This Week in Startups - E1039: Independent Journalist Vincent Woo reflects on his piece, “Lambda School’s Misleading Promises”, shares insights on what drew him to the story, where Lambda School went wrong, how they can be better & more

Episode Date: March 24, 2020

0:45 Jason intros Vincent Woo, who wrote "Lambda School's Misleading Promises" for New York Magazine 2:21 What drew Vincent to this story? What wrongdoings did he discover? 6:02 Vincent describes Lambda's ISAs and how they were sold 14:24 How Vincent approached Austen Allred as an investigative reporter & clip from Vincent's interview with Austen 16:19 What is Lambda's school actual placement rate? How does it compare with other coding bootcamps? 20:06 Getting Lambda's former Director of Student Placement on record to speak about the placement rates 23:43 Why ISA coding schools should exist 29:18 How Lambda's remote-only approach differentiates them & how opportunity cost plays into their issues 35:06 Where did Lambda School go wrong? 45:51 Does the business model work in broad strokes if opened up to everyone? 53:54 What does Lambda School need to do now? 58:21 Where is the blindspot in most entrepreneurs? 1:00:57 Vincent also writes about local political corruption in the Bay Area

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I'm your host, Jason Kalakanis. And on this podcast, we talk about startups and we talk about their journeys. And they're often messy. And they're trying to figure out where they're going. And especially in the early years, things were up and down. We recently had Austin from Lambda School on the podcast, and Lambda School is a coder school. And what's unique about Lambda is that they use something called an ISA, an income sharing agreement. So instead of paying for your tuition up front, you pay a percentage of your salary after the fact.

And I think just broad strokes, it was originally you could pay for the nine-month program at Lambda School to learn how to be a developer, $20,000. And I think on the back end, you paid 15% of your salary capped at 30,000. And may have changed a little bit. And so, unlike college where you're not guaranteed or you're forced to pay the money up front, here Lambda takes the risk and the student takes the risk of going to the program for nine months. And recently, a story came out in New York magazine titled Lambda School's Misleading Promises by Vincent Wu. Who is Vincent Wu? He is on the program today, and we recently had Austin on the program to talk about the

issues that Vincent brought up in his story in episode number 1,033, 1033 of this week in startups. Welcome to the program, Vincent Wu. Hi. So tell me, who are you? And why did you write the story? Because my understanding is you're not a traditional journalist. No.

You're not like a trained journalist or you don't work for... I have some training. Oh, in journalism? Well, I had classes. Oh, he took some classes in journalism. But you don't work for New York Magazine. You did this as a freelance piece for them. Yeah.

And it's your first piece for them? Yeah. Great. So tell me, why did you write this story? What was the origin of it? I told this story a little bit in the piece. And as told, it is true, right? Like, the way this story even started was I saw of like a very strange,

tweet from one of their executives that basically claim that if you did not believe that Lambda School was or would be a $100 billion company that you fundamentally did not understand the American economy. Now, as an angel investor, I think you can understand why it's kind of an odd claim. Like most startups fail even when they're good ideas. You know, the idea that you don't believe any particular company is $100 billion is actually no judgment of whether you think the company is a good idea or not. Like there are so many market forces. And competition. Yeah, of course, or regulation or global recession, like the one we find ourselves somewhat in. So all of those together made me think like, wow, what an incredibly aggressive statement and an odd one. It struck me like it's stuck in my memory.

And I remember retweeting it and just having the reaction like, wow, what a strange thing to say. And when I did that, people started calling me and they wanted to tell me really strange things that they had discovered. through interacting with Lambda School that eventually went on to form the impetus to pull on the threat of this story. And this is about five or six months now ago. And so you talked to these folks and decided you wanted to make this into a piece as a journalist?

I thought I had an edge. Without revealing my sources or where they come from, I suspected that I had information that most journalists would not be able to acquire. Right. And you had specifically a deck that was sent to investors. Among many things, yeah.

Yeah. And so you find yourself after doing this tweet, getting this information, and had you written an article for a journalistic publication in the last year or two, or is this like the first one?

Mostly self-published local political corruption pieces, but not really for like a major publication. This is my first major publication piece. Got it. By far. And so you get this insider information and you discover what?

Basically a lot of fraud. Fraud. Fraud is a criminal term. Yes. So you're alleging criminal. Yes. Fraud. Okay, what is that?

Describe it. I mean, it varies on the spectrum. I can give you the hardest version. Sure. And we can work back from there. So the hardest most blatant example of fraud perpetuated by Allred is probably his repeated statements that he in no way sold ISA is at any point, nor ever would. And he's made these statements.

statements several times in the public as part of a general defense of the incentive alignment of his school which is to be lauded I mean I don't really have a problem with it it's the lying right so at the moment he made various statements on Twitter and if you want to like throw up like a screenshot of a tweet or something I can send yeah yeah but he said stuff like we have never ever sold ISAs like in as you say selling them selling them outright 100% of the equity explain what that means because I people understand an ISA is the agreement between Lambda school and the student.

When you say selling an ISA, what does that mean? Let me explain. Yeah. So the ISA that Lambda contracts with the student say, it says basically that if you get a tech job paying $50,000 or more, we will take 17% of your pre-tax income over two years up to a maximum of $30,000. So if a student does get a job, it's worth some amount of money to Lambda, but rather they would really prefer having the money up front for cash flow issues.

So in order to, you know, make their books better, they have an incentive to kind of say, like, hey, we have these contracts. We think a lot of them are going to be worth something. If you, a hedge fund, are interested in going long on the value represented by these contracts, give us like a third of the face value up front and you can carry the upside, you know. So that's what they did. They sold outright ISAs to a hedge fund and received $10,000. a head up front and, you know, presumably... Why is that wrong? I don't think it's wrong.

I think the lie is what makes it fraud. Okay, so there's no problem with bundling 100 students together and using that as a financial device with a bank or a hedge fund. That happens in mortgages and loans all the time. So long as students, I think, are informed of the reality of this, I think it's fair. But I think the way that Lambda School works is at the time and a bit less now that they've been forced to walk back a lot of these statements,

that, you know, part of the value proposition is this idea that we only make money when you make money. And to an underprivileged student who doesn't have a lot of cash on hand, this is a really enticing promise. The promise that not only are you getting a good deal on your education, potentially, that the school is so invested in you that they will go to any great length to make sure that you get a job. And so much as that financial claim is true or is not true, it's definitely material to student's understanding of the contract they're entering into. Right. And the contract, is there any problem with the contract itself? It seems like it's a really generous contract, right? Yes and no. I mean, this is, I mostly want to talk about like the actual allegations of fraud and wrong doing it.

Yeah, we can do that. Just so the audience understand. Pontificating on whether these are good or not, I think fundamentally they come down to whether the price is good or not. Okay. So for a lot of people, if you do actually think that you're likely to get a job with Lambda school. Like, imagine your student and you think you have roughly 80% odds of getting a job after going through Lambda school with a median salary of, let's say, about $85,000, right? Yeah. The sticker price you're looking at for your boot camp is above $20,000. Right. Now, Lambda School doesn't exist in a vacuum. There are many, many coding boot camps, many of them with audited performance reports that are public managed by Sur. And you're thinking,

should I really be paying $20,000 or $25,000 when I can be paying $15? Okay. That starts to become the calculus. And whether they're good or not obviously depends on the student and whether they're comfortable with the risk. Like, I don't want to make a value judgment fundamentally about... Well, let's just make sure the audience understand. So the ISA, that agreement, they didn't come up with the ISA. No, Purdue did.

