The Twenty Minute VC: Lambda School founder, Austen Allred on why unemployment is an optimization problem that will be solved over the next 20 years
|David Senra||Mar 18, 2019|
Where the idea for Lambda School came from: I was working at a company called Lend Up. I was thinking about how you can help move people from where they are now, to a place of better financial health. There wasn’t anything out there that was increasing people’s income.
I felt I needed to get to Silicon Valley. But I didn’t have any money or connections. I drove to San Francisco and lived in my car for a few months.
Living in your car in Palo Alto is disorienting. You are surrounded by so much wealth, but you have none of it.
This made every thing feel very urgent. Every minute I spent not working was another day I’d spend living in a car.
People vastly underestimate the psychological impact of having just a little bit of money. Having just a few thousand dollars is vastly different compared to having no money. This impacts the kind of risks you can take. This impacts a lot of what we do at Lambda School.
I had a company blow up before. I had to go get a job. It was fine. I play a psychological trick on myself. I think there is no downside. It was a benefit to hit rock bottom and bounce back quickly.
We have never lived to please investors. We never run the business to make it marketable to VCs. I think that is a recipe for disaster.
Something I think about all the time is an idea from Ev Williams: You can build a great product if you think of a fundamental human desire, and then take out steps.
How Lambda School applied Ev’s idea: We started out as 1 of 200 code schools. We had no differentiation. We realized what people were really looking for was a high probability of a positive outcome with low risk. We came up with an offer. We said if you put $1,000 up front, after you get a job you can pay us the rest. Normally we would get one or two applications. That time we got 150.
This led us to make Lambda School completely free upfront. You don’t pay anything until you get a job.
We want to eliminate unemployment and make income mobility instant. What if there was an easy way to have all the training and resources you need to get a new job, and it was risk free?
How do you iterate so quickly? It is something we had to build into our DNA. The Lambda formula: We run a lot of experiments, we run them concurrently, and we run them quickly.
Jeff Bezos says what if you were a baseball player, and every time you hit a home run you’d score a million runs? You should be swinging for the fences every single time. I think that is true for startups. If you find something that really hits, you win. So the focus should be on the number of at-bats more than anything else.
We have a culture that if we have an idea, it needs to be shipped by the end of the day.
What do you believe that others disbelieve? That unemployment is an optimization problem that will be solved in the next 20 years.