What's up, everybody?
This is Cortland from IndieHackers.com, and you're listening to the IndieHackers podcast.
On this show, I talk to the founders of profitable internet businesses, and I try to get a sense
of what it's like to be them and to walk in their shoes.
How did they get to where they are today?
How did they start their companies?
And how did they make the day-to-day decisions that keep their companies running?
Today's guest is Austin Allred, one of the creators of Lambda School.
Austin is the founder's founder.
He's been doing this stuff since he was very young, and he's not afraid to open up and
share some stories about times that he failed, rough patches that he hit, and how he pulled
himself out of it, as well as open up about the strategies that he used to succeed.
Lambda School is one of the fastest-growing companies I've had on the podcast, hands
down.
A year ago, they did not exist, and today they are killing it.
They're also one of the most inspiring and revolutionary and helpful companies that I've
had on the podcast.
So I cannot wait to get into this episode.
But first, a little message.
If you are listening and you have not yet been to ndhackers.com, what are you doing?
You should check it out.
There are full transcripts of every podcast episode, including this one, at ndhackers.com
slash podcast.
And if you are an aspiring founder or somebody who's otherwise interested in running or starting
a business, you should check out the community forum.
Just go to ndhackers.com, you can talk to other founders, ask them any questions that
you want, get help building your business, help them build their businesses.
And generally just avoid the trap of trying to build a business completely on your own.
Once again, that's ndhackers.com.
And without further ado, let's get into the episode.
Austin, thanks for coming on the show.
It's great to have you.
Yeah, thanks for having me.
Good to be here.
You are one of the co-founders behind Lambda School, which on your website you describe
as the computer science education of the future.
Tell us a little bit about what that means and how it all works.
Yeah, so Lambda School is a very different take on higher education, I suppose.
So we're kind of a combination of a school and an investment fund.
And what that means is students study at Lambda School completely for free.
They never pay us a penny unless they get a job that pays $50,000 per year or more in
the field that they studied.
If they reach that level, they'll pay us a percentage of their income for two years up
to a maximum of $30,000.
So basically what it is, is we're trying to create the best school in the world that anybody
can attend at zero risk.
So if it doesn't work out for you, you never pay us anything.
That's super cool.
Easily one of my favorite business models of any companies that I've had on the podcast
so far.
So we're definitely going to come back to that, discuss it in more detail.
But in the meantime, I first discovered you about a year ago, over a year ago actually,
on Twitter.
I was just digging through our history this morning.
And we first started tweeting each other back in November of 2016.
Although I couldn't figure out why, because Twitter really sucks at letting you see the
context of your past conversations.
Had you guys started Lambda School back then?
I hadn't, no.
So we started actually, we officially started it April of this year.
So it's been a little less than a year, which is kind of wild, because it feels like much
longer than that for me.
Yeah, I mean, it feels like longer than that for me.
And I've just been watching from the sidelines.
But before we jump into Lambda School, it strikes me that I don't really know anything
at all about what you were up to before you started Lambda School, even though apparently
we were tweeting each other.
So how did you decide to get into tech, to get into startups, to become an entrepreneur?
Yeah, so I'm one of those guys that have always been in tech.
I got started on eBay, kind of hacking the eBay search results when I was like 13.
So back at the time, it was a simple like text search for a title.
So if you search for iPods, you would get 15 million results.
And the only way to narrow that down would be to enter more keywords.
So I figured out that if you plug in iPod, and then you start to minus out all the other
possible keywords, eventually, I had like this five page long search, you would get
to this page that had the stuff that was only listed as iPod, and no other words.
Turns out nobody would see those because of the way eBay's search was filtered.
So I would just buy all of those and flip them.
And that's how I got started.
Oh, that's pretty genius.
So what did your parents think of this 13 year old who's flipping iPods on eBay?
Well, they actually, they're intrigued, I guess.
They were concerned.
I'll tell this story, because it'll be fun for the podcast.
So I was selling stuff on consignment, which would basically mean I would take stuff that
from people that didn't know how to list on eBay, which was not hard.
It was filling in forms, right?
But I'd list that for them.
And then I'd take a cut.
And I was doing that, you know, I was probably not making very much.
But for a 13 year old, who cares, you know?
And then I had one guy that wanted to pay me in e-gold, which was the like precursor
to the precursor of Bitcoin, like way back in the day.
So I did some research on it was like, oh, cool, like it, you know, an internet currency.
That sounds interesting.
Sure.
Pay me on that.
But the guy that wanted me to do that was one of the biggest credit card thieves in
the US.
And I had been unknowingly fencing all of his stolen stuff.
So one day my mom was driving me to soccer practice, and we got pulled over by five unmarked
cars and they had a warrant for our house.
And that was the end of my eBay escapades for a little while, but then eventually got back
into it.
That is, that's hilarious.
When you first mentioned eBay, it reminded me of being a 12 year old in the late 90s.
And asking my mom if she'd put her credit card in so that I could buy something off
of eBay.
And I still remember her response to this day, which was, are you crazy?
I'm not putting my credit card on the internet.
I was like, what's the worst that could happen?
It's hard to remember those times, like I actually started out, I had a little checking
account and I would just mail people checks.
I got a PayPal account before PayPal put in like the security to verify that you were
over 18 or whatever.
So I had a PayPal account and I'd somehow through that got like my own credit card,
which I'm 99% sure is technically illegal and was a security loophole somewhere because
yeah, it was not linked.
I had a credit card in my name that was somehow linked to my mom's credit score and her social
security number and whatever else.
But yeah, that's, so that was how I got my early start.
And then that turned into basically scalping event tickets on eBay, kind of buying in advance
and waiting until the day before the show and selling them and overnighting them.
Eventually I got a relative who was wealthy to sponsor us with a bunch of capital.
And he paid me an hourly rate to do that for him.
And he made a couple million dollars from it.
And that's where I learned about equity.
Give me some of the details behind that scalping business.
What were some of the things that you learned and how did you make millions of dollars for
your already wealthy relative eBay back in the day?
I don't even know, I haven't used eBay in a long time.
I, you know, Amazon kind of swallowed it, but you could just see all of the past auctions
and where everything ended.
So it was the easiest way to do market research ever.
You could just literally look at what everything was selling for, who was selling it, that
kind of thing.
So my family went to Wicked, which at the time was a hot new musical in New York.
It's kind of the Hamilton of its day, I guess you could say.
So we're like, okay, well, I bet we can find tickets on eBay and I looked on eBay and sure
enough, they were three to four X retail.
And so just trying to figure out why that happened and why that was possible, I learned
that basically people are just buying them a couple months in advance, waiting until
the day of the show.
And then they're selling them to the stupid people like me that didn't plan ahead.
And you want to go to Wicked today, you're going to pay for it.
So for a while, it was just that we would just buy Wicked tickets in New York and then
venture it out into Chicago and just buy them in advance and sell them.
It was pretty straightforward ticket scalping.
And then eventually it got more sophisticated and we had some people that would determine
which shows would do best.
And we look at the capacity of theaters and figure out where we thought that the tickets
were under priced based on the capacity of the theater and the demand for a show and
all that stuff.