Yeah, Purdue. And so the ISA sounds like a better deal. than being on the hook for college? You would agree. That's a much better deal than having a $200,000 loan with a college. I am no fan of college. Got it. And I think depending on your life circumstance, I think a lot more people should reconsider whether they just ought to go to college today than at any time in human history. Right. Like, I'm on board with that. And then paying. What about the paying? Like paying on the back end if you get a job in that category. Because if you get any job, I think it's a wonderful financial structure in many respects.

So we're going to agree on that. Then, so the issue is there was this issue of the bundling, which he said he would never do, the selling of it. No, it wasn't bundling. He was he was literally selling individual ISAs at the beginning at the outset. Very early on in Austin, Allred's running of Lambda School, he received a quiet offer from a couple hedge funds to purchase individual student ISAs, which he never disclosed to press or told anyone besides his investors. It leaked to me eventually. and this was just wholesale. I think they took half of their students basically said

and you own these contracts. They're not bundled in a securitization sense. The hedge fund, I don't believe, though, I would need the exact legal contract in order to prove this. I don't believe they got paid out differently as an average of group performance over time. I think each contract literally is just

whatever proceeds come from this student go to you. Right. And it's not like the student's going to get chased by the hedge fund because legally, they only have to pay if they get a job intact over 50K. This is gray area. I mean, it's unclear what enforcement mechanisms for defaulting on these contracts will be. There has been no major case that has been brought to press yet.

It's unclear whether these contracts can be collected as debt or not. This is something that Austin is lobbying for in government as well. That they can be collected as debt or they can't? He basically wants more authority to collect debt on these. Right now, if you don't pay. my understanding as an amateur student of the law is that non-payment of an ISA when you qualify to pay for it is effectively only breach of contract. Got it.

And you know how breach of contract disputes go. Like if you want the money, you need a lawyer. Right. And if what you're trying to collect is only on the order of, let's say, $20,000. It's not worth it. And your lawyer costs five. So that is taking even more risk. And let's just say, like, listen, neither of us are lawyers, but they're taking all.

the risk in this case. Well, it depends on me if they've sold some of... Right, if they sold them, then the hedge funds taking all that risk. Yes. So this is an issue where you feel Austin was dishonest about this, and he since deleted the tweets about the ISAs. Of course he did. That he wouldn't sell them.

But now he's up front that they are selling them, and that's actually part of the program. Yeah. I mean, of course, because I published, yes. Yeah. Okay. So that's one issue. when we get back, let's talk about the enrollment rates, or I'm sorry, the placement rates, which means of people who graduated who got a job and the discrepancy between placement rates when we get back on this week and service.

Blake Barnes, the head of product for LinkedIn Talent Solutions. Welcome to the pod. Thanks for having me. Thanks for that. What's your favorite question? See, for me, favor comes down to what's most functional, what's useful for hire. Okay. What do you think of the clever functional ones?

We find a lot of questions, for example, might be around your experience with technology. Like, how many years of machine learning experiments do you have? Right. Or, you know, tell us more about the languages you use, these sorts of things. So for some of our more technical roles, those are some of the ones that have been most effective or useful for a higher is to find the right candidates.

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It's a product that helps companies all over the world understand talent pools. And one of the things they can do is help recruiters work with hiring managers to understand what's really possible, right? You know, saying, hey, I want, you know, I'm looking to hire a product manager, you know, with 20 years of native development, you know, for $100,000 a year in San Francisco. And they're like, yeah, good luck with that. Yeah, good luck with that. And talent insights can help hiring managers and recruiters, you know, help them understand

what the available talent pools are out there. So basically you can give them a report, an analysis of, hey, if you need somebody in this field, here's what you can expect to pay for this number of years experience. Yeah, or how all these qualifications match together to kind of like, say, here's the possible pool of applicants. Find the right person for your business today with LinkedIn jobs. You pay what you want and you get the first 50 for free. The $5.0. The $50 bill. Just visit LinkedIn.com slash twist again.

LinkedIn.com. You got that in your URL already. Just add slash twist. TWIST and you get that $50 for your first job post. It's $50 for terms and conditions, of course, apply. Thanks, Blake, for coming on the pod. Thank you for having me. It's been a great fun.

Let's get back to this amazing episode. All right. So you recorded your interview with Austin. You asked him when you were writing this story for an interview. And I get the sense that he didn't know that you had the information, the internal information you had. Of course. He didn't. Yeah.

Okay. So like a. 60 minutes investigative reporter. You sprung this on him during the interview. Of course. And you're smiling. I think you like the idea of being an investigative reporter. It's quite fun.

It's quite fun. And so here we'll play a clip about you asking Austin about this. He is really good at giving the impression that he is like completely driven and motivated to do what is best and greatest for the world through these students. Coming away from it, I can't help but believe him in some respects, but also you can't help but completely disbelieve him in others. The language you have used with Twitter followers, I think is kind of adamant, right? Like, you say things like we never ever get paid up front for an ISA,

which encompasses a lot of behaviors that are not. That's totally correct. When we did sell ISAs, we would sell them either at the point where a student was hired or at graduation. Is that true? That's 100% true. Here I was sort of amazed that Austin so readily contradicted his previous statements about never having sold ISAs. Yeah, and so I guess the subtlety there is he was saying he never sold the ISAs until they were placed. No, he caveated himself. I mean, one, should you even believe any of his words here, whatever.

But even if you listen to what he says, he says we only sold them when they graduate or when they're placed. graduation is, you know, it's a nice event for the student, but it's nowhere near as important as placement. Got it. So let's talk about that. The placement rate for Lambda school is what? I have no idea. I assume it's much less than what they claim.

Okay. And they claim now what? Before your story after your story? Before the story, the public claim was 86%. Got it. After this story, they produced a report that purported to show that the placement rate, at least for their first half of 2019, leaving off all the data they don't want to talk about, is 70-something percent. Got it. Which is, you would admit, extraordinary, right?

No, it's within benchmark for similar bootcams. Most of them cheaper. Got it. If anything lower. So most bootcamps do what percent? 80 or above. Really? Yeah.

So that is shockingly high when comparing. to the placement rates for college, which we talked about, neither of us are necessary fans of in terms of the investment to getting a job. In those cases, it's 20 or 30%. I mean, I don't know. If you're averaging all fields, like are we counting like art sculpture? Yeah, everything, yeah. Like Western literature.

Yeah, exactly. I feel like there are a lot of majors where the expectation really isn't placement in an expensive field. But I'm not an expert on college dynamics, so I can't really comment. Like, in some senses, yeah, it's better. I mean, I talk to people about it. I would say the coding schools, you know, if the goal of school is to get a job, the coding schools outperform colleges. Right.

