Building a Life-Changing Business with Austen Allred of Lambda School

Episode #046

Austen Allred (@austenallred) was in debt after watching his company implode. Learn how he used his entrepreneurial experience to turn things around, and then went on to create Lambda School — a successful business that changes people's lives for the better. He dives into the details behind how to align your business' success with your customers' happiness, how to decide whether or not to raise money, the future of education, and the lessons he's learned from Charlie Munger and Jeff Bezos.

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    Question: How does Lambda School approach students who already make over 50K but are looking to switch careers?

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      Austen here. We look at it just the same! You still don’t pay unless you’re making $50k+ in the career you studied for. So in this instance you would only pay after you’re a software engineer.

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    Just finished this podcast. Great stuff, and thank you for sharing.

    I'm really curious how Lambda collects "retroactive tuition" once a graduate is hired. What percentage of their salary, in what salary ranges, for how long?

    I assume this is sewn up contractually when a student enrolls. Can you share details about this, @austenallred ?

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      17% of salary for two years, only if a student is making $50k+, with a cap at $30k total.

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    Hands down one of my favorite interviews on IndieHackers! Please tell me you named the school after the Nerds movie fraternity house, Lambda, Lambda, Lambda??

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    You know what impresses me about this interview is the fact Austen is taking people in low to mid-income brackets and demonstrating with the right motivation and hustle.... nothing is out of reach. As someone who lived on the street as a teen to having clawed my way through to several successful startup exits as an adult... I’d rather hire motivated, talented and grounded developers through this program than entitled, egotistical universi-babies who think they should be paid Silicon Valley wages after graduation even though they have little experience.

    I only wish Lambda had a history of alumni so they could market job opportunities to those who have had their first or second job... showing some experience to move up. I’m not sure how ready their graduates are to ‘own’ a product area when working with startups they would be introduced to through IH. The heart and drive may be in the right place, but would the experience be there?

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    Hey @csallen, I know there are a million of things you're busy with and there's limited research you can do on each guest, but I have to give a little feedback.

    Data-driven curriculum development and immediate 1-1 help for stuck students weren't innovations to the bootcamp industry. Hack Reactor did both in 2013 and I saw it with my own eyes.

    Sorry, @austenallred . I think you're doing great stuff and your heart is in the right place. I don't even know the state of other schools in 2018. It's just that claiming things done half a decade ago as new innovations of your own isn't fair to the hard work those who came before you have done.

    FWIW, the longer curriculum and digging down into OSes and C at the did sound impressive and novel to me! I'm kind of surprised at the relatively low salaries from grads given the breadth of their preparation, though that may be mostly a matter of location.

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      Hey @alchemist, thanks for you’re comments. Respectfully, I think you misinterpreted a few things.

      No one would ever insinuate that they’re the first school where students can get help or where people looked at data to decide on curriculum, however we definitely take those things to the next level. We know where every student is at minute by minute, and until they are comfortable with and complete a section they can repeat that section and move on at their convenience, while being provided one on one help any time along the way. I know Hack Reactor well enough to know that this is remarkably different from the way they do things, and I have a lot of respect for Hack Reactor as a school! As far as which classes to start, web development is an easy class from a “should we do this” data perspective, which I was referring to, but I think our next 10 or so classes will be surprising to people. I don’t believe Hack Reactor has ever had a data science team, but I could be wrong.

      And the highest cost of living area our grads have been hired in is Ann Arbor, Michigan, and despite that we have a median $90k salary. That’s demonstrably higher than any other school I’ve ever seen that places people outside of just New York and San Francisco, where the incomes aren’t obviously higher.

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        Thanks for your detailed reply. A specific part I was replying to was:

        So one of the big ways that we’re different from everybody else is anytime you’re stuck on anything, we have somebody available instantly to one-on-one with you and walk through why you’re stuck.

        At HR, students had access to a help button at as they worked through projects and there was a pool of people in the same room available to help right away. It typically just took them a minute to walk over.

        They did have people working on data science, but not a dedicated team and they weren't teaching it beyond sporadic workshops AFIK. I really can't speak for anything since early 2015 since I've been back here in Asia.

        And the highest cost of living area our grads have been hired in is Ann Arbor, Michigan.

        That explains a lot and 90k is very good then! Probably higher than what fresh CS grads are getting. I'd love to learn more about how it's remarkably different, and I wish you the best in expanding so you can offer the experience to more students.