We lost a bit of money for a while buying stupid stuff that we ended up just holding
the tickets.
But yeah, after a while we had it pretty well nailed down and we would buy a lot of tickets
and sell them and it was pretty straightforward.
As long as you didn't buy something bad and take a $100,000 bath, you didn't make a lot
of money.
So at this point in time, did you realize that you were doing market research and exploiting
market inefficiencies and were you like reading business books or were you just like, this
just makes sense.
I'm going to do this.
No, it was yeah, it was very casual, I would say.
I remember I was, I liked the idea of being like an entrepreneur, being in business, but
I had no idea what that was actually like, you know?
I remember I got invited to some like Chamber of Commerce lunch or something with, you know,
the little city because I was the 15 year old, you know, hey, look, I do business.
And the guy was like, oh, that's an interesting form of arbitrage.
And I was like, yeah, that is an interesting form of arbitrage.
So I go home and look it up and say, oh, arbitrage, that's interesting.
Turns out that's a thing, you know, and that's what some people try to do on Wall Street.
And you know, that all leads into today in a really funny way.
But I started another company that was VC backed that totally failed and blew up.
That was probably about a year before we started talking on Twitter.
Well, let's talk about this one, too.
Why don't I just force you to relive all of your failure stories?
It was a bad idea in the first place.
And I didn't realize that at the time.
But I had never lost in business before.
So I thought I was invincible and had a lot of hubris and was really smart.
So yeah, basically, we wanted to crowdsource the news.
So kind of Wikipedia for the news, but with a bunch of fact checking stuff built in and
you know, Facebook was hot at the time and I figured if Mark Zuckerberg can get a bunch
of people to sign up for this thing, then hey, news is a big thing, too.
We can get a bunch of people signed up and somehow money will magically appear on the
other side.
I don't know how, but you're hoping for some of that hocus pocus revenue.
Yeah.
Classic 20 something entrepreneur that has no idea what he's doing that gets somebody
to give him half a million dollars in VC and then tries desperately for a couple of years
to make it work out.
And it doesn't.
Turns out there's not much money in fact checking.
So the longer story is we have quite a lot of traffic.
We had probably a quarter million, half a million views a month, which would be a lot
if you were actually selling something in in a completely untargeted advertising world.
Who cares about that kind of traffic?
So we're showing enough potential that we thought we would raise another round.
We had another a lead VC that was, you know, this billionaire media mogul that liked the
idea and, you know, we're doing all the paperwork for our quote unquote Series A that media
mogul billionaire decided to he didn't like the deal after due diligence was done, after
paperwork was done, after everything and just never sent the wire.
That was it.
So yeah, I ended up personally and a lot of debt trying to, you know, make our employees
whole and our contractors whole because we were really pushing it to the wire because
the money's coming in any day, right?
So just wait for that.
And it never came.
That's one of the most important lessons to learn whether you are contracting or you're
selling a product or raising funds, the money's not in the bank until it's in the bank.
People told me that, you know, and I knew that hypothetically, that was the case.
But this was different because come on, you know, so actually the way that we met is coming
out of that.
I was like pretty deeply in debt.
I had no job.
We were remote.
So I was living in the middle of nowhere in Utah.
And I had some pretty successful blog posts about user acquisition that I turned into
a book to try to get out of debt.
The book is now we self publish everything we, you know, electronic only for the most
part, we just started doing print books.
So it's just been pure revenue, but yeah, we did about a quarter million dollars in
sales of that book in the last year, which is just, I mean, my only costs are sending
an email now.
So that's, I think that's how we met.
I was really into the anti VC scene, as you can imagine.
So you just sort of stumbled onto Andy hackers at that point.
Yeah, yeah.
I mean, I thought it was a really cool idea.
I talked with Bryce about it.
Bryce is another Utah guy.
Bryce Roberts.
He's from NDVC.
NDVC.
Yeah.
And I, you know, I was very, very anti VC.
Like when, when you go through that phase, you realize how often incentives are misaligned.
You realize how dangerous VC can be from, you know, it's, I think it prevents you from
solving the right problems.
Sometimes it blinds you, you solve problems with money that shouldn't be solved with money.
And I was determined never to raise VC again.
So that's how I got into the whole scene.
Turns out now I've raised again, but it's different.
Of course, it's different this time, but let's get into that story since that's why you're
here.
How did you decide to start working on Lambda school?
Yeah.
So, um, my little brother had worked at a code boot camp.
He's one of the early employees and I've always been, I was a college dropout, so always really
interested in education and I thought nobody was ever doing a good job.
But I also thought, you know, surely a hundred million people have tried and failed these
kinds of companies.
It must be, there must be some reason why that's the case, right?
So never bothered to try because surely some PhD who understands the academic space better
than I ever could is the right person to start that company.
Not me a college dropout because I don't know anything about education, but it got to the
point where I was talking to a friend who had a couple hundred thousand dollars in student
loans for a career that is non-existent.
And at the same time, I was working at lend up, which is a lending company to people with
less than perfect credit.
So I was, I've always been immersed in this thinking about, you know, risk and return
and, you know, fascinated by the financial industry and how all of that works and just
slowly realize that what is missing in the education model, the real problem with the
education model is people are, have to take just outsized risks and the people that need
to take those risks the most are in the worst position to take that risk.
So I'm talking about a hundred thousand dollars in student loans that you can't bankrupt your
way out of.
You know, if no one in your family has never made more than, say, 40K, that's just a huge,
huge risk.
Even if it might work out for you on the other side, it's the potential of it not turning
out is big enough that you're just not going to do it.
And you know, having lived in the rural community, you talk with people that you know that if
they spent, you know, 10 grand on an education, they could increase their salary by 40K year,
but they won't do it just because that's too risky.
So we started looking at education from a risk first approach.
And you know, seeing the problem with boot camps was really they promise a lot and deliver
not very much most of the time.
And there's a lot of really accurate criticisms of code boot camps and just trying to think
about what if you could take the risk out of that model?
What if people wouldn't pay if it didn't work?
How would that incentive structure change things?
And yeah, that's kind of how Lambda School started.
We started out just people, you know, people would pay us just classic business just to
get things off the ground because we were determined to never raise VC.
And we were just getting enough revenue to keep me and my co-founder alive and then extend
as much risk as we could.
So we would invite as many people as we could to take the course for free if we thought
they were promising, as long as we had enough money to support that.
It was out, you know, after a while that you realize the opportunity could be much bigger
with just a little bit of capital.
And that's why we joined YC and the opportunity is way bigger than even we had realized in
our wildest dreams.
So we're just acting like a normal company.
We were never targeting VC-like returns.
And I think that's why we'll get VC-like returns, ironically.
It's cool to hear you talk about being sort of an outsider to education.
You know, you're not a PhD.
You don't research this.
All you really see as an outsider looking in is all these education startups failing
and trying these things and not working out.
And I wonder why it is that no one is really hit on the business model that you've decided
on in such a big way.
And one of the things that strikes me from your story is that you're living in a rural
community.
You know, you were actually around people who needed to take a huge risk in order to
educate themselves, whereas somebody who, I don't know, is living in San Francisco doesn't
really get very much of that.