The coding school, as a product that you're buying as consumers, is much more single purpose. I think people go to college for a variety of reasons. Right. They can give a general education, babysitting for four years, whatever. Yeah, I mean, people who are really down on college. You know, myself included, really see a lot of the time spending college as waste. And I'm in agreement with you there. Right.

Though there, I have to make the point that there are very, very inexpensive colleges. Which is weird. Everybody is getting this $200,000 in debt, and there are colleges that cost $3,000, $4,000, $6,000, $9,000 a year. Yeah. I mean, the American economy is strange. Prestige signaling is a big issue in higher education. I don't have the answers. Yeah.

And it's becoming less. I mean, one of the great things about society now is that it's not about your, you know, it's about your credentials and your skills, not which, big school you went to anymore. I hope that is the case, but it's difficult for me to observe directly. Like, hopefully, but I mean, I see it every day in terms of hiring. If you had somebody who knew exactly how to code Swift or React or JavaScript or whatever you happen to be using in your sack and they never went to school, but they spent two years teaching themselves that and could code, they would get the job over somebody with a PhD in, you know, computer science from Stanford or Harvard. And ostensibly, this is the purpose of the company. I found it, really, a tool that helps

you evaluate objectively someone's actual coding performance. Oh, that was of your company? This was coderpad. Coderpad, which was your company, coderpad.com. You didn't go to YC. No, I did apply, though. You applied? How many times? Just once.

Just once, yeah. How was that experience? It was fun getting grilled. Yeah? They asked me straight up whether I thought I would make a billion dollars, and I was like, no, and then they were like, okay, I think we have our answer. Wow. So basically, if you're going to apply to Y Combinator,

If they ask you if you're going to make a billion-dollar company say yes, even if you don't believe it. Yeah. Yeah, be delusional. Yeah. Absolutely. Or lie. I just wasn't able to either one. To get there. All right. So now you-returning to the main story. You had the main story, yeah. Like, you asked me a question about placement rate. Yeah. I think initially, and then we kind of went off into a tangent about, like, is this better or worse than college. I mean, if juries out. But, like, yeah, I think probably the true placement rate of Lambda school is maybe around 50% of. I've graduated. But it's hard to be sure because they're the only ones that have the numbers. I say this because I have multiple sources, not just this memo that basically make similar claims, right? I have, for one, their former director of like student placement, effectively, who says, yeah, that's bullshit. Huh. I had a... Did you say that on the record, yeah?

She, Sabrina, on the record in the piece, yeah. She said... That was a real journey to get her on the record. Really? Tell us about that. Because so many of these stories are being criticized in Silicon Valley now. for having all anonymous sources. Oh, this was all very under.

I want to say also, by the way, I did take a little bit of offense to the way that you and Austin talked about my piece. Okay. This is not an opinion piece. Okay. All of these facts went through like seven editors, fact checkers and lawyers.

We had the story ready to go probably weeks before we published because we were going through so many rounds of legal, like, make sure we can cross every T here. I would think New York Magazine, since you're a stringer, they would want to make sure that it's doubly. They went the distance, and I was really happy that they did because I made the peace stronger.

Anyway, getting Sabrina on the record was very difficult because she was terminated from Lambda in very contentious manner. She had a number of complaints about basically racism at the company. And I think it all kind of came to her head. Her story is fascinating. It came to head when she was trying to push for effectively diversity and inclusion. training for the students as a reaction to how much intra-student harassment was going on during Lambda School over Slack. And this program was effectively stymied by management. And they tried to fire her eventually, I mean, dramatically during her firing as she tells it, and this is true

from the material she sent me, they attempted to fire her claiming that they had put her on a PIP before. But in the- Performance improvement plan. Yeah. Previously, she was was in a contentious meeting with management where it looked like they were about to put her on a pip, but she so thoroughly refuted most of the complaints about her supposed lack of performance that they never actually put her on the pip. And then when they fired her, she counted with, but I'm not on a pip, what are you talking about? And then they freaked out, but had preemptively already removed her from all company like Slack. And like they had planned to just terminate her right then.

And afterwards, she couldn't discuss. It was hard to get her on the record because they also forced her to sign an NDA with severance. Yeah, pretty standard in the industry. As she was five months pregnant, she couldn't help but want to take the money. So she broke her non-disclosure? Yes. For your story?

Yes. So that's a pretty big level of conviction. Has Lambda taken legal action against her? They're starting to threaten her, yes. Huh. And in your story, she says, I would say out of 71 students within the six months of them graduating was probably 50 to 60 percent placement rate, which is not too bad in my mind, but it's below the 80% you claim other schools have and below the 86% they themselves had reported at some point.

Now they're saying it's in the 70% range. Yeah, I hope it is. Which would be in the, which would be between these two numbers in fairness, because this is the six months of them graduating. And they keep working with the students. They say they do. Yeah. I mean, they have an incentive to. I mean, they really care about that.

They don't have an incentive if they think you're a lost cause. Let's put it that way. Explain that. Because it does seem to. me that if, and I'm interested in your opinion of this and in terms of you being offended by us, our discussion about it, I think it's a good thing to unpack because I think the the struggle I'm having is I'm kind of glad that this exists as an opportunity. Yeah.

Because as an opportunity, if they allow more people in, they have to lower, they'll be lowering the benchmark for who gets in, right? That's what they've done. Yeah. So if you're a coding school and you want to have a high placement rate, you only let in the top people and maybe not the people who need extra work or maybe you're taking more risk on. Yes. And so you would be excluding people. You would not be inclusionary. You might say this person doesn't have as much math in their background. They don't have this much work experience. So we're going to exclude those people. I agree. And so if you want to be inclusive, you lower your rate by definition because people might quit and people might not complete it or they might not have the prerequisite. So how do you think about that? This is one of the big complicated questions about Lambda school. And I have a lot of thoughts about it. I would say one of the things that struck me about almost all of the students I talked to, whether they felt good or bad about the school, was that they were in incredibly

dire economic straits before they started Lambda school. And many of them basically had to take on credit to attend, not to pay for the school, but to survive for nine months. Lambda school is a long boot camp, unusually long. Some are starting to get to be about that length, but the, when... Now that's six months was a standard, is that my right? It's starting to fluctuate, but when... So the first real boot camp was dev boot camp, effectively, and I think there was something at like nine to 12 weeks. So in the beginning, I think they may have lengthened the program eventually over time. Does that work nine to 12 weeks, or it just doesn't work? It works if. you picked your students well. Got it. So you train the cream. Not just that, right? Like,

they also worked with, like, Dev Boot Camp in its heyday, in its small class size phase, was probably one of the best educations you could get as a programmer or a novice programmer because not only was everyone highly motivated to get everything done, it was in person. So we get a lot of individual instructor time from very experienced teachers who had a theory of pedagogic. effectively. There's an anonymous quote from one of my sources that is interesting actually kind of on this tangent that I like to read. I wish they would let me use their name. They claim to be upending the traditional classroom but are recapitulating to the worst aspects of it in reference to Lambda school. And what the source means by this is like what is the shape

of Lambda's lectures now? The reason Lambda is so viral is not because of the ISAs, as you said the beginning. There are other boot camps that offer ISAs. Lambda is just the best capitalized one, and thus the one with the most marketing. The thing that really makes Lambda School, Lambda School, is that it is entirely remote only. So the experience of students in Lambda School is two hours of kind of just being lectured at, and then the rest of their day, just freewheeling effectively, which is very different. I think in a lot of respects, what early boot camps are trying to do with their pedagogy. And, you know, this is the, this is the, the, of scale effectively, right? Like, they, their attraction to VCs is that they could potentially

reach, like, the entire market without scaling physical location costs. Got it. It's very interesting from the capitalization perspective. When we get back from this quick break, I want to know which one is the better model, doing it remote and allowing people to have all that flexibility or doing it in person and having that up-close personal touch where you're over the shoulder and maybe it could sit next to the person and answer that question when we get back on the speaking service. You need to find the right software for the job, but you've got so many other things on your plate that you don't have the time. Well, you can cut to the chase with Captera.

