The Pomp Podcast - Austen Allred: How to Fix Our Broken Education System

Episode Date: October 17, 2018

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

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Austin Allred is the co-founder and CEO of Lambda School, a full computer science education that's free until you get a high-paying job. In this conversation, we covered why Combinator, the challenges of building a startup, what it takes to train a computer engineer, why the current student debt problem is so bad and how Lambda School is helping hundreds of people avoid debt and build a better career. I really enjoyed this conversation and think that Austin's work is important. I hope you find this conversation as engaging and fun as I did.

This podcast is presented by BlockWorks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur and want to attend exclusive events and dinners, visit them at blockworksgroup.io. I promise you won't be disappointed. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his

opinion. This podcast is for informational purposes only. All right, guys. I've got Austin here. Super excited about this conversation. We got a lot to cover. Everything education. So before we get started, I don't think I actually don't even know what your background is pre Lambda. Sure. Yeah, I grew up in Utah. Did a bunch of crazy stuff when I was younger. Ended up working in. Wait, hold on back.

What crazy stuff? So I'm Mormon. So I served a mission in eastern Ukraine, came back, dropped out of school, went to China, vagabonded around China. Where? My home base was Shanghai, but I literally didn't live anywhere. I just kind of had a suitcase and went wherever. Hostels are super cheap there, so I just jump on a train. um yeah then went back to to utah decided to get into tech somehow had had no money had no skills

um so i just jumped in a honda civic and drove out to palo alto and lived in my car for a while while got things off the ground and so hold on what were you doing in china um i mean this was like 2011 if you remember at the time china was the thing right everybody was always talking about china um i'd been selling on stuff on ebay and importing stuff on a small scale so i was just interested in import export wanted to figure out what was going on basically um and so yeah just decided to go out and see what was happening um decided that import export wasn't for me it's highly regulated it's just it's a nasty space that's full of antiquated stuff and now flexport is taking it on bless their hearts um but yeah i really just decided to double down on tech when

I was out there and yeah yeah all right so you come back uh drive to Palo Alto uh living in your car yep all right uh so one thing I always I mean are you do you sleep in the front seat passenger seat back seat yeah so you lay the the passenger seat and the back seat down um feet in the trunk head on like the passenger seat um twin air mattress halfway blown up it kind of like covers up the the gaps you had like a like a suite in there oh it was it was swanky yeah all right so and so bougie civic while you're uh while you're sleeping in the car hanging out in palo alto what uh interest kind of focus what are you doing yeah so at that time i was working on a company called grasswire um basically trying to crowdsource um fact checking

of the news um it worked so we ended up getting you know half million dollars in vc and running it for a year and a half um it worked we got like half a million visitors a month at its peak um but it's still there was no real good way to monetize the news at that time if it were today you would have put a coin on it and done some crypto stuff somehow um kind of put a coin on put a coin on it just put a coin i like that um yeah kind of steam it style stuff would have worked, but there was no way to incentivize anything. There was no way to monetize other than generic ads. It was just a nightmare. Also the, uh, the term fake news had not been coined yet. Right. If we were about a year later, we would have, you've been riding that fake news

wage. Yeah. Yeah. We were too early. So we, we, we basically died the December before Trump started coming to power, so to speak. Got it. Um, and really that's, you know, the fake news thing was really largely a reaction to Trump, but, um, so bad timing. Yep. Okay. So, uh, so go through that and obviously, you know, learn a bunch, I'm sure, et cetera, company dies. What do you do? Yeah. So, um, it was not, it was not a good time for the company to die. Um, we're my daughter, sorry uh my wife was like eight and a half months pregnant um let's see we yes so we were we were remote so i was living in the middle of nowhere in utah by my in-laws farm um and yeah so you got a house at this point no we were still renting we were like oh man