And I've talked about this on the show before, but sometimes just changing up your environment
and not being in the same places everybody else can really contribute to, I think, coming
up with unique and fresh ideas and coming across problems that other people aren't really
seeing.
Definitely.
I mean, I think everybody that I spend my time with now in San Francisco, if they needed
to find $10,000, they could find it somehow overnight, right?
Like, even people that are just normal, you know, working a normal job, like 10 grand
is not a big deal in San Francisco.
In the rural community I was living in, the median income is like $30,000 a year.
The most frequent criticism we get is like, well, there are community colleges, like there's
not much risk anyway.
I think people just don't understand what it's like to be psychologically in that place.
So we graduated our first class of 20 students about three weeks ago, and now almost 75%
have jobs, so about 15 of them have jobs or contracts, and the first guy that got a job
actually got a job at Uber.
So he's a React Native developer there, and he'd never made more than 15 bucks an hour.
So he told us that the reason he joined Lambda School is because he literally didn't believe
that what we promised was possible, so he didn't believe that he could ever get a job
for 50K a year, so why not, right?
If he wants to learn, that's a free way to learn, and he figured that he would show us
why we were wrong, and it wouldn't work out, and then free education.
And now that it did work out, he's like, oh my gosh, that's better, you know, a lot of
people have been promising that success is on the other side of an education, and that
has been the case for some people, and for some people it has not been the case.
So really, I think some of the secret of Lambda School is that we are the true advocates for
the student.
So we take the risk for them, we view them as not revenue, but as a portfolio of investments
that we make.
So we're constantly, you know, we have a data science team that's trying to analyze the
markets to figure out exactly where the shortages are that we can plug, what the real skills
are that employers want, you know, so we're kind of a very full stack approach where our
job is to get you a job, and education is only a small part of that.
Do you think that you being in debt from your past business failure and the whole VC investment
blowing up and you having to recoup your employees, do you think that you would have been able
to come up with an idea like Lambda School if you hadn't been in that place yourself
and really understood the mindset of someone who really needs to financially recover?
No way.
I remember, you know, so I was out of the job and feeling pretty down on myself, right?
Like it's a hard place to be.
And even, you know, when I wrote the book, I was like, if I could make somehow $2,000
in this book, then I'd be that much closer to being out of debt and like all of my problems
would go away.
And I didn't think that that was possible.
Like it seems silly because now I'm making more than $2,000 a month just from the book,
not even, like I literally don't touch it, right?
But I didn't realize that that was possible.
I distinctly remember talking with my brother who had lost a job at one point in his life
and, you know, we were driving by a golf course and there was a guy that was out there picking
up golf balls and I was like, you know, maybe I could, maybe I'd be qualified to do that
for a living.
Maybe, you know, that's something that I could manage.
And I don't think people understand the psychological aspects of not having a lot of money.
It's just a very different world.
Yeah.
I think you have to really be there.
And it's good that in a way it's good that you were because if you weren't, then we wouldn't
have Lambda school.
And I think what you guys are doing is really helping people.
I mean, the story that you just shared about the guy who never made more than 15 bucks
an hour who's now a full-time engineer at Uber, that's life-changing stuff.
Silicon Valley in general gets kind of a bad rap for not doing things to improve people's
lives.
And you always hear these platitudes about, oh, you know, go out into the world and do
things that make the world a better place.
But very rarely do I talk to someone whose company is actually doing that.
So kudos.
Thanks.
As much as I hate to say it, I'm glad that you were broken in debt for such a long time.
And that's what it took to create Lambda school as a result.
Yeah, me too.
Sometimes you learn really hard, expensive lessons.
Yeah.
So one thing that I've seen you tweet about that I love is that you tweet about Charlie
Munger.
And for those who don't know, Charlie Munger is Warren Buffett's business partner, longtime
business partner.
And he's the subject of one of my personal favorite books of all time, Poor Charlie's
Almanac.
So the fact that you're tweeting about him and that you're also a fan means I cannot
resist asking you questions about Lambda school that come from a perspective of Charlie Munger
and what he calls his elementary worldly wisdom.
So maybe they've got poor and I stand out.
Oh, do you do you have the big, the big blue hardcover?
Yeah, it's like the most annoying book in the world to read.
It's huge.
So one thing that Charlie Munger is very big on is mental models, which is this idea that
if you just try to remember isolated facts, you never get anywhere because there's way
too many isolated facts and you can't make sense of them.
So if you have some sort of underlying models or theories that describe how the world works
and you can hang, you know, any facts you come across on top of these models and reason
about them much more effectively, what kinds of mental models would you say have served
you well and running Lambda school and throughout your entrepreneurial career?
Yeah, so I think Lambda school is kind of built on a couple of them that drive everything
we do.
I think this is the reason Lambda school has really been successful.
So we look at everything from a risk standpoint and that comes from my experience working
with Lambda and, you know, buying and selling tickets.
Really we are looking for sure bets to move people from low income or medium income to
high income.
First of all, if you talk to most education companies, the idea that you are creating
an education for the purpose of making people money is just that's bad, that's anathema,
that is evil.
The purpose of education for most academics, and this is something that I didn't realize
was as extreme as it is, is academics do not view their job to get you a job.
That's something that happens by accident as a result of you becoming a better person
and being educated.
But we are very much, our goal is to get you a job and we will do anything and everything
and whatever we can to get you a high paying job and that's all we do.
So the first mental model is kind of the, you think about Clayton Christensen has talked
about the milkshake or people used to buy milkshakes from McDonald's in the morning,
not because they wanted a milkshake, but because they wanted something that they could eat
while they were driving.
We ask the question is what job is that milkshake really doing?
And we ask the question, what job is your education really doing?
And we think that the role of education is not primarily, but our role as Lambda School
is to get you a better job.
So we look at it from that standpoint, and then we look at it from a risk standpoint.
So every student that comes in Lambda School's doors, we're actually losing money day one.
And we've lost money on them by the time they start.
So if we can't get them to a job, we will lose money by definition.
And those incentives are incredibly important and structure everything else we do at Lambda
School.
Give us some specific examples of that.
How have you structured Lambda School differently based on your thinking about these risks and
incentive structures?
So one example of that is last month we had four or five people that came to us and said,
hey, we want to learn video game development.
We have $15,000 we're willing to pay upfront.
Will you teach us how to build video games?
So we have our data science team go through, look at the video game development market
and realize that 15 grand and what we could provide would not be enough to get you to
a job in that field.
So because we view it not as, hey, who's willing to give us money, but can we actually get
you to the end result, we're not going to build a video game development curriculum
because we don't think that we can actually get you a job there.
And I think that's very, very different than anything that has ever been built by education
companies in the past.
So we work backwards from that and that's really important.
Yeah, it's interesting because academics certainly see their job as teaching and don't much care
what happens after you graduate, I guess, unless you go on to become a professor or
something.
You don't accept any tuition and doesn't in any way connect to their confidence that
you'll be able to make it up in the future for your education.
And yet on the other side of the equation, for average people out in the world, we do
look at education as a way to get a job.