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Former. Former. You may know the new CEO. I may? Amanda Richardson, I believe this spoke at a couple of your conferences. Yeah, yeah, yeah. She says hello. Hello, yeah.

What is Coderpad? Coderpad is a tool for interviewing programmers remotely. Got it. So you're a fan of the remote work, obviously, or remote is a good thing? It's necessary, yeah. Which to augment an experience I was lacking previously. And so you're not competitive, just to be clear, with Lambda School in any. way.

No, in fact, they're one of our customers. That's amazing. So it's not like you're having ax to grind here that you're competitive with them. No, not at all. Yeah, just door clear. So when we went to commercial break, you were talking about the modalities of education remote versus in person. Yeah. Which works better for learning.

Obviously, in person works better. It does. The question is whether it's affordable. Got it. Yeah. Absolutely. without a shadow of a doubt. In-person instruction is much more powerful.

The instructor can react to individual students in a way that instructors in these remote lectures really can't. Got it. They can look them in the eye. They can see the expression. Yeah. Questions are much more fluid. You've been on large video conferences. It's disastrous. I mean, yeah. Usually I'm the host, so it's not as disastrous for me, but it is mind-numbingly boring to be sitting there with a headset and be one of a hundred people.

It is difficult. And you can't do very simple things like, I have a syntax error. help. The instructor can look over your shoulder and just say something quickly. Like that feedback loop is really hard for students in Lambda school to get. I mean, I talked to a student who said in his entire tenure at Lambda School, he was never able to successfully get a one-on-one session with an instructor, despite requesting it numerous times. Yeah. So if you're into remote work or you're into doing it remote, it might be a benefit. And if you can't get to a physical location like San Francisco, if you were in Idaho, or in Waterloo, or...

There are boot camps in Idaho. I'm sure. But, I mean, if you weren't able to travel for some reason, the expense of it, the time, you have kids, a family, whatever it is, it's a godsend, but it is not as effective. It's a tradeoff, right? Yeah, it's a tradeoff. And like all tradeoffs, we have to leave it to adults to choose, which is best. I mean, this question that we got on to is part of a larger question about, like, you know,

isn't it such a great financial device? aren't they being inclusive by having, you know, a motive to greatly expand the pie and just take on as many eyesize as they can? And as part of answering that, like, I'm trying to get at that like, kind of, right? Like, the students do have to pay for a lot of their own expenses during a very long tenure at school. Most students I saw who had problems with the school really struggled, especially with, like, medical conditions and the like, that it's not free. Like all of these have costs. How is it not free? It's not free in the sense that you pay opportunity costs.

Like your rent during your time. Like these are people who used to work. Oh, you're saying people are quitting their jobs to then do this. Absolutely. They're quitting their jobs in advance of Lambda school. I talked to a guy who was making, I don't know, 60 to 70K as a bartender. You know, he had worked his way up. And then, you know, on the promise of being able to be made into like, you know, a UX designer making much more,

he quit his job, foregoing a seniority at the bus. bar and now is just strung out because the ux program is like the biggest disaster at lambda's ever tried to like make into a curriculum interesting because if you had a 60 to 70 000 a year job unless you were in a major city a ux position would not pay that much yeah so that may have been just a mistake and taking it they sell a dream you know like maybe wanted to move you know like i think fundamentally he was craving to be someone who was valued for being creative right as opposed to just being like a bartender. Yeah.

I mean, it's, that's, I could see somebody who's in a dead end job. Being a bartender is a dead end job. Like, it's very few places to move off. So he's looking for a way out. But like, in retrospect, like if you asked him like, you know, like, should, like, if you could go back in time and undo this, like, the answer would be like, absolutely, of course. Like, he four, he went, he four went like nine months of income. Oh, here he is.

Bethany Serber, a student spokesman for the group enrolled in Lambda's U. program, that's user interface experience. The Verge reporting goes into additional depth, too, if you're interested. Objected to, yes, the standard disorganized, completely lacking curriculum delivered to us by Lambda School. Serber and her group are seeking to negotiate the cancellation of their ISAs. So they felt that it wasn't very well done and they want their ISAs canceled. Why do they need to have their ISAs canceled anyway if they're not?

A lot of them want to go to a different boot camp and try to get a job. Oh, I see. So if they go to another boot camp. This is five-year optionality on their future income, maintained forever. maintained for five years. So what they're concerned about is they didn't feel the program was good. And if they do happen to get a UX... It was wholly through their own labor afterwards.

After what. And this is a pattern I see with a lot of students that do manage to scratch it out after Lambda school. They say things like, basically I had to go through the entire Udeme catalog and teach myself all the stuff that Lambda school failed to teach me and like managed to get a job anyway. And Lambda, you could say, like, teaches them some aspect of motivation. Certainly I think is valuable, but is it like $17,000 to $30,000? valuable is up for these students to decide. This is actually a pretty mild quote from the letter. Like, the letter is very damning, like, that Lambda School basically failed to deliver totally

basic principles. Do they still have that U.X program? They're shicanning it, but they won't say it. Oh, okay. It's like they shaked in Europe without really saying it. So they, what is your thought? They went too fast and maybe got ahead of their skis? Yeah, I mean, in their quest for scale, they realized pretty early on that they had to do more than just teach people like web dev stuff if they wanted to make it to $100 billion. Right. So like, what are some other tracks we can maybe teach? Yeah.

The problem is there's no real established pedagogy of UX. Like, UX is a fairly nascent industry. So we don't even, like, the notion. What do you teach, envision or like? I think they wish they were taught that. I mean, like, the students really weren't even taught how to use design tools. Huh. They were taught mostly like how to conduct user research as far as I could tell.

Valuable, but only one aspect of it. Exactly. And also the problem is like UX is a lot of different things at a lot of different companies. You know, like the field hasn't really settled into even what the job responsibilities are. And so I think it's a very difficult program to educate people for. The intellectual exercise that I went through in thinking about this was if they opened it up to everybody in the world. Yeah. And anybody could come. Okay. Or, you know, a million people, let's say. And none of them were on the hook for it. and they just had to make the decision if they wanted to dedicate their time to it or not, which is a cost, but I would say probably a minor cost, like nine months of your life, like kids spend, I don't know. It's not minor for the kinds of people who would be attracted precisely to the value proposition you're describing. These are people living hand to mouth. Yeah, I mean, I lived hand to mouth in my life and I went to school full time and I worked full time.