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    as much as i loved the interview and the content (i even emailed austen directly after this about it) this did feel like the least "indie" interview you've done yet. It's not my place to gatekeep what is or is not indie but it was just strange to get that feeling when Lambda school is barely a year old. Mixed feelings I guess. 🤷🏼‍♂️

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      I understand the point of view, but indie doesn't mean self-funded. I've made sure to throw in a mix of interviews with people who've raised since the beginning, including an interview with an actual VC (Bryce). If you're building your own business as opposed to working as an employee, you're indie in my book.

      Especially given Austen's scrappy history pre-Lambda School, and of course his anti-VC sentiments, and how much thought and convincing it took to persuade him to raise. There's a lot to learn here, and it would be a shame for people to ignore it. I don't want the culture of Indie Hackers to become "VC is always bad," which I see as just as inaccurate as, "VC is the only path."

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        If you're building your own business as opposed to working as an employee, you're indie in my book.

        So Jeff Bezos is "indie"?!

        Get him on the podcast!!! 😉

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          Can you name anyone that does exactly what they want more than Jeff Bezos? I can’t.

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            I actually would enjoy hearing him on the podcast, even though he's operating at such a scale and with so many resources that a lot of it wouldn't translate over to a newly started business without funding.

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    My Main Takeaways:

    • Austen's business, Lambda School is free if you don't get a job in your field after completing the school, and if you do get a job that pays over $50,000, you only pay a certain percentage of your income for the first 2 years.

    • Austen got started by buying and selling stuff on ebay when he was 13, austen has had the entrepreneurial spirit since a young age.

    • The money is not in the bank until it is in the bank - Austen had a VC backed startup that eventually failed, it was a platform for crowdsourced news. He had a billionaire media mogul who was interested in investing, but who eventually backed out after due diligence was done because he didn't like it. After this, the business started to struggle financially because they were expecting funding but the money never came, so Austen went into debt.

    • Austen turned a valuable blog about his thoughts on user acquisition into a book to try and get out of debt, he self-published it and he's done about 250,000 sales of that book

    • Austen dropped out of school.

    • Austen was initially hesitant about making Lambda School because he was a college dropout and thought that some smart student with a PhD would be able to do it better than he ever could.

    • Austen was hesitant to go for VC funding with Lambda School due to his bad experience with VCs early in his career (the billionaire media mogul VC who backed out last minute). So he started Lambda School and had people pay upfront just so he could generate revenue to stay afloat, and as he made more money, he could start inviting people into Lambda School for free initially, and they'd only pay after getting a job with an over $50k salary. Soon he realised the value of VC capital, so he joined YC and realised that Lambda School was a bigger opportunity than he thought.

    • Changing up your environment can give you new ideas and a fresh perspective on things.

    • Turn losses into wins - Austen says that without his losses and failures, he would have been able to come up with the idea for Lambda School.

    • The traditional education system does not care whether you get a job after graduating or not - but that's Lambda School's core focus.

    • Leverage the power of incentives - When you want people (and yourself) to achieve a goal, provide the right incentives.

    • Austen, the CEO of Lambda School, describes himself as a "bad programmer".

    • Austen says that he is no longer the best at ANY skill in his team at Lambda School, he has a very good team.

    • The more you need to raise money, the harder it is.

    • Austen said that while in Y Combinator, they "mathetmatically proved to him that it is better to raise VC capital" (despite Austen's dislike of it).

    • Money is not an issue for Austen's company, it's more-so finding the Right People.

    • "Focus on your users and talk to your users" - Austen says that this is the main advice he got from YC.

    • There are plenty of problems that seem like they are insurmountable, but you must find a way around them.

    • Austen says that he's studied Jeff Bezos religiously

    • Austen says that it doesn't require a high IQ to be as successful as Warren Buffet or Jeff Bezos, rather it takes patience and being calculated.

    • Lambda School's curriculum is constantly updated and improved, unlike in the traditional education system.

    • You don't need to learn to code to start a business. Austen and his team didn't know how to code but they started anyway, and learned along the way.

    • Only focus on innovation in your key areas - When Austen started, he thought he was amazing at everything and wanted to innovate in every area of his business. But as he gained experience, he realised that there are people who are way better than he is at certain things, so he should just focus on innovating in 1 or 2 areas and use simple/boring solutions for everything else.

    • Don't just think about what you should be doing, also think about what you SHOULDN'T be doing.

    • Keep your head down and focus on nailing your core value proposition

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