It's sort of like this fuzzy connection where it's like, yeah, you go to school and then
something happens and then you come out the other side, you know, employable and ready
to be a successful adult.
And I think what you guys are doing is you're making it very explicit to people what they're
going to get out of it.
And it's not this fuzzy, mysterious thing, it's come to Lambda School.
You will make 50k or more a year or you pay nothing.
How much do you think being so direct about the numbers helps your message resonate with
people?
Very much so.
I mean, our biggest problem is people think that it's too good to be true.
They think that clearly we must be scamming people somehow because that business model
wouldn't work.
That's, you know, it causes red flags to go up, which is something that is frustrating
to me because it's like, man, we're we're taking on all the risk.
You should just be jumping at this opportunity.
But I mean, and people are right to be skeptical.
There have been so many ITT texts of, you know, University of Phoenix is of the world,
which have not had your best interest in mind.
I mean, I was looking through I'm fascinated by University of Phoenix recently and found
that for several years they would have more students default on their student loans than
graduate.
If that happened to lambda school, we'd be out of business overnight.
That's terrible.
And that's pretty egregious.
So we just view it in a very different lens.
And even even little stuff like there are code boot camps that mean the best.
But if your incentives aren't directly tied to whether or not a student gets a job, and
you know, it's really easy to to not care on the other side.
And that that comes from that mental model, ironically, comes from Charlie Munger, where
I think incentives are so much more important than people give them credit for.
Yeah, they're huge.
My favorite Munger story on that is, do you know that the FedEx one where they changed
how they paid their employees to sort of get the planes loaded?
It's a great one.
So for listeners who might not have heard it, it's basically like a core part of FedEx's
business model is that they needed to, at some point during the night shift a bunch
of packages from one set of planes to another.
And they can never get it right.
It would always take too long.
It was always inefficient, and they tried everything.
And then one day someone had the bright idea of, oh, why don't we pay everybody per shift
instead of paying them hourly.
And like overnight, all the employees were able to get the packages transferred from
one plane to another and then go home with time left to spare.
So it's a really good example of the power of incentives.
And I think with what you're doing at Lambda school, you guys are, I mean, your entire
business model is about incentives.
You've aligned your incentives as a company with the things that your customers really
or your students that you're investing in are trying to do because you're investing
in them rather than just educating them.
And so if they don't make money, you don't make money.
That's exactly right.
I've been shocked at the number of times when we've had to make a real investment or do
something that we would only do if our incentives were aligned in this way.
I mean, little stuff like, hey, there's this expert instructor.
He's going to be 20,000 a year more than the other person.
But we know that he would do this much better at helping our students get a job.
And like for us, it's not even it's not like we're trying to be really good.
So we'll, you know, pay more money.
It's theoretically we could create a model where, OK, how many more people will that
person get a job because he's a better instructor and the math is worth it for us.
So we've structured everything in such a way that we have to do good by our students.
And it's so important.
It's one of these decisions that gets made up front or oftentimes doesn't get explicitly
made or even considered.
But then you have to live with that decision or that non-decision for years.
And it affects every decision you make at your company.
It affects the big decisions and the strategic direction you head in.
But it also affects the hundreds of tiny day-to-day decisions that you make.
And those add up over time.
And that's the difference.
Like that gap widens to be the difference between a company like Comcast, where pretty
much everything that you do is hostile to your customers and everybody hates you, and
a company like Stripe, where Stripe literally makes more money if there are more companies
on Earth and those founders are more successful.
So they can do cool things like buy indie hackers, for example.
So yeah, I just think it's worth people taking the time to sort of do what you did.
Think about their incentive structures up front and create a company that's not going
to make themselves and everybody else miserable if they end up being successful.
Some of that also comes from, you know, when I wrote the book, for the first few months,
it was just an ebook.
And I could see the number of people that had purchased it and the number of people
that had actually downloaded it.
And it was something like 50% of people that purchased the book would ever even download
it.
And with Lambda School, if we sign up 40 students to start and they don't graduate, you know,
we still don't make money.
It would be really easy to say, yeah, well, that's on them.
They weren't trying hard enough.
They weren't disciplined enough.
They weren't whatever.
But for us, that's the problem.
And a lot of what we do is actually working around those human psychological problems
that we have to make people do things that they wouldn't otherwise be able to do.
So if we just had a self-paced course that we threw up online, we would, you know, it
wouldn't be enough to get our students to get jobs.
And yeah, it just matters.
So let me ask, are you a programmer yourself?
Because none of the businesses that you mentioned earlier really seem like they're very technical.
I'm a bad one.
How did you...
Our students are all better than I am.
How did you learn or first start learning to code?
Was Lambda School sort of your first, you know, attempt at dipping your toe in the water?
Did you have some experience before that?
And my first company was.
So I built out the front end until we could afford to pay somebody who actually knew what
they were doing.
And originally I built out a really bad back end, but yeah.
So I still, you know, build a lot of our site on the front end to this day, which is not
healthy.
We're moving away from doing that because, you know, when you're 30 people, you shouldn't
have the CEO building the website anymore.
But yeah, so I'm a really bad program.
Are you really up to 30 people?
Yeah, it's insane.
That's nuts.
You guys just started in what you said, April or...
Yeah.
So April was our first class we incorporated in June.
Geez.
That is crazy.
Well, let's talk about this, this is like crazy growth because I don't talk to very
many people who go from one or two people to 30 in just eight or nine months.
So what are some of the biggest growing pains, if any, you guys have had with Lambda School
and how have you handled those?
So the funny thing is we kind of unlocked this business model where the demand is just
way bigger than our internal supply.
In the beginning, we would get 3000 applications and we would accept the top 20 students.
Right.
And that's frustrating because you know that on the other side, that's what drives your
revenue, but we didn't want to outpace our own growth.
So it's funny because to me, I feel like we've grown really slowly.
And I know that sounds insane to anybody who's looking at the numbers.
We just started adding a new class and a couple new instructors every month because another
thing we wanted to do was learn really quickly and iterate from class to class.
So even though we're only a few months old, basically less than a year old, we're already
on our ninth iteration of our CS curriculum and it is really freaking good now and it's
just going to keep getting better because we start a new class each month.
And yeah, it's funny going through YC, we got to the point where we were like, okay,
we could double the number of students if we want to keep a really good ratio, but we
would need another hundred thousand dollars.
And I was talking with, I'm so risk averse now that I was talking with our YC partners
like, okay, we could add more students, but if we can't raise after YC, then it's going
to be a suboptimal experience for those students.
So we want to make sure that we can actually raise before we make those hires and let the
student count bubble up a little bit.
And YC partners like seriously, you guys, and you're profitable, you have a huge market,
you're worried that you won't be able to raise a hundred thousand dollars after YC.
So he said, you know what, I will personally give you a hundred thousand dollars if you
can't raise.
And that was the assurance that I needed to make those hires.
So yeah, it was really like I moved from teaching every day to not teaching at all really quickly,
like really quickly.
And as you can imagine, now that we're 30 people, most of my time is just management.
And that sounds like a really lame word, but you know, making things happen and there's
so much stuff that only I can do.
And at that point, it becomes really, really, really important to have the right people
hired because I don't, you know, I'm not over the curriculum anymore.