I mean, you're very talented person and I'm glad you could do that. Actually wasn't. I was considered the least talented. I'm merely reporting. 71-3-year-a-a-verage. What students told me is they experienced a tremendous amount of anxiety around this. The foregoing of nine months of income as a long bet on this. The only reason they could even contemplate it is because the school is free up front. There's a huge class of people that would not contemplate making this decision unless it was free up front.

But don't a large number of people work and go to school and have to pay for it up front? Like I did. Like in the past? Yeah. I mean, that sounds nice, but I don't think it would work with you at Lambda School. No. Like these students are, I mean, I would have loved to have the op.

I would love afford to... Students report spending 10 hour days on this stuff. Like, it's possible, but it's really... I worked 10 hours a day and then I did school for 7, 8, 9 hours. I admire your grit. Yeah. I mean, it sounds crazy, but yeah. So some people, it was too much for them to handle

doing 40 hours a week of this or 50 hours a week of this, plus working. Most of them just quit upfront because Lambda School tells you that's what you ought to do, really. Yeah. Also. Oh, to be full time. Yeah.

Like, this is conveyed to the, them as a full-time job effectively. So the point I'm trying to make is the financial structure creates the market. Like before there was a zero-cost enrollment option, a lot of people wouldn't contemplate making this jump. The thing is, that group of people that would contemplate making the jump is not randomly distributed throughout the population. It is our population's most vulnerable, the people most impacted by not making rent, missing one paycheck. And this is, I think, both the danger and beauty of Lambda schools that it offers a model to address this population, but for a lot of them, it can come as a significant personal life set that.

Wouldn't the easiest solution be to just make it make a three-day-a-week program for folks? They do have a part-time program. Oh, they do? Yeah, I don't know how effective it is. I talked to no one from that. I couldn't find anyone. I would think that that would be super effective because you could work like I did. I was fixing laser printers and I was a bus boy and a waiter.

You could work, in my case, as a waiter four days a week. and then three days a week or two or three days a week do this school. I think it extends their costs. But yeah, I think it's a small program within their overall program. I think they would struggle to make it work. It would seem like that would work really well. That would be like a great solution. I'll let Austin know.

Trust me, he's listening right now. I mean, he's not listening literally right now, but he'll be listening to this podcast when it comes out. I mean, criticism, one of the things I love about criticism, I think, And I think in fairness, the role of investigative journalism when it's doing its job is that it does make society better. It does make the individual perform better. So. Lemniscoe almost certainly will come out of this better. And will continue to clean up its act in wake of this reporting.

Yeah. And you had internal documents from an investor or from some exercise they did, some PowerPoint as well. Yes. And what did those describe? The memo as described was kind of a pitch for investment in Lambda School and kind of talked about... Pitching deck, yeah. Yeah, it wasn't a PowerPoint. I mean, it was just like an essay effectively.

And it talked about their costs and placement and opportunity and so on. It had a really amusing name. What was it called? Human capital. The last unoptimized acid class. Human capital, the last... Are you like an anarchist, like anti-capitalist? I'm curious.

am um are you like i'm very wealthy off of the back of modern capitalism so like if i am only in the limited extent that it doesn't really affect my actions very much got it so you made enough money from your company that you can't possibly be anti-capital i don't know i mean what is anti-capitalist i have some critiques of capitalism certainly there are obviously some pros to capitalism i don't know where we are because i'm only i would vote for bernie sanders okay uh but you live in America. That's true. Right. Correct. So you choose to be here in a capitalist society, but you want to turn this capital society into a socialist society? I'm curious. Are we doing this? You want to do this? Yeah. Why not? I find you fascinating. I'm just curious if I would, the reason I'm asking about your

politics is because when I look at free markets and I look at these students, I have a less patriarchal view of them and their ability to make decisions for themselves than I think you do. You seem very concerned to protect people coming to a free program. I'm trying to. I, and I, prevent these students from being defrauded. Right. I think they should all be free to make this choice, but they have been lied to. Okay. This is inadmissible.

Okay. So if there, let's assume that they know the ISAs could be sold or will be sold. Yeah. And they were aware of the true placement rates. Okay. And if they know the placement rate is somewhere between the person who no longer works there, who is disgruntled, who feels it's 50 to 60. No, she is disgruntled.

I have other sources we can talk about. But, well, even if she's right, It's 50 to 60. Sure. And then the internal number they claim is 75 to 86. So between those two numbers, if we just assume each person is painting their best picture and you average the two, you're averaging 50 and 86 you're at 65 or 70. Okay.

Is that seem reasonable? It's a number. I don't think it really matters much what my number is, but I mean. Well, I mean, there are other. What I'm saying is these existing competition. Lambda School is just one option among many options that are very similar to it. Got it. I'm not trying to say that all boot camps are bad, and this option should be taken off the table.

I think if the most capitalist argument I can make for this is that they should be allowed to compete with fair rules to deliver the best results. Okay, I like it. What are the rules? The rules are you can't lie at minimum. I feel like this is a very simple point that almost no one who shouted at me on the internet really understood. Well, no, yeah, I mean, I would be 100% in great with you. and it is actionable if you were to lie when... Which he clearly has.

I guess... No, no, no. He clearly has. I think his explanation was, you know, they may have had an 86%. About... They've lied about so many things. Okay, but I mean, just so we unpack it perfectly, I think, because he's not here to defend himself, and maybe I just have to do round three with the two of being the same room.

But if they're at 86, if they had 86 at some point and they said that was the number then, and the number now is 60 or 70? Right. Okay. Okay. So I have another source for instance who, how do I put this without? For whatever reason, they had access to Lambda's internal hiring numbers and was shocked to see them at around 50 percent, to which when this concern was voiced to Lambda, was met with shock. The internal number of when you say hiring, the placement rate of the students, yes. The placement rate of the unit's right. Post graduation within six months. Got it. And so they keep working with the students after that, right?

They say that they do. Yeah. That would be, that would make sense to them. They have the incentive to get the number of. My experience with students is that they do not. All right. So when we get back from this final break, the thing I really want to talk about is if they did go and allow it anybody to take it on, part time or full time, should that exist in the world and would that be better for society? We get back on the student service. When I'm evaluating startups, I always ask, are you recording your NPR? score. What is net promoter score? It's very simple. This is when you get a little email after you've purchased something and it says, how likely are you to recommend this product to a friend? One through 10. The people who score 9 and 10, they're very enthusiastic about your product, aren't they? That's why they pick 9 to 10. People who do 6 and under, they're like detractors. They don't want to promote your product. They might even say something bad about it. And then there's people in the between who are

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Thanks for support in the pod. All right, Vincent Wu was on the program, socialist and investigative journalist. He's voting for Bernie Sanders. for Bloomberg. We both lost and Biden is going to stumble his way into the presidency. We split the difference. We split the difference. We went with the Biden who is clearly doesn't know where he

is sometimes. I mean it's sad but it's I mean I think he might not be all there. I mean he didn't seem crisp. I really can't do this line. He did not seem crisp in that last debate. I mean he feels like he's not fully present. I'm a little

concerned. I don't want to shit talk our likely future presidential. Exactly. So if the program, and so if the program existed, you could go full or part-time, same economics, same ISA, and all the graduation rates were published and audited. Should that exist in the world? Is that a good thing for society in the world? It effectively exists. I mean, that ease Lambda School. I mean, what is the difference that you're proposing, I guess? Well, the part-time thing. The thing I'm proposing is that any. The thing I'm proposing is that any. Anybody can go take it, they don't have to be accepted. Taking out the acceptance thing, so this theoretical, a million people can log into the slack and start doing it. Well, in order to do that, I mean, their economics would have to be so different. Like, I mean, like, they would need an incredible amount of additional instruction.