120 000 for a house that's so expensive but you're living in a house yeah yeah all right no car no field no yeah there's I've never been to Utah so there's no such yeah like a three bedroom at the time was like 120k you could rent it for like 600 bucks a month so there's no point yeah um yeah so company goes under I'm like oh shoot um go burn through all of our savings paying off contractors and making employees whole and all that stuff um and then our daughter ends up in the NICU for a long time. So we're like broker than broke, no job living in the middle of nowhere. There's no tech, anything, just farms and a community college. Um, so I decided to write a book about growth, which is the stuff that I had learned in the past couple of years, um, sold

that it did really well. Um, and then that started kind of circulating in Silicon Valley, a company called LendUp in San Francisco, saw it and reached out and said, Hey, can we have you join our growth team. And I said, yes. So I ended up in San Francisco. Got it. And just overall how to grow a tech company, acquire users. Yep. User acquisition. Um, and the idea was how to go from zero to a thousand users for free, you know, kind of cheap gorilla growth, hacky stuff. Um, but very tutorial like, so it takes you through, okay, you have this company. Here's how you figure out which channel to use. Here's how you figure out, okay, let's take Instagram. Here's how you can win on instagram step by step literally just do this stuff and it'll work

here's how you win on twitter step by step step by step and it'll work um and you know so i i kind of sold it as like a tutorial more so than a generic marketing book and it did well sold quarter million dollars of it was all self-published so you just basically keep that and that got us out of the red yeah love that love that uh all right so you get to end up in san francisco uh working on the growth there uh what made you leave uh yeah so left to start lambda um basically you know coming from a rural area to san francisco you just see the the huge discrepancy in opportunity so you know in the town i was from the median income is like 30k um and so i'd talk to people and say hey there are you know code schools out there in

$10,000 to go to a code school. Like in San Francisco, that's a referral bonus. That's nothing. But there is just no possible way those people could move to San Francisco and go to a code school and not go broke all at the same time. So the original idea was just, hey, let's take a code school. Let's put it online so that it's more accessible. Let's make it cheap.

Since we don't have physical buildings, we can drive the cost down. I mean, just classic, hey, let's put this on the internet kind of thing. yep um and yeah started that as kind of a side project while at lend up and did you know we would get these huge free classes to kind of promote it so we'd have 7 000 people in this free class and then we would convince a few of them to pay us 10 grand um and that was enough to quit our jobs and go full-time and what they're doing is so free class go in all online they're sitting at home, they're taking like a daily course, they're doing a, you know, kind of once a week, how does that work? Yeah, so the free course is basically every night, Monday through

Thursday, for a few hours, you know, we're introducing a topic, you're working on some stuff, you have a review. Obviously, you can only do that so much when there's 7000 people. So it's a little bit different of a structure there. But it was basically, hey, let's teach you how to program you know up to a certain point for free and then if you like it you can pay ten thousand dollars and and do the rest we'll you know train you for three months kind of a standard code school model we weren't that creative in the beginning and that that was really all it was to get off the ground we were just saying hey let's take you know code schools exist let's put them online and make it not suck that was the entirety of the the vision and is this one of the schools when you

first started where, uh, you were recording a video, um, or is it one where you were building like modules and people could go in and actually, uh, uh, type? So not either, not either of those things actually. So, so we felt and still feel that it was very important to have it be live. So it's like live streamed. Um, and then you'll have group working sessions where you're all working on the same code base at the same time, um, or, you know, individual coding sessions. and that's true to this day it's still live and interactive it's i mean it's not exactly like a classroom environment because we try to make it better being online but um no different than you know showing up at a class and having an instructor walk through stuff with you and so as you're doing

this you realize hey we can get you know thousands to sign up for a free class pay attention uh we can convince some subset of them to pay us you know real money um and you leave and it's just you you've got a co-founder a team kind of what was those early days yeah it's just me and my co-founder um he was basically teaching 9 a.m to 9 p.m and i was basically trying to get butts in seats 9 a.m to 9 p.m um and as a part of that we started emailing you know the thousands of people that have signed up for the free class like hey why don't why don't you pay ten thousand dollars to the school you've never heard of and like join us and every single time the response was you know A, I don't have the money. B, I can probably get the money, but that's just way too much risk.

What if it doesn't work on the other side? I just blew 10 grand. And frankly, that's deserved in the Code Bootcamp space. There's a lot of bad product out there, a lot of really bad schools, frankly. So I can't fault anybody for that. And so we had like, for our second cohort, We had one empty seat and we basically emailed everybody and said, hey, we have, you know, one seat left. If you'll pay us a thousand dollars up front, then you can pay us the other. You know, we'll add on a finance charge. So pay us ten thousand dollars after you get hired. Same course. And we had like 200 applications come in. And that's when we realized, OK, there there is something to the idea of de-risking it for the student.