I, you know, I look at it and I think it's interesting, but I'm not the one day to day
making decisions.
I'm not the one day to day dealing with students, little problems, which are endless.
I'm not the one, you know, we've got 300 students.
I'm not managing these requisition, which has been my thing for a really long time.
I think that was the hardest thing for me is that's my, my specialty.
So passing off something that you view as your baby is really hard and you have to find
a very special person who's, you know, cause I can, you know, with, for example, our VP
of finance, I don't know if he's making mistakes.
I don't know if he's doing a good job nearly as well as with our head of growth.
So he, you know, I had to learn to delegate a little bit more and, and step back a little
bit.
So I'm not doing his job for him and driving him and say, it's tough, but it helps so much
if you hire somebody who's better than you, not only because I'll do a good job, but because
you won't be tempted to butt in and make small corrections and drive them insane and distract
yourself from doing your own work.
Yeah.
It's also weird that we're now at the point where there's literally somebody who's better
than me at any single thing.
Like I am not, like I don't have a skillset that is, I'm not the go-to for any skill on
the team anymore.
I'm just trying to get the ship driving in the right direction and try to make data move
around and make sure that we have enough money in the bank to support everything.
But I'm not the best at anything, which is kind of hard in like a really stupid, prideful
way, but it's also really important because you just can't and we'll probably double again
in the next six months and you can only do so much as one person, right?
Yeah.
So going back to Charlie Munger, one of the things that he talks about is the psychology
of human misjudgment.
He discusses some of the things that cause all of us humans to make bad decisions from
time to time without really recognizing it.
So these are the kind of mistakes that to you don't feel like a mistake, but to everyone
else watching, like that's obviously asinine, why are you doing that?
One of the patterns of misjudgment that he talks about is called over-optimism tendency.
So we're overly optimistic as human beings about pretty much everything that we do.
We buy lottery tickets, we start startups, we think it'll only take us two weeks to get
this feature out the door when it really takes six months.
What if anything are you overly optimistic about with Lambda School?
Everything.
I mean that in a literal sense, I've learned now that when I decide what I want, I set
our internal goals for like 10% of that basically.
The nice thing is that at the end of the day, this is the business model that is very data
driven.
So it doesn't matter what I think, it matters what the numbers are actually coming out as.
But actually, where I'm underestimating most of what we do, I did not think that we would
have 75% of our students hired within three weeks.
So I can't very consciously try to underestimate and be very risk averse because this is a
very financially data driven company and if I'm wrong, it gets very bad, very fast.
So we just have to consciously, our model said something like, we will get 50% of students
hired within six months at an average salary of 60,000 a year.
And in my mind, I'm saying, okay, but like, there's no way because I look at this number
and if they can beat that, our students are way better than, you know, so anecdotally,
I know that that's pretty unrealistic, but for the sake of model setting, we have to
overcorrect and make sure that we're not overpromising and underdelivering, because that could really
quickly turn into a multimillion dollar swing and a miss.
You mentioned doing Y Combinator, which I also went through a number of years ago.
What are some of the most impactful things that you got out of that period of your company's
history?
And what's the story behind how you changed your opinion on whether or not it's good to
raise money?
I was definitely so biased against VC that I went into YC in interviews and I was like,
look, we probably will never raise again after YC.
And that is a huge red flag, right?
But at the same time, I think that mindset of being, it's funny because, so we're almost
profitable.
We're probably, we'll be profitable in a couple months here.
And as soon as you have that level of revenue and that level of profitability and you're
that young, it's incredibly easy to raise money, which is, it's funny, like the more
you need to raise money, the harder it is.
And because we don't need to raise money and we have our own destiny ahead of us, we can
raise infinite amounts of money at ridiculous valuations.
And you know, so it's, you have to make sure not to get drunk on that.
But YC was really, really good for sitting us down and saying the way they got us to
raise money.
And I'm also super skeptical of VCs because I now under, you know, after having been burned
so bad, I understand their incentives and where our incentives are misaligned.
And if I could take a 100% chance at making $10 million or a 10% chance of $100 million,
the VC would take the ladder every day.
Whereas for me, like the difference between $10 million and $100 million doesn't really
move the needle.
So we actually, you know, we had to sit down and model out our assumptions like a financial
model and they had to prove to me mathematically that it was better to raise VC than to not.
Yes, yeah, and that was, that was a turning point where I, you know, I love being independent
and making my own decisions and I still control all the board and, you know, me, my co-founder
can do whatever we want, technically, but you have to do what's right for the business
given the circumstances at hand.
I think YC was really good about pointing that out to me and saying, look, you can't
learn by just watching what everybody else is doing because your unique, your circumstances
are very unique and you need to respect that that's the case.
Not to say that you should just, you know, like the VC and a lot of tech is so commoditized
that people have thought for longer than you about almost everything, but you're the only
person in your unique circumstances.
So there are quite a few times where we would go in for a partner meeting, like, okay, we're
doing this and this and this, and they just say, why do this and this and this instead?
And you're like, yeah, you're so right.
And I'm an idiot.
And it was obvious as soon as they said that, right?
It's so valuable to have knowledgeable mentors that you can kind of rely on to catch you
when you're making dumb decisions and steer you in the right direction or just like bounce
your ideas off of them and get a second opinion.
It's just so much better than trying to do it all by yourself.
By the way, I met Daniel Gross, one of your YC advisors the other day, he suggested that
I have you on the podcast and I actually already had you scheduled.
Oh, really?
Yeah.
Daniel's a good guy.
Yeah.
So let's talk about Daniel and your other advisors.
How important has it been for you to get advice?
And in general, what kinds of advice have you found the most useful to get from your
advisors and your mentors?
And I'm asking this just as much for me as I am for the audience, because with Andy hackers,
what I'm trying to do is create a place where anyone can go and ask any sort of business
question.
What do you think about my idea?
What do you think about my landing page?
What do you think about my growth strategy and other founders or chime in?
So I'm curious, how important has this been for you and what categories of advice have
you found the most helpful?
Yeah, I think it's incredibly important.
Often, our advice is more along the lines of like, hey, stay focused, because we see
– so we have a model that empirically works, and we're going to make a lot of money from
it.
We're going to do a lot of good from it.
And I want to do the same thing in every other industry and make 1,000 times as much money
as we currently are.
Like, we're in a really good place for a startup, where it's not very often that a startup
is able to be growing as quickly as we are and be profitable and have good results.
And like, you know, there's not – I keep waiting for something to come kick us in the
teeth, and whatever it is hasn't come yet.
Because of that, I want to grow really quickly.
I want to innovate in 10 different places.
I want to do all these things.
And we only have the resources, and I mean, not even – like, money is not an issue for
us.
It's more the right people.
So our people can only do so many things and try so many experiments without being overwhelmed
and overloaded and without having to neglect the really, really important things that they
do.
So we actually set up an informal board, even though we don't actually have a board.
We still have four people that I meet with monthly, just as a sanity check.
I send out religiously monthly updates, even though that's more than most people would
send to investors, just because I want to be held accountable.
Which is something that's hard and scary to do, but I think it's also really important.