Okay, got it. Like, the costs would make this infeasible, but like, let's say we live in the magical world where... Yeah, like, let's say people actually start paying off their ISAs and that the money works and that they're able to pay their teachers. that business model worked like was in the black then obviously it would be a good idea

the question as to whether it would be good or not is effectively whether the business would be viable or not let's talk about that how many if there if it's a how many do you know what the student to teacher ratio is and what is 40 something I think 40 students to one teacher yeah and so

a teacher probably gets paid 100 150 what do they get paid I don't know they have to be a developer right they would have to have to be able to work as a developer if they're teaching the development tools. Start cutting a few corners here and there and me. Well, let's assume that they would. Yeah, let's say you pay them 150K. Yeah, there has to be 150K developer. They have 40 students and the program last nine months.

40 students times an average of 25K is a million dollars. Let's say half of them pay it back. That's 500,000. Of the 500,000, 30%. Well, your placement rate would plummet is the thing. Well, that's why I pick 50, not like 60 or 70. Oh, it would be way lower. If you literally took anyone. Okay, let's pick. Well, okay. You're like, 10% or 5, you know, depending on what you literally mean, like, the entire population was enrolled. Like, what do you?

I guess they had to play. I mean, I don't know what the basic test would be, but let's say like some basic test. You have competency in using the online tools, ability to speak the language of the professor and, yeah, some basic ability to. Let's say you 10x to student population, which they plan to do anyway.

Yeah, so the 10x of student population, you have a graduation rate of 20%. 20 times 25 is 500,000. If you place half of them, that's 250, you would essentially break even. Yeah, maybe. I mean, there's a lot of additional administrative costs. There's a cost of acquiring the student, for instance.

Yeah, but if you opened it up, you wouldn't have to worry about the acquiring cost, right? Perhaps, yeah. And look, I mean, effectively this is their plan. Is it really? I mean, their plan is to scale the school to be, like, a multi-billion-dollar company, right? Like, the only way they get there is by dramatically ramping enrollment. Yeah, to be a billion-dollar company that have to have a hundred, million in revenue.

Yeah. 100 million in revenue would be... It's possible, but it'd be a very big school. Yeah. Yeah, like a very big school. And like, I think it... Like, is... I think some aspect of your question is reducible to the question, like, is education good?

I mean, and, like, I have to say, yes. Like, of course. Like, people should have the opportunity to be educated. Like, so long... Well, I'm just also this format of education and the ISAs and the combination of these things. Because I think that's what's truly unique about what's going to on here, and that could be revolutionary in the world. And maybe that the good side of this is maybe we should be paying attention to putting aside the things you uncovered, assuming they're all true,

which I'll just give you the benefit of the doubt. And New York Magazine, the benefit of the doubt. If it is all true, what can we learn from the ISA system and then backloading it in relation to the education system? I tried to make this point earlier. And I think like the main thing about ISA is that people need to understand about how it's changing the coding bootcamp and potentially the education world in general, is that it changes the demographics of your students dramatically. It is a very strong incentive for a particular subset of the population, e.g., the population that cannot afford roughly $15,000, you know, and that's a big chunk of the population. Oh, yeah, it's got to be half. Right. And, like, these people are in many ways fundamentally different

from the people who can afford $15,000, the people who were considering, oh, maybe I should go to college, you know. How are they different? Like, they're poorer. Yeah. They're much poorer. And they have much less in the way of opportunity, you know. So, like, variance in populations that have very little breathing room is much more deadly. Variants, when you have, like, I don't know, you have, like, 20 grand in the bank, you know, you can eat it, you know.

Like, so I think this is fundamentally what's changed, right? This is a group of people who have a strong incentive to join because no one else will take them for education, but also are in some ways. the least prepared because their prior schooling hasn't really prepared them. Public school system sucks. They may not even know how to learn because they didn't learn how to learn in the public school system because it was babysitting. So you can open up the school to all of these people and I think that that is a good thing like fundamentally. It's just a very difficult thing. And you have to do it carefully because when you don't do it carefully, you have a constant incentive to cheat to make it look like it's working. But this is a hard problem. This is the

problem of all education effectively is that it's very hard to scale education we don't really know how to do it lots of teachers have different theories of pedagogy no one has really settled the question of how best ought students to learn in large numbers like we're just not there you have an idea no this is a mystery yeah you know like this is one of the hardest things and like from what i've seen in lambda school they don't really have much in the way of pedagogy like they're in chaos like they're just randomly throwing resources at students and hoping it works out yeah and so nobody has an idea, wouldn't it be nice if there were a bunch of venture capitals who were willing to take

the risk and have some crazy entrepreneurs dedicate their life to it? Yeah, I think so. I mean, in some ways, yeah, I agree. I do think... I mean, that's what's occurring here. Yeah, that some aspect of this story is good. Like, zooming out from it, I like that people took a risk on alternative education.

I like that they're trying to widen the pie. I think these are good things. I think your behavior on that road is the important thing. That matters. And that Like the nobility of your mission matters, but the nobility of your behavior arguably matters, at least to me, even more. You're a principal guy. Somewhat?

Somewhat. Seems very high. You seem very high principle to me. I mean, we've all done terrible things. We have? Well, let's put it this way. I know why you are banned from Demo Day. Why was I banned from Demo Day?

I'm not allowed to say. You're not allowed to say? Okay. Really? Yeah. The reason I was told I was banned from Demanday is because I was low-balling the offers. That's not it. Really?

Yeah. That's the reason I was told. I think they give you a nice answer. Really? Okay. Well, if somebody knows, tell me, Jason and Callagana, so I'm interested to hear. We've all done terrible things, you know. Yeah.

Well, I guess I've got to end the show because I've got to find out why I got to have for Dono Day. So what else do you think they need to do now? And what do you think of Austin as an individual? I mean, I think I've made my opinion of Austin pretty clear in the interview. He's a liar. I mean, I think. We also said you thought he wanted to be, I think, in your interview, famous.

Yeah, I mean, he's a narcissist, effectively, right? like and you know he's motivated to do a good thing and I think when people in that position who think highly of themselves feel that way they feel like the minor offenses they commit on that road are just minor offenses that they are justifications for where they're going and that when they get where they're going everything will be good and it won't have mattered what they did on the way to get there like the ends will have justified the means effectively and in some sense he is right like if he does manage to get where he's going and lambda school does does become a very good at-scale school. In some sense, he will be right that his sins will be forgiven.