And if we can do that, then we can we can fix all this other stuff that we've wanted to do. Like we felt like three months wasn't really long enough to get you from where you needed to be or from where you are to where you need to be as a software engineer to get hired. But if you don't, you know, if you're not charging ten thousand dollars and you have to charge twenty thousand dollars, how many people are going to charge you 20 if it's hard to get them to pay you 10? um so from that we basically moved to a model where it was hey you can either pay us twenty thousand dollars up front or you can just pay you know then we started delving into an income share agreement where you don't pay us anything until you get a job and then you'll we'll do an income share for a couple years if and only if you get a job um and we got a couple people to pay up front and that funded the rest of the class and then we when we announced that we had thousands of

applications coming in on the, on the free upfront with the income share on the backend. Yep. Got it. And so what is the model today? So the model today is, is basically that, um, it, it's completely free until you get a job that pays more than 50 K a year in the field that you study. Um, otherwise you never pay anything. Um, if you do get that job, we share, so you pay a 17% of your income for two years capped at a total possible of 30 K. So if your income is below 50 K, you pay zero. If it's above 90 K, you pay 30 K. If it's somewhere in between there, it's a percentage of income. You pay it off over two years and you're done. Got it. That, um, definitely de-risks for somebody who wants to learn and say, I'm going to bet on myself to some degree. Um, but

either one doesn't have the money or two you know that the price is the the hurdle what has been the success rate on the back end um yes our first cohort 83 of the students were hired and making more than 50k wow um it it stayed right about that level um it's incredibly big difficult to get to that, frankly. But, but yeah, it's, it's working. And so let's talk about the education kind of in the traditional world, right? So what's the issue there, right? Why is there so much demand for what you're doing? There are a couple main factors that, I mean, so right now, if you are living in middle America and you want to change a career, there are two huge problems. The first is that it will take you probably four years. You have to go get a university degree in two years is going to

be studying Shakespeare and the liberal arts, which I have no problem with, but not an efficient way to switch careers. Um, and the second is that it's really freaking expensive. Um, it's gone up like 2000% in the last 10 years alone. Um, the average person that gets a degree, you're looking at a hundred, 150 K in debt. Um, that's just too much to handle, right? That's, you know, I, I always think about it from a risk perspective. That is a whole lot of risk to take on hoping that this new career change pays off for you. Um, so, you know, the opportunity costs of your time and the cost costs of the tuition and living expenses for four years, it's just astronomical. um so we basically we de-risk the education by making it free up front and then um yeah we

the the other aspect of that is a university isn't really built to get you a job that's kind of a they view that as a side effect of what they do but they're not like gunning for that for us that's all we care about and you you don't come to us if you don't want a job but you do come to us and we will do everything we possibly can to help you get a job or we don't get paid and the incentives really really matter how do you uh drive that high like success rate in getting the job um yeah i mean the first thing is picking qualified students that show us that they're capable um the second thing is picking a job market where there is high demand and then the Third, it's just we know that we have to make you the best engineer you possibly can be.

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

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

overall system works yeah harvard could sorry one sec harvard could make their tuition zero and relative to the size of their endowment it wouldn't move the needle that much right it just they may as well take 40k a semester from rich people because that's what a lot of their student body is anyway um i think the goal of harvard and the goal of Lambda School are just very, very different. I had a conversation recently with someone who does the interviews for Harvard. And in their handbook, they say, Harvard, we're trying to find the next Michelangelo. We're not trying to create the Medici's who are the people that funded Michelangelo. So there's kind of a social element there or social class statement that

we don't want to train the merchant money-making class. We want to train something higher, something more enlightened. Um, so, and that's just not our goal, right? We'll create as many Medici's as we possibly can. Um, and we want to take people that aren't Medici's and make them Medici's and then they can fund the Michelangelo's later. Um, so I think just fundamentally the, you know, our goal isn't necessarily to create, you know, Nobel prize winners um and we're not you know it's just a very very different organizational structure and and goal absolutely what is the like biggest problem as people go through the program that you see if somebody's not technical becoming technical and gaining that skill set like what

are those challenges that you guys really work with people to kind of you know smooth over the transition? Yeah, I think the first and foremost, um, people, I don't know if they have forgotten how to learn or if they've never learned how to learn, but so many people come into Lambda school and they're like, okay, you know, what, you know, what is required? What's going to be on the test? What do I have to do to check all the boxes so that I can signal to, to whomever that I know this stuff? Um, and that just doesn't, that fundamentally does not work in software engineering software engineering you have to be able to approach something you've never seen before understand how to decompose that understand what works what doesn't work what will be optimal what

will be suboptimal make trade-offs and then solve the problem and that is very very different than the way the educational system has traditionally been run so we have to kind of beat that out of people we have to beat out of them the idea that you show up you check boxes and you're done or you jump through various hoops and that shows everybody that you can do all the stuff that you need to do. You just can't do that as a software engineer. So we basically spend the first month

trying to create a new system of incentives and motivation that are, we need people to learn how to learn. Once that clicks for people and it's almost visible, then they're set, then they're off to the races and they can do anything and everything.