And that's another thing I learned from my first company, is not to have as much hubris.
So yeah, they've been – I mean, they're hard on us sometimes, especially with little
things that aren't – just being buttoned up is really, really important for our kind
of a company, and things are moving so quickly that I would rather launch a new product or
a new program or a new feature than button up the one that we have really well.
And we have to be buttoned up.
Exactly why.
It's good to get a different perspective.
I mean, we all have our unique tendencies and biases and blind spots.
Yeah, I'll tell you a story about Daniel Gross, right?
So basically, we have these – so our students sign income share agreements, and we hold
them on our books.
And one of the things that I want to do eventually is create a robust market where anybody can
invest in anybody else.
And so you could say, hey, I will pay your tuition, and you pay me x percent of your
salary after you graduate, and make a real liquid market to invest in other people's
educations.
And so, you know, as I was talking with my co-founder about how you could best enable
that, I was like, oh, duh, this is easy.
Blockchain, right?
Like, you put it on the blockchain, you create a token, you make everything able to move
around, and we have real assets and real securities, unlike most of these fake ICOs.
And so, oh my gosh, we could do this.
We could have everything on the blockchain, and we could create this marketplace.
And we basically sat down with Daniel Gross, and we were like, okay, here's what we're
going to do.
And he's kind of like, what the hell?
Like, what are you guys?
He's like, don't get me wrong.
I believe in the blockchain.
I believe in crypto.
I am a huge fan of all of this stuff.
I understand it all, but you guys need to be focused on, like, hiring good teachers,
and like the core thing that you do, not off here building blockchain something or other
because it's really sexy and, you know, really revolutionary.
I think that's one of the things that YC is really good at is just getting you to focus
on the stuff that's really important, which is, I mean, YC could basically be just a record
player that says, focus on your users and talk to your users.
And like, that's it.
And it would be incredibly valuable because it's really easy to forget that.
It's so easy to get off track from that stuff.
Oh my gosh, yeah.
Having someone in your face telling you or specifically having someone listen to the
decisions that you're making and then tell you exactly how you're not focusing on your
users and how you're not listening to them is so eye-opening.
What would you say is the hardest part of running an education business like Lambda
School?
What are some of the structural challenges and obstacles you have to overcome to actually
make this business work in the long run?
Yeah, there are a couple big things.
The first is that the world is not created to support businesses like these.
And I'm talking about the regulatory environment, accreditation, degree granting, what people
know and expect as the education system is not like we don't match up with what that
is.
And so when we talk to people, you know, the number one question we get is, are you accredited?
And then we talk to accrediting bodies and they say, okay, if you're going to be accredited,
you need to have a librarian on staff full time.
You need to have your program has to be at least four years long.
You're like, why?
Like, because that's just what it is, right?
You need a librarian.
So there are a lot of schools that are online that have a librarian that they pay to sit
in some room all day.
That is ridiculous.
We'll do that, right?
Like the regulatory framework is not built for a company like ours.
So we're figuring out where is the right, where we just throw all that away and say,
we don't care.
We're going to do our own thing.
And where we try to fit into that and I don't know, maybe buy a college or buy a university
and just gut it and remake it from the inside out.
There's also just endless people problems.
I mean, an education company is, you know, it's really easy to have a program, but there's
so many edge cases.
Our biggest problem right now is people that have to drop out for financial reasons because
we're not lending people money.
We can't just lend them more money if their spouse loses a job or whatever.
And they can't like sit in our classes all day and just, you know, people die.
And we had in our second class, we had, I think nine or 10 people just randomly happen
to be either in Texas or Florida at the same time as a hurricane's hit.
And just like random stuff like that, you can't control it, you know, and it's just
a lot of people issues.
And especially where, you know, our, our business model is based on return percentages and investing
and, you know, knowing the spreads, that stuff really matters.
So I mean, it was well within our models, all that stuff, but just dealing with the
endless day to day small things that can hold people back, especially it's insane dealing
with people that come from lower income backgrounds have the deck stacked against them in so many
different ways when we had to, and there are problems that we didn't even anticipate.
So for example, one of our students that got hired, they, they got a six figure job and
they went to the job and they were like, Hey, what's your, we need your bank account information
so we can have direct deposit.
He was like, Oh, I don't have a bank account.
And he started running around to all these banks.
They're like, yeah, you need like a, you know, $500 minimum deposit.
And he's like, I don't have $500, you know, like a problem that I, I would never care
about, but it's real, right?
So we had to find a bank that would work for him that would get an account up and running
overnight so that he could have a place to deposit his six figure paycheck, just little
stuff like that.
That's nuts.
I mean, who would even think that that is a problem, right?
But, or, you know, another student that got hired as a react native engineer that couldn't
afford a smartphone and he'd learned, learned everything on an emulator, but when he got
to the job, they're like, wait, why don't you don't like, you don't have a test device?
And of course they were fine with it, you know, it's not, you know, and a lot of our
students are programming on crappy computers that we have to replace.
And there's just a lot of little, little things like that homelessness we deal with every
now and then.
So yeah, we're hoping to get to the point where we can invest more in people than we
already are, but we're kind of leveraged right now.
So we can only do so much per student.
So those are the big problems.
So let's talk a little bit about learning how to be a founder.
And let's bring Charlie Munger back into this.
One of the things that Charlie is big on comes from his own role model, Ben Franklin.
And that's this idea that it is better to learn from other people's mistakes than through
your own set of miserable life experiences.
So yeah, learning from your own experiences is effective and it's memorable, but life is
too short to spend it repeating everybody else's mistakes when you could just read a
book instead.
Who are some of the role models that you look up to?
What have you learned from them and how they shaped your career as a founder?
The biggest one is definitely Jeff Bezos.
I have been fascinated by and studied Amazon religiously, basically since the last company
failed.
And I think the way that, and the funny thing is if you look at all of these people that
create ridiculous outsized returns, whether it's a Warren Buffett or a Jeff Bezos, nothing
that they do is hard in the sense that it doesn't take an IQ of 160 to be a Warren Buffett.
It's hard in the sense that it takes a lot of discipline and analysis and patience that
most other people don't have.
And everything else is pretty straightforward.
I've learned a lot from the thing I like the most about Amazon is their long-term outlook.
And especially if you look at their business model and their returns, they had a unique
business that was spinning off cash pretty quickly, but they were basically reinvesting
every penny and being incredibly frugal and creating more long-term cash flow.
And that's what we're trying to do as well.
We're pretty close to profitability.
We'll be in the next few months wildly profitable.
And finding ways to experiment and reinvest and kind of give yourself a bigger moat and
a better flywheel with that money is what drives a lot of my thinking day to day.
I like that you mentioned the flywheel.
So I'm sort of on an Amazon kick too.
I don't know how, but I only recently discovered that Amazon is this amazing company that I
should probably learn more about.
And one thing they have is this famous flywheel concept.
And so in the Amazon flywheel, the inner circle starts with happier customers.
If they have happier customers, then they'll get more traffic to their site.
And if they have more traffic to their site, they can use that to bring more sellers to
their platform.
And if they have more sellers, then they have a larger selection of goods, which feeds right
back around into having happier customers.
