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

Full podcast here.

  • 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

  • Book recommendations: Les Miserables and The Wright Brothers.[I read The Wright Brothers and discussed some of the ideas I learned on Founders Podcast #28]

  • What do you believe that others disbelieve? That unemployment is an optimization problem that will be solved in the next 20 years.