We don't have to worry about them anymore. That's awesome. And do you find that once they get over that hump of, you know, here's how to learn again, the information that they acquire, like there's an acceleration? Oh, absolutely. And that even continues, like, post the program into their job?

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

come to us because they don't understand that that's possible um and we have to teach them to do that well and not only is it how to do it but it's the desire to want to learn something new right a lot of people see something that they don't understand and they just walk away Yeah. I mean, I, the funny thing is I look back, you know, when I was younger and I see that in myself, like there, there were so many times when I would see something and I'd be like, ah, I can't figure out how to do that. Cause I'm not, I'm not a software engineer. I've never been trained to, to do that. Um, and it was once I really started to say, okay, you know what, I'm just going to do whatever I want and I'll, you know, figure it out as I go. um which by the way that kind of clicked for me when i was living in ukraine learning to speak russian and just like yeah i don't i don't know how to speak russian but i'm gonna try with this guy you know um and that that really matters so now it's you know i'm dealing a lot with i mean as a ceo of a rapidly growing company everything that i'm dealing with i've never

touched before never imagined before but it's not that intimidating it's just i know there's a learning curve. I know I have to pick stuff up as I go. I'm not a finance guy, but had had to learn finance more, you know, structuring all this stuff, had to learn how to manage, how to organize a company, all that stuff. But you can do it. And there are materials out there, there are resources, there are people and you can just figure stuff out. Absolutely. How many people have gone through the program? So we've had 150 graduates and then 700 are concurrently enrolled. Got it. What are some of the things you've learned from, you know, because there's probably thousands of applications, you've got hundreds now who have either gone through or going through. What are the biggest things you've learned about people and kind of going through this transition? Yeah, I think the first is you assume that everybody has the same, like, requirements and needs that you do.

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

levels and all sorts of stuff. Um, so we definitely underestimated the difficulty in creating a really good curriculum. them. And then the other thing is just the, and this is constantly a learning battle because a lot of our students come from very low income backgrounds. They're very stressed financially from day one. Creating an environment where somebody that's already, that already has stress at level nine based on their normal life circumstances, getting them to learn something that's incredibly difficult is hard. Um, and we have to, to build in support for that kind of thing. Um, sometimes that's financial support. Um, we can only do that so much. A lot of the

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

Yeah. So if you look at Lambda School as kind of a traditional, you know, what are all the risks that are involved in this startup? And let's start peeling them away. It basically starts out with, can you get people who haven't paid anything up front to finish a six month program? So really, really focusing on the persistence of somebody's desire to finish. yeah I mean when we started everyone was like you guys are gonna get killed because students have no skin in the game you guys took on all the risk what you know if they just shut a laptop and walk away what happens and they're right right like we have to find people that are dedicated and motivated and then the course has to be so good that there's never a point where they're just like you know what to hell with this how do you screen for the dedication and motivation Um, so now we, you know, in the beginning we would try stuff like, Hey, let's try this

logic challenge. And if you can figure, you know, if you can think analytically enough to get through this challenge, then we'll accept you. Now we actually require all of the students to go through a class before they start. And we monitor people when they're in that class and see how well you do in that kind of trial environment. Um, so we call it tryouts and And we accept people based on how well they're able to be dedicated and, you know, finish stuff and all that. So you kind of put in sweat equity as opposed to a cash investment. That's the skin of the game is that you got to get to the tryout. And if you're good enough to get to the tryout, then you're welcome.