So it's an entire loop that sort of feeds into itself.
And there's an outer loop as well.
So when they get more sellers, they could take advantage of economies of scale, acquire
more goods and bulk at lower expense, and then pass those savings on to their customers
in the form of lower prices.
So now they have happier customers and we fed right back into that inner loop.
And the idea is that because this is a loop, improving any one metric will automatically
improve the others.
Do you have anything like this flywheel or anything resembling it at Lambda School?
And how do you think about growing your business and the metrics that you should be tracking?
Yeah, we actually literally have a flywheel printed up the same way that Amazon does.
What's on your flywheel?
Yeah.
So our inner flywheel, it starts with better students, and that kind of started with...
So the unique thing about our business model is if you look at code bootcamps, where you're
paying $10,000 to $30,000, that market size is inherently very limited by how many people
have that kind of cash or can afford to move to those places or more often to both.
So our original market is like the 90% of the US that doesn't have $10,000 in cash to
go to a code bootcamp.
So the students that we start with are just better.
And we turned down students that if they had $10,000 and walked up to another code bootcamp,
every one of them would accept.
And hopefully we can expand to have more impact later on, but we have to be pretty exclusive
in the beginning.
So the beginning of our flywheel, and then it goes to happier employers.
So because our incentives are different, we are more than twice the length of code bootcamps.
We have three to four times as many programming hours.
We learn lower level stuff, so our students are writing in C and not just JavaScript.
They're learning architecture and operating systems, and we build a state machine and
stuff that you don't necessarily need to get a job day one, but that underlying knowledge
is really, really important and helps you down the road immensely.
And that's one of the reasons our students are getting hired so quickly is because they
know stuff that other students don't.
And it's a very, very practical curriculum.
So we use Git every day and see us students out of some colleges somehow don't use Git,
which is baffling to me, but that stuff creates better students.
Better students causes happy employers, happy employers, you know, we're now at the point
where employers are reaching out all the time saying, hey, who are your best students?
We actually just launched a program yesterday we call trials, which is basically as an employer,
you come in, you click one button that you select an hour, and then we in the background
will arrange back-to-back interviews during that hour.
And if you select the student, you can try them out on a contract at a set rate.
We hire them.
You just pay us an invoice.
There's no paperwork.
We're trying to make it really, really easy for employers to start hiring our students,
even if it's on a short contract kind of trial period.
So stuff like that will cause us to have better stats and better outcomes, and that causes
more good students.
Then there are a couple other flywheels that have to do with getting the best instructors
that's related to all of those things.
So we're, you know, the core of our business is actually people that are really good teachers
and a really good teacher will have an outsized impact on the rest of the organization.
And then the other side, which is harder to explain to people that don't understand the
back end of what's happening in Lambda School, but it's the capital markets.
So the better our students are, the more jobs they get, the cheaper it is for us to borrow
money or the more we can sell securities for, which will let us drive down our prices.
And yeah, so there's, you know, the better data we get, the cheaper money is essentially.
That's fascinating to hear.
How do you know which of those metrics to press on the hardest?
Are you sort of focusing on all of them at the same time?
Yeah, at the end of the day, it all comes down to how good our students are.
So you know, we're working on all of these things simultaneously.
So we have a career development team that is trying to create more and better relationships
with our hiring partners.
We have, I'm kind of the capital markets team, I'm always talking to hedge funds and banks
and seeing how much we can possibly invest in our students and what rates we can get
money at so we can give our students better and better deals.
I think within a couple years, we'll be able to up our minimum salary to 70 or 80,000,
which will just, I think that'll crush other boot camps and other educational institutions
even further than we've already crushed them.
But yeah, it really all comes down to better students.
So the vast majority of what we can do better is in the classroom, getting them to the place
they need to be to get jobs.
That's where we have the most leverage.
You mentioned earlier that you guys are on your ninth iteration of your curriculum and
how you teach students, which is great because I think, you know, one of the biggest shortcomings
with traditional educational systems is that they don't evaluate their curriculums and
even when they do, they don't iterate on them with any sort of speed or rigor.
And I myself have taught quite a few people to code.
It's one of my hobbies and it's not easy to do, it's very time consuming, there's a lot
to teach and the concepts can be difficult to learn.
How would you describe the approach you guys take to teaching at Lambda School and what
have you found works best for people who want to learn how to code?
Yeah, so we, this is another way that we differ from academics very drastically is we take
what we call a top-down approach.
So if you're looking at, you know, the stack, we start on the front end and we want student,
like the hardest thing for us is, well, not for us, but just in general is motivation.
And if you can get a student motivated and excited, they can learn anything.
So we start with the front end, you know, they're building just basic HTML and CSS and
we have them program one project all the way throughout.
So they'll start out by, you know, building out the front end and then, you know, that's
something you can see and you can play with and you can deploy and it might not do much,
but it's there.
And then from there, we just kind of work our way down the stack until, you know, by
the end here, managing memory management and see, and it's a different, completely different
level than most of the web stack you started with.
But we, we try to get people excited really quickly.
And then, I mean, some of the answer is we just hire the best people and we have a really
solid ratio.
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 while
you're stuck.
And that's expensive to do, but again, it comes back to our returns, right?
If that moves the needle for that student, then they get a job.
It's, you know, we can mathematically show that that's a good investment for us to make.
Yeah.
And then the other thing we do is we have for each section and, you know, a lot of it is
just really good pedagogical standards where, you know, we show you something and then we
do it together and then you try it on your own and we critique it and, you know, the
kind of I do, we do, you do approach.
But then if anybody is ever stuck, we, we have intentionally created courses that start
so frequently that you can easily bump back and do something over again, or you can't,
it's much, it's actually really, really flexible.
And we take feedback at the end of every lesson and at the end of every week.
And we gather all of that as data.
And if we ever see any problems starting to flare up, we can patch them and fix it immediately.
So our curriculum is literally changing every day.
And we have basically this big database we use, well, we use Airtable on top of our database
to manage all of our curriculum.
So we're going in and making little tweaks literally, I don't know, 20 times a day.
Our curriculum will change and it's, it's subtle, right?
But that's another one of those things we're talking to our users, really understanding
what's lacking.
That makes a big difference over time.
And I think our, our first class had it better than most other students did at other institutions.
But I look, you know, our ninth class is about to start and it's like, man, they are just,
I don't think there's ever been anything quite like what they will experience.
So it's really cool.
Yeah.
You're measuring and making these tweaks based on like actual data.
It just seems like the more, the bigger and bigger that your program gets, the more students
who go through it, the better your program is going to get as a result, because we'll
just have more data to make better decisions.
And it's like, yeah, I think what you're doing for education is great.
I hope this really catches on and that other schools start doing similar things, because
it's just ridiculous to me how bad we are at teaching and how inflexible our teaching
systems are and how we will take, we have all these things that exist elsewhere in the
world.
Like any tech company measures their metrics and they look at what their users are doing
and they try to make their product better.
But for some reason, education just doesn't, just doesn't give a shit.
So I'm a huge fan of, of your approach.
It's incentives.
I'm telling you, it's incentives.
Yeah.