And I'm okay with that. You know, like I see reporting like this as kind of moving the needle on that, like that this forces them to clean up their act. I do think actually that that is the best part of, that's when journalism's at its best is when it actually acts as a safeguard against, you know, people behaving badly or the truth, you know. There was a lot of, psychic potential saved up for this piece. Like the moment I put feelers out for like, hey, I want to hear about Lambda school, I found students that had written like 50 page letters to Lambda school demanding the cancellation of their ISA, meticulously documented with screenshots. Why wouldn't they just cancel them? I mean, if it's all on the come anyway, like, I don't know why

they don't. I actually, I mean, that's what I would hear your confusion, actually. If somebody was truly upset, I mean, just people have money back guarantees. This story, this one, like the highlighted text here would not have made it to press if Austin had just said, okay, I'll cancel all of them sign this nondisclosure agreement. That would have been very easy for him to do, and it would have saved him a lot of heartache, and yet he resisted. I don't know why. It would have been so easy to buy off these students because, like, you're not even buying anything. It doesn't involve a capital transfer in any way. You already sunk the cost on them. Like, they're probably not going to repay the ISA just out of spite, you know, so like, why even bother making a point of it? I don't understand.

I think fundamentally, like, the easy and dumb answer is he's somewhat of a prideful man, as are we all, you know? So I can kind of get why you would get stuck. I mean, especially if you told yourself in the morning every day, like, I am the mission, the mission is good, the company is doing good. Then like when a bunch of students all demand a refund on Moss, like an entire cohort, the cognitive dissonance introduced by that event, I think, causes him to fight. And this is something I've seen a lot of screenshots in private conversations between Austin and students. He just tells lack. Yeah. Yeah. Yeah. He tells him that they're wrong.

Like, when students have concerns, they're usually shut down by staff. Like that... I've seen young entrepreneurs with that. I mean, one of the things that makes you a great entrepreneur sometimes is not... What can make a great entrepreneur is not bending in your vision. It can also be your blind spot. So people say, like, you shouldn't do surge pricing, right? Like, that was one of the things that they told Uber in the early days.

It shouldn't be surge pricing. Travis was like, yeah, no, there needs to be surge pricing because if not, we're not going to have drivers on the road when it rains. And so you're wrong. And he told the customers they were wrong. And you know what? It was hard for people to hear, but in that case, he was right. I mean, surge pricing gets people to drive on Friday and Saturday nights, and they get them

to drive and pick people up in the boroughs in Brooklyn. I'm not really sure what your point is. Obviously, some people can be right or wrong and they can be pigheaded about it. Like, Travis is famously wrong about all sorts of stuff. Right. famously right about other things yeah totally I mean how he's rich so obviously paid off but like well I made I made a company that changed the world yeah I was just trying to give you a profile I mean your question was like what do I think of Austin all that that was kind of a summary of like

yeah yeah my assessment of him just as like a personality yeah you know and I was actually trying to reinforce that I think you're right that like I do see it in entrepreneurs that they they do have a blind spot sometimes where they're so used to their contrarian view being what makes them actually create opportunity in the world. Like, I have a contrary review. They should be a school. It should be remote. People should play ISAs.

A lot of these people are just not very well socialized. You know, like, that's the thing about Austin and Travis. Like, right? Like, they, their friend circles were either sick of fans or their family. You know, like, they don't. Oh, that is a real thing. Yeah. You're right about that.

Sometimes people do not give people candid feedback. Right. I mean, like, I just don't think that, you know, never mind. That's too cruel. I'm not going to say it. Sorry. No, we don't have to get cruel, pick any individual people out. I mean, it is definitely, as you get more powerful and rich and influential, people do not give you candid feedback. Yeah, and I think it could be harder to see that you're not well socialized, you know. Like, Austin is not a very empathetic person. You know, and like, I think part of that is environment and training, you know. Yeah, I mean, and also some people are, I'm not saying this in his case, but, I mean, they literally do Saturday Night Live skits about Zuckerberg being. a robot. A robot. Yeah. Which is kind of like them saying he's got Asperger's, which is kind of cruel when you think about it.

I mean, he just accused Biden of being senile. Well, I was saying senile just didn't seem like he's as sharp. Okay. Yeah, I mean, but senile is a description of old people. I mean, he's very old. Totally. Yeah. I mean, they had the, I mean, mental acuity for the president is a valid discussion. I guess. So my larger point here is only that like these, like, everyone already knows that like startups tend to be reflections of their founders. Oh, that's 100%.

And if you look at the personality of Austin, all right, you see Lamb's School pretty clearly. I just want to say, I really enjoyed our conversation. I'm glad you did. Yeah. Will you apologize for calling me an idiot three times on your show? Did I call you an idiot three times? Yes.

Well. You must admit that at least I'm clearly not an idiot. No, you're smart. Okay. You're super smart. So please. Yes, I'm sorry, I called you an idiot. Thank you.

I really appreciate that. I do think that it's idiotic. I'm not going to say you're an idiot. I'll say it's idiotic to the, to think that or it's idiotic to think you shouldn't exist in the world but you think it should so I think it's kind of a misunderstanding I thought your position ways you just think they shouldn't exist in the world a lot of people read what they thought they would hear when they read my piece podcast better than my piece is very factual I made a lot of very factual claims about fraud

and then people just accuse me of shilling for higher education I don't understand oh I never even why would they think you're shilling for higher education because people are crazy yeah did you I mean, do you even mention that higher education is better than this? There's no mention of college in here. Yeah, as I say, I don't remember that. I read the story. I don't remember the actual mention of that. People on Twitter are just people on Twitter.

You know, like, that's just how culture is. All right. Well, with that, I'll thank you for being on the pop. What's the next investigative piece? You got another one coming up? I do local political corruption mostly, so you'll see. This town is corrupt, huh? I agree.

It's unbelievable. I mean, it's very believable. It's just hard to believe in 2020. a city like this that's so modern would have corruption, but I think a lot of intelligent people are not involved in the local political system. So you have all these people in tech who are not involved in the local politics. I agree that tech people are very insular, yes. I mean, they really need to get involved in this political process.

The guy Ed Chan who was, is that the name Edward Ed Chan? I don't know what you're talking about. Who is the former man? I mean, Ed Lee. Oh, Ed Lee. Sorry. Ed Lee, he had, I'm thinking of the other guy who was involved in this. There was another guy who was involved in a call Fishboy or something.

Shrimp Boy Chow. That's it. I was juxtapositioning the names. He was some criminal gangster and they were, he was selling access to him. Are you asking me to recount the Leland Yee scandal story for you? Yeah, briefly. But Leroy Chow was a gangster who was wrapped up in the state senator Leland Yee investigation. Leland Yee was busted for attempting to facilitate the purchase of, you know, things like rocket launchers to an undercover FBI.

age and you know some elements of Chinatown were drawn up into this investigation including shrimp boy chow shrimp boy chow that's it and some though i don't think charges were pressed on this like some people who were fundraisers potentially for ed lee so the jury's a bit out on like whether lee was involved personally i i personally don't think he was and sound like he was a pawn like they were selling access to him ed lee was a well-meaning bureaucrat and he was good at his job he really didn't have that much in the way of political aspiration like he was kind of handed the job and now he's dead, so I won't speak ill of him. Yeah, ill of the dead, yeah.