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

a night class? How do you offer students when you say show up every day, right? What is the ask of them on a daily basis? Yeah. So it's, it's for the full-time class, it's 8.00 AM to 5.00 PM. Um, your button seat. So 8.00 AM to 5.00 PM Pacific. So, you know, different time zones are different. Um, Monday through Friday for seven and a half months, um, for the part-time class, it's 6 PM to 9 PM Pacific, um, which is, you know, 9 PM to midnight, um, Monday through Thursday, and then three hours on Saturday for a year. So basically you can either say I'm going full time and I'm not going to have a job for seven and a half months, or I'm going to keep my job and I'm not going to have a life for a year. Um, and there, there's just, there's simply

no way around that, right? You have to be able to put in the hours or there, there's nothing we can do to help you what's the number one reason people quit is just the rest of their life like everything else kind of just takes over yeah by far um you have a spouse supporting you and then the spouse loses a job you have a death in the family sometimes it's like we have a lot of students in the southeast and when hurricanes hit you know it's just so frustrating um so shark attacks just all kinds of like stuff going on yeah i mean when you know we have 700 students enrolled right now at that kind of scale like something crazy is going to happen to somebody it's just it's just going to happen um so there you know that just comes with the territory and

we have to build it into our model and work with people we had a student that was in on vacation in costa rica i think um either costa rica or puerto rico one of the two um got mugged got everything stolen like i couldn't you know barely made his way home um so he you know we didn't know what happened to him he just didn't log on and then three weeks later he shows up and says hey i got i got mugged and it took me three weeks to get back home wow um and you know so we can we can accommodate stuff like that um but stuff happens yeah yeah and uh this is the classes are all in english all in english you know the languages yet nope we not yet not yet one day yep um and then uh what are you teaching right so are you teaching one single language are you

teaching multiple languages and i as a student could pick walk me through kind of you know some of the content itself yeah so so we separate it into different tracks um the the full stack web development track um we'll teach javascript which is you know react node um we used to teach mongo we recently removed mongo and replaced it with relational databases sql postgres stuff like that um that's kind of the first 15 weeks is full stack traditional javascript stack web development then we have 10 weeks of computer science that is based in c and python um so python and django just because we want you to have exposure to a new language. We'll do a lot of the data structures and algorithms training in Python.

First of all, because it's a different language, but second of all, it's probably a better language than JavaScript. I should be careful saying that, but it doesn't have the same side effects that JavaScript has and is a little better to reason with when it comes to data structures and algorithms. And then C because C doesn't let you abstract away all the hard stuff and you have to deal with the lower level.

So when we're talking about systems and architecture and operating systems, we use C for that. And then we have a five-week apprenticeship that we call Lambda Labs. It's kind of a simulated dev shop environment. You can use new languages. So we have students build stuff in React Native or Ruby and Rails or whatever.

um that you know you can kind of choose choose your own path um we also have a program that's a little bit different um for the full stack web development called lambda custom and that is when an employer comes to us and says hey i want to hire 10 phoenix and elixir engineers we'll basically swap out the traditional curriculum for something that includes phoenix and elixir um but they have to be willing to guarantee that they'll hire 10 students for it to be worth our time doing that got it um then we have other tracks we have ios we have android we have ux design we have data science and those you know follow a similar pattern but you'd have to map what i just said on onto those different that makes sense um what about blockchain interests right so obviously

most of the people listening are super interested in blockchain crypto etc are students aware of it are they interested in it are they looking for jobs in the industry what have you seen so far yeah um a lot of students come in not i don't know if i should say a lot but there are definitely some students that come in interested in crypto and um we have some some side stuff that we send them through so they actually understand the the cryptography aspect of crypto not just here's how the blockchain works but you know keys all that stuff um yeah we we have a few students that are hired as blockchain developers it's not a majority of the students but those students are really well paid there's a pretty big shortage

of blockchain engineers when you say pretty well paid what do you think average are I shouldn't our average is ridiculous our average for blockchain based engineers like in the hundred ninety K range hundred ninety thousand I mean you know that like twenty blockchain engineers just went to their boss and said hey i need a raise yeah um i again i'm not saying that's average but that that's what our average has been um i i would imagine that it will net out to being kind of software engineering salaries plus uh 20 you know bonus for understanding how crypto works yep and then um do you see any difference between the people who come in that are interested in crypto versus not and you know

going through the program, uh, or, um, kind of the, the skills that they're better at or worse at. Um, cause it sounds like there's definitely on the backend, there's a difference in, in kind of maybe salary, but anything in the middle of the program? Um, I think it's just a different, like focus area for them. Um, so there, there are a lot of people that are kind of, you know, Hey, Bitcoin is cool. And I have a Coinbase account. Um, and then once they learn to become a software engineer then they once they learn to learn like we talked about then they start to actually delve into how does a blockchain actually work what is this what is what is a ledger you know how what what are we actually talking about when we're talking about moving crypto from point