Because you guys have no other sensible financial choice other than to care about your students
outcomes, so you have to do a good job.
So a lot of people listening in want to start an online business, but they have no idea
how to code.
They aren't technical.
And for some people, this is a really stressful situation because it feels like they can't
get started unless they learn how to code.
And you're a completely unbiased opinion as the creator of a programming school.
Should aspiring entrepreneurs take the time to learn the code before they start a business
or should they just jump in right now?
I don't think they should.
I think they should learn along the way, but we didn't write a single line of code for
the first three months, which is really, other than like in our class, because that's the
actual product, but we basically, I mean, for almost anything days, there's a product
that exists that you can do for very cheap.
You can tie a bunch of pieces together and get started and get started talking to people.
I think in the long run, it's incredibly important to be able to program, to test an idea and
to know if there's a market for something.
I don't think it's true that nowadays you need to be able to code.
I think really quickly you'll get to the point where you'll wish you had somebody technical
on your team, but I'm a big believer in the idea that the biggest thing holding most people
back from doing stuff is making excuses about why they can't do something instead of just
figuring out what they could do to work around it.
If you don't program, that's a really easy thing to solve once you get to a certain point
and you can just hire somebody or hire a freelancer.
You should learn it just as out of principle so that you know what people are talking about.
It's not easy to learn, but it's not rocket science either.
I shouldn't say that because it's really hard, but it's possible to learn.
One of the things that we're realizing is we have a machine learning and data science
class, so it's kind of artificial intelligence.
That stuff requires a pretty heavy math background if you're going to do it at a serious level.
We started with the assumption of, okay, we need people to understand calculus.
We need them to understand statistics, and the farther we got in it, we realized actually
we can just teach people calculus and we can teach people statistics.
When you're teaching people in that context, it's hard still.
It's always hard, but everything is so doable.
You can learn anything, and that's really what your full-time job is as an entrepreneur.
It's just learning stuff that you didn't know.
You'll probably run into somebody who's an expert in it, and you'll feel dumb, but you
have to learn it.
What do you think is the strongest opinion you've had that's changed as a result of things
that you've learned by being an entrepreneur over the last five or ten years?
Yeah, one of the big things I've...
Going in as an entrepreneur, I came in just like, okay, I can learn how to do everything
better than anybody else, and so we're just going to start from scratch and we're going
to do everything awesome.
Now I am of the opinion that there are people that are really, really good at some things
and solutions that exist that are really, really good for some things, and you should
pick one or two areas to innovate and innovate like crazy there and use really boring solutions
for everything else.
We're not innovating on... We use Salesforce, which is super ghetto, clunky, really enterprise-y
software.
We use a lot of enterprise-y solutions for what you would expect for a hot tech company
or whatever.
We find stuff that works that other people have already done and plug that in in the
places where we don't need to innovate because you can only innovate in so many places.
And then as you get bigger, sure, when I went into the Uber offices, they've built their
own internal version of Slack because if they can save six minutes per engineer, they save
like a billion dollars a year, so it makes sense to hire 15 engineers and build their
own version of Slack instead of paying for it, which is just... That's a different kind
of scale.
We don't innovate on anything and everything, but for us, we have a very limited scope,
and we try to do the things that we do incredibly well, and things that we don't care as much
about use really boring solutions.
It's so tempting to want to just build everything in-house from scratch.
You mentioned earlier that you guys use Airtable.
I use Airtable as well, and it's super flexible, but I bet you anything that you guys do in
Airtable, you're tempted to build out a custom user interface that you've designed yourself.
Oh, every day.
Yeah.
And it would be such a loss of focus to constantly give into that temptation, but it's also so
easy to convince yourself that you should.
I think especially engineers fall into that trap, where you can... You know how to build
something that's better, that's more suited for your particular circumstances, but if
you do that, there's opportunity cost to everything, and that opportunity cost is huge for us.
I think that's one of the actual advantages that you get if you are an entrepreneur who
doesn't know how to code.
Because I talk to so many programmers whose businesses go off the deep end because they
get sucked into building feature after feature just because they can, whereas if you don't
know how to code, sometimes you are a little bit more likely to be focused on the actual
challenge at hand just because hiring someone to program your pet feature just doesn't make
financial sense.
Yeah, I've never seen a company that's struggling and has tacked on one more feature and that's
solved it.
If your core thesis is wrong, an engineer just wants to build more stuff.
I've seen that death spiral so many times where something core to the business just
clearly isn't working, but it's so much easier to build stuff around the outside and see
if you can compensate for that.
I think that was a lot of what my first company was.
The core problem we had is that people don't actually want to go to one specific location
to see fact checking.
Everybody thinks they like fact checking.
Nobody will say, I wish my news were inaccurate, but they don't care that much.
We would build all these features to make crowdsource fact checking better, but at the
end of the day, the core value prop wasn't there.
To the man with the hammer, pretty much every problem looks like a nail.
I think it helps if you're a programmer to just be suspicious of any inclination to solve
a problem using code.
And the same goes if you're heavy on any other skill.
If you're a product designer, you should be wary of always thinking that the solution
is fixing the product.
I read this book last year written by this marketer who was talking about different businesses
from the 20th century and he analyzed every success or failure by attributing it to branding.
If Toyota didn't sell enough cars, that was branding.
If their CEO didn't retain enough employees, that was branding.
And it seemed ridiculous as a reader, but I'm sure from the author's perspective, it
made a lot of sense because that was the area that he knew and he always saw how any problem
could relate to branding.
And of course, we're all capable of making the same error and judgment.
So let's wrap up with another mongerism.
One of the essential pieces of Charlie Munger's wisdom is inversion.
And that's this idea that instead of always asking what you should be doing, every now
and then you should flip it around and ask what you should not be doing.
So instead of sharing with us what you think entrepreneurs should be doing to succeed,
why don't you tell us your thoughts on what a new or aspiring entrepreneur should avoid
doing if they want to build a successful business?
That's a really good question.
I think there's like this weird, I don't know what the right way to describe it is,
like there's this weird hype cycle, especially around Silicon Valley.
But I see the competitors we have that I worry about the least are the ones that get the
most press and they're the ones that are the most beloved by the people that don't matter.
And VCs can fall into that category if for us they do at least.
Keep your head down, keep innovating on the stuff that actually matters, especially when
nobody sees it.
Nobody actually knows is our class performing, like is our experience better than some other
school and they won't see that for years until we have a lot of data.
And I think by then it might be too late for our competitors to create something better.
So just keep your head down and focused on the stuff that matters.
I think that's the hardest thing for any entrepreneur to do, but just really, really, really nail
your core value prop.
Cool.
Well, it was very fun talking to you, Austin.
Thanks a ton.
I really appreciate you coming on the show and sharing your stories and strategies and
your advice so candidly with everybody.
Can you tell listeners where they can go to learn more about what you're up to at Lambda
School and what's going on with you personally?
Yeah, Lambda School is lambdaschool.com, L-A-M-B-D-A, school.com.
Although if you forget the B, we own that one too, so that's not a problem.
And then I am Austin Allred on Twitter.
All right, Austin, thanks a ton for coming on the show.
Cool.
Thanks, Portland.
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