Yeah. No, I remember reading the story in the Chronicle, I think it was, or something, where they were the shrimp boy. It was just amazing somebody has that name. He's very short. Oh, really? Yes, his mom nicknamed him, shrimp boy. So he was supposedly selling access or getting people meetings for like $10,000 in cash.

As a fixer. Yeah. And Ed Lee didn't know about it. Yeah, most people don't know about it. Isn't that incredible? No one knew about it until the FBI told everybody. Yeah. Except for the people who were doing it.

It's not... So the thing about criminal conspiracies is there are vastly more of them in the world than anyone suspects because the vast majority of them are simply financial frauds that go undetected. There are so many and they're so easy to do. Yeah. And like many, many people are tempted to do it, sometimes to cover a hole, eventually to make a profit once they realize they can get away with it. You only really hear about the most egregious cases. Enron, Theranos, you know, the like, only when it becomes so bad that journalists get interested,

do you find out about those cases? It's got to get pretty big. Yeah, most local DA's offices, for instances, do not employ a forensic accountant. Like, prosecution of white-collar financial fraud usually falls to the state or the feds. And their appetite for these cases, like, the fraud needs to be in the millions and millions of dollars before they can even get interested. So if somebody's skimming in some little bit every year, nobody even knows. You can be skimminging like low, low.

millions of dollars in all sorts of place, both in government and private industry forever and never be caught. Wow. And that is normal. Like, it's unbelievable. Well, it's a testament to the strength of the economy that life continues nonetheless. But like, yeah. I guess I shouldn't be shocked. It's very believable. I mean, like, look. No, I just, you know, like, I obsess over like, should I expense this or that? What's the tax rule on like, let me put it this way. Expensing this dinner and like, how many people came to do it? My wife join us is my wife, like, when I go on vacation, with my wife if I'm doing business. Small steak stuff, right?

I obsess about it. You don't have a totally fake company that claims to have revenue or not. Like, let's put it this way. If Trump had not become president, do you think anyone would really be that aware of the depth of his financial crimes? I mean, it's got to be extraordinary. Like, they're in the hundreds of millions of dollars. I mean, this Deutsche Bank stuff or whatever these loans are.

Like, when this comes out, oh, my God. Yeah, but like, probably round trip. It took him to become president to get the spotlight. Because it's very hard, right? Like you're playing cat and mouse. Right. And you try to have stiff punishments, but people have such a widespread incentive to commit crime that, like, white collar is just everywhere. And you have a lot of plausible deniability to.

It's tough to build the case. It's not just nabbing someone for selling a violent drugs. It's like, you have to, like, as a state agey attorney, like, you're going to put in, like, a year of legwork on one case in order to prove to the level of confidence necessary to know that you won't lose in front of a jury. the case that you bring. Like, it's very hard. And I think this dichotomy means that just a lot of frauds go and detect it. So, that I don't know why I got on this topic. No, it's, I'm, listen, I mean, I told you when we were trading emails, I found you're fascinating because I love investigative journalism. Obviously, I spent a lot of time in journalism. What do you think of this DA? This like, Chessa remains to be seen. Let's see. Some interesting things, some things that make people a little squeamish, but.

Like his parents were, are in jail for murdering. care about his biography. I mean, I think some people have objected to, he's removed some of the lawyers working like gang beat, but I think he is potentially going to do some interesting work with white collar crime prosecution, which I think is exciting. Like, you know, this is one of the big missed areas in local DA's offices is actually being able to prosecute white collar crime. Right. Or higher levels of rings effectively. So you don't stop street crime by like prosecuting like car burglars, you know, like this is a. fencing operation. There's the economics of it. You need to be able to roll up the whole chain.

Yeah, that was my understanding is when they made this law that you can't prosecute people for petty crime and the car break-ins, that you had so many car break-ins that the gangs were actually, it was 80-90 percent gangs, and they actually were like, oh, we can just break into cars systematically and pawn the stuff on Craigslist or whatever, eBay. And they kind of made it into a... What's that? It goes overseas. Is that what it is? They just pack it in. to a container and ship it somewhere. Wow. Just steal 100 bicycles, put them in a container and go to

I think bicycles go to L.A. I don't know, but like electronics purses, that kind of thing. They sell them in Vietnam, China, that sort of thing. Wow. That is crazy. Wow. It's not crazy. This is a global economy. Like, we buy the iPads from China and they're stolen

and they go back because that's so surprising. It's surprising in the scale, I guess, to me, of it all. Every aspect of the modern economy is insanely global and complicated at this point. Right. Like the delicacy of the supply chain is sort of awe-inspiring slash terrifying. Yeah. So, yeah, like the idea that crime would be, like, especially crime of economics would be international at this point.

Well, I was just thinking of this. I was on an island at some point. It might have been Australia or something. No, it wasn't Australia somewhere. And they served us Fiji water. And I just had this moment of like, what's wrong with the water here? Also, is Fiji water real? I never really...

I think it really is from Fiji. It's kind of crazy, right? I'm just like, you literally shipped this bottle of water from Fiji on some boat, and you burned a bunch of fossil fuel to bring it here. It's pretty wild. And it must have hit like two or three other places before it made its way to Jamaica or something, wherever I was. I blame the existence of marketing.

You know, grocery stores used to be the way you would buy things is you would go to the store and you would tell the grocer what you wanted, ingredients-wise, and they would hand you a bunch of like brown paper packages. Yes. Completely unbranded. Brandless. But when we realized that we could save money on grocery stores by making them self-serve, there's an explosion of consumer branding and choice because now they realize the problem

was no longer convincing the grocery that their ingredients was good. It was convincing a bunch of lay people on mass. So interesting. So like now we have a situation where you go to the grocery store. Do you read that in a book somewhere or something? I never actually knew that history. It's a pretty amazing. This has been written about, I think I first became aware of this.

idea from the podcast The Anthropocene Reviewed, which you may enjoy. It's wonderful podcast by the author John Green. I love a good podcast. Totally. You listen to Prit Bahars. No. Preyth Bahars. Stay tuned. What is that? He was the DA in the Southern District of New York. Oh. That is interesting. Trump fired him like in the first week. He wanted him. Trump kept calling him to make a pledge of like loyalty. You know, Trump has a loyalty pledge. And so now he has a podcast? And now he's got a podcast where he talks about Trump and everything else. But he has one on Mondays that's paid. Cafe.com is called Cafe Insider.

He does it with Ann Milgram, who is the DA from New Jersey. And him talk about legal issues. And, you know, they'll go an hour into an issue. And you're like, wow, I never really get to go on the step. Like, we went an hour into this investigative story. And, like, where do you ever get to hear something like that? Well, on podcasts all the time. And podcasts all the time, which is why podcasts are surging.

It's kind of cool, yeah. Because, you know, an article, people don't, people like, oh, too long, didn't read. and nobody's running long from anymore. And the fact that you have a story that was actually fact check is like one out of 10,000 pieces of content. They cut me down from like 4,000 words. Yeah, all right. Listen, you're a great guest.

I love to have you on again. Maybe on the news roundtable. Okay, we'll see everybody soon on this week's songs. Bye bye. Goodbye. Bye.