a to point b what you know um so that that's really cool to see that they there's a certain point where it moves from hey crypto is this abstract thing and their you know prices go up and down to let's understand the tech under the hood. Let's read what Satoshi wrote. Let's understand, you know, all that stuff. Um, and I think there are surprisingly few people in the crypto community that understand all of that fully. Um, there are a lot of people that are trusting other people when they say crypto is secure. Crypto is, you know, a private method of transaction crypto is, you know, you, you could probably list off a bunch of different things more than I could off the top of my head. Um, and people get that conceptually,

but when you understand the tech, when you understand cryptography, when you understand how mining actually works instead of, Hey, I just, I'm just going to buy a GPU rig and plug it into something. Um, it's pretty cool to see. Yeah, absolutely. What, um, what do you guys need the most help with right so people who are listening what can they do to to make you guys more successful um the first thing is stop lumping in lambda school with other code boot camps that suck when you're hiring engineers um that's probably our biggest battle is people look at us and they say oh yeah i've i hired somebody from an eight-week code boot camp once and they didn't perform very well. Like, of course they didn't. Yep. Um, how do you get over that right

now? You just say, Hey, that was eight weeks and ours is seven and a half months. Yeah. Right now it's just like, so we have a lot of companies that come to us or we, we come to them. We have a biz dev team that is constantly trying to create those relationships. And they're like, yeah, you know, we're looking for someone with a CS degree that writes Java. And we're always like, okay, just interview one um just try it and we've had multiple companies that you know first of all they hire that person they pay them 110k and then they come back to us and we literally have companies coming to us now saying can you send us 50 more can we you know what what can we do to you know we need to hire 200 engineers next year we want to make 150 of them lambda grads get me

more of that. Um, so there's some, some element of just, you know, they need to try and interview and hire the right person and then, then they get it. Um, so we've had companies now that have hired seven or eight students and we've, we've only had graduates for six months, right? Yep. Um, so that, that's really how we win in the long run is just by better product. Yeah. Well, so I definitely agree with that. What is your incentive though? If I'm a student, um and based on the way that i understand the the pricing mechanism right basically as soon as i get paid more than ninety thousand dollars you're kind of capped out right and so what is the school's uh incentive to help me go from 110 to 130 to 150 let's say

um on that salary is it just the better that i leave with a great experience great job etc i become an ambassador for Lambda or how do you think about that? Yeah. So, so we intentionally capped how much we take from an income share, just because, I mean, if you're making 80 K and you pay us back, you know, 27 K, that's a pretty fair trade. If you start to make 150 K and all of a sudden you're paying us like 60 K, then that feels, I mean, obviously incentives are still aligned, but that starts to feel a little bit shady at that point. So we just put a hard cap on it um that said you know we want you to be as successful as we possibly can be we do report averages we do report you know incomes i love it when our students get hired for 110 even though

that doesn't change our income level at all from when you're getting paid 90 um i mean the truth is we do get a little bit faster still because they'll you know they're still paying the 17 percent and they'll hit their cap earlier um so that's a small bonus but i mean really the the long term in the long run the way lambda wins is if we have thousands of successful students out there um that employers trust um and you know later on in lambda's life cycle we'll start to have you know more products for hey you want to hire a software engineer that has two or three years of experience now we have thousands of software engineers with two or three years of experience that solve relationship with us um they're all sorts of i mean that our relationship

with the student is usually really really strong they they're grateful they are they want to give back to the community in some way um so we're just trying to foster that as much as we can absolutely that makes sense um all right so i got two questions for you and then then we'll wrap it up, but, um, if you could change anything about the current education system, what would you change? I would, oh man, there are like 80 things. Um, the first is you have to realize the education system is 100% built around title four funding. Okay. Um, so, so title four funding is basically Pell grants, federally subsidized student loans. Every university, every college is 100 built to pull money out from that pool or they're dead um that is what education is built

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

curriculum, which in computer science world is just a recipe for disaster. Um, you have to have a librarian on staff full time. So even if you're in online school that doesn't actually have a librarian, you have to have somebody with a master's degree in librarian studies on your staff. Um, that's wild. So it's, it's just, it's literally, if you took 50 PhDs, sat them down in a room and said, what do you think the requirements should be for education in the United States? That's literally what is happening. And they can write the rules for everybody. And the only way you can break away from that is if you're not taking federal funding. And there's a rule called the 90-10 rule, which is that if you're a for-profit college, you can only take 90% of your income or revenue from federal funds. And that's a huge problem is people are trying to stay below that 90%. So that gives you a sense of how reliant everybody is on student loans, basically, or Pell Grants and whatever else.

If you said people can now bankrupt their way out of student loans, like you can't declare bankruptcy on student loans, they're there forever, that would rock the education system. If you said schools have to, you know, less than 50% of your students can default on their student loans, that would rock the education system, which is crazy. 50% is a huge, huge default rate, especially when you're talking about something that you can't bankrupt your way out of and is with you forever. um so i i think the big problem is that there's just no like the blind are leading the blind and there's nobody that can raise their hand and stop anything so it's just this incestuous you know the the phds write the rules for how accreditation is granted as soon as accreditation is there you have unlimited backing from uncle sam so you can charge whatever you want it all ends up on the student's back the student ends up screwed but you don't care because i got mine

um it's just a very very broken system across the board absolutely and i think we're now starting to see the uh the impact of uh of the debt that we're putting on all of these uh these students is pretty uh pretty misunderstood i think years ago and now is uh it's quite sad frankly yeah i mean when i went to college um you know most of my high school buddies came from lower middle class environments. And nobody told us anything about student loans ever. Um, it was all just go to the best school you possibly can study something you love. And if you get a degree, it'll all work out on the other side. And that's just fundamentally not true, especially in this day and age. Now, you know, a lot of people have degrees and they're, I wish I could remember the number,

but there's something like 5,000 people in the U S with PhDs that work as janitors. Um, Um, it's just, that's a ton. It's a whole lot. Um, yeah, it's the expectations of the students and society are just completely misaligned with the expectations of the university and frankly, the results. Um, so, you know, net, net, you still make more money if you have a bachelor's degree than if you don't, because of course, if you take all of the smart people in society and you have them get a bachelor's degree by definition they're going to you know it will bear out in the stats but we've translated that into everybody needs a bachelor's degree and if you don't get one you're screwed and pay whatever it takes because that's the only way to

make it and that's you know coupling that with and we'll give you unlimited money to do that because we think it's really important and we're not paying attention to what happens on the other side is just a recipe for disaster and we're seeing that now absolutely um all right so ask one question uh to end it and then i'll let you ask me one question uh before we're over uh all right you gotta admit that aliens exist somewhere in the solar system galaxies etc do we think that aliens have pets uh yeah so are there alien animals there's a paradox i'm trying to remember what it's called um but this is not what you ask necessarily but aliens so far as we know have not made contact with us right so either they don't know we exist they're not advanced enough to make

contact with us or they have conscientiously decided that it's just better off to let those humans do their own thing and leave them alone. Like we're like too stupid for them. Yeah. I don't know. Like, yeah, you could be like, yeah, let's just not disturb their natural environment. Let's let them burn it to the ground on their own. Well, cause we always think about like, we haven't found the aliens. Right. But like, what if they know that we exist and, uh, and we don't know that they exist? Yeah. It's, I mean, it has to be one of those three things by definition, right? Either they don't exist or we're not one or the other isn't advanced enough to make contact with the other um or they're consciously deciding not to make contact with us and they could um i think

the latter is pretty unlikely like i think if they could make contact you at least try to say like hey what's up let's you know maybe there's some is it like a like a you up text at 2 a.m maybe there's some information sharing that could happen somewhere i'm i'm sure if you you know if you create one simulated environment and then another one like they'll both evolve in different ways and i mean you don't get you don't get a chance to say let's let's try all of humanity over again and see what happens this time that'd be that'd be cool yep um so i'm gonna say that if there are aliens out there they're not advanced enough to make contact with us. And if you look at, let's see, so how long was it from the time that we

domesticated animals until we were a space faring civilization? Maybe it's less than a thousand years, right? Yeah, I believe so. So in the expanse of time and space, if we say, you know, the earth is hundreds of millions of years old, I'm gonna say it's unlikely that they have reached the point of domesticating animals yet because if they would have then it's pretty likely that they would be progressing to the point where they could make contact with us how's that for an answer that's probably the most thoughtful answer you've gotten normally people are just like we are we are the pets we are the animals but but no i think i think that's completely fair um all right what uh what question you want to ask me um let's ask you a hard one this always scares me so much

when people are like oh let me ask you a question crypto transaction volume slowly going down why yeah look i am a believer that uh it will continue to go down so we're doing this in october of 2018 right um i think that uh the beauty of a blockchain and crypto in general is security right and trust and so like i usually draw this spectrum for people on the left side of the uh the spectrum you have security on the right side you have like um you know innovation and like all the shiny stuff bitcoin specifically is like as far left on that spectrum as you can get in terms of security is the number one thing right so really really slow you know low transaction volumes because of the slowness it just doesn't really work today as a medium of exchange for a

whole host of reasons what we've seen is a bunch of people try to push blockchain technology and crypto to the right of that spectrum right so they started doing all sorts of things around speeding up transactions so on the left side of the spectrum you have store of value on the right side you have means of exchange is that um not necessarily right so i think that i think of it as we'll call it replacing credit cards on the right side maybe so for payments specifically yes right um i think that i just look at payment or non-payment blockchains and crypto you know projects companies etc all on this spectrum of like are you optimizing for security or are you optimizing for you know speed innovation and kind of all the shiny stuff sure to me we actually

because we're all like too smart for our own good uh meaning people in technology like we keep pushing farther and farther to the right of that spectrum and we want all the innovation the speed and all that stuff and we should do that right that that is where like the r&d and the innovation etc is going to happen but i think that i'm probably much more of a bitcoin maximalist than most in this idea of like the security and the trust of the chain and the technology is the core component sure and so while people are doing all that innovation and doing all this crazy stuff like people the bitcoin developers are going to keep adding that to the bitcoin chain Right. So smart contracts and all that stuff. And so when we look at transaction volumes, for example, well, the most adopted chain, which is Bitcoin and the most secure chain is also a slow chain because of the optimization for security.

Sure. So you can make the argument that if you're calling it a store of value, you don't look at like the transaction volume of gold to determine the value of gold. Right. It's it's so that's definitely that's just the wrong measure. Yes, that's one way to do it. I think that what becomes interesting, though, is, is there a world where as we really solidify the security, the distributed nature of of the technology, can we actually improve transaction volume, the speeds and all this stuff? And so that's not going to happen in the first 10 years. sure right like we're not at bitcoin 0.1 yet don't try to do bitcoin 2.0 don't try to don't try to layer on speed and payments because we're still figuring out the very very fundamentals of yeah like we're at like of the blockchain basically let's say we're at bitcoin you know 0.5 right and people aren't even at 2.0 people are like you know there's some people who have launched like four you know improved bitcoins already like how are you on number four already we haven't figured out like the original bitcoin and so i think that uh the saying of like the

people with the longest time horizons have an advantage here is definitely applicable and you know we're building a technology that if it can actually um you know deliver on a third of the promise right so it doesn't even have to take over the money supply it doesn't have to you know do all the stuff if it just delivers on a third of what the promise is it's probably one the most important technologies of our lifetime right and so that should be you know kind of security with care security is everything so if there was a security issue of the Bitcoin blockchain right I would make the argument that Bitcoin would become unvaluable yeah right so if there's a fraudulent transaction if

there was some sort of security breach and in like a material way what is the value of bitcoin i mean zero right yeah so i think that you know when you look at you know what is the most important core uh focus it is security and so um there's a saying in the military that uh slow is smooth smooth is fast right and so i think that that's kind of what we're seeing with bitcoin of like it goes slow but it goes smoothly and because it goes smoothly we're actually making pretty fast progress sure right because at any point if we try to speed up and there's an issue you you lose all the momentum right and so i think we've seen that with some of the alt coins and so to answer your question like i'm not worried about the transaction volumes because i don't

think that's like that's not the right metric yeah i don't think it's the core thing to focus on and uh my hope though is that over time it will improve after we've figured out kind of that foundational security yeah that's fair yeah fair awesome man i really appreciate you coming i'm a huge fan of what you guys are doing but how can people uh find out more applied to uh to come to a class yeah um so we have free classes that start every month um you can try it out at absolutely no no cost uh lambda school.com l-a-m-b-d-a school.com awesome well uh let's get some more people in there we'll get some more blockchain developers awesome love it we need them all right thanks so much, Austin. Thank you. Hey, everyone. Pomp here. If you like this episode of Off the Chain

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