#117 Austen Allred - Lambda School's Founder Brings His Best Ideas

yeah i feel like i could rule world i know i could be what i want to put at all in it like a days all on a goal travel never looking back ride okay so austin all it's all is police lessons yep yeah so austin all reds here he's a founder of lambda school which i've just been shameless pi on the podcast for like a year so you probably already know about that he's he's a interesting dude and i don't know which austin we're gonna get there was controversial twitter austin that was around for i don't know like a year again then like he cleaned it up a little bit get you know tightened it up as the company was growing so i don't know are we gonna get tightened up officer we're gonna get lucy goose why you you can request for lucy goose sure my team isn't listening right now so we're aren't good right but i'm in it for the i'm in it for the clicks in the listen so you know the more controversial and interesting things you say the better so can you give sean and austin can you get background what is you his business is called lambda school what is that yeah so we train people to be software engineers and data scientists in live online classes but we don't charge anything until you're making more than fifty thousand dollars a year after the program so the idea is we can der risk education for people then you can kinda go for the education that you ought to i mean incentives are aligned between the school and the student so we don't get paid unless and we don't make money unless you're successful and that's kinda how we think it should be so like a free school and you get a percentage of their of the revenue that the student a percentage of the salary that student mix to a certain point and that's how you get paid back yep that's right so basically we get seventeen percent of salary if and only if you're making more than fifty k a year and then once you've hit thirty thousand dollars or twenty four payments the monthly payments whatever comes first it it's done so it's either two years or thirty grand whatever comes first and if you don't get hired making more than that amount then we never make anything and give people a sense of the the sort of scale of because it's been pretty wildly successful so far and and kinda just getting started but give you people a sense of of you know how lambda school has grown over the last few years yeah i mean we started what was it three years ago with our first twenty students and now you know we enrolled three hundred or four hundred students a month so you know we're talking in the realm of it we're we're like that's a lot of software engineers is actually you know it's not the biggest university by any stretch but you know we're we're placing more software engineers and you know we're we're think about like the uc system right all the uc schools we're about we're a little bit bigger than that as far as software engineering goes then all the uc schools combined correct wow that's kind of awesome wow so the math is if you're adding three hundred a month that's thirty six hundred a year if you if it just stays the same and if you can earn thirty six thou i think you said thirty six thousand dollars off of that so that means you're adding a hundred and thirty million dollars of revenue or a potential revenue lifetime revenue sam just selecting that mental math right now yeah i mean the i i wish it we're that simple okay but yeah i mean so let's say a our average student gets hired making seventy k right so that student will pay back just less than twenty five k but we'll round it to twenty five for sake of simplicity so if we're getting four thousand students year hired then that's a hundred million a year kind of over overtime run rate but you have to finance those is so we basically borrow against them and we pay a lot for that and then every student that either drops out or it doesn't get hired we don't get paid for so those those cuts are you know the that's a difficult thing right and so you think about like a you know a university that had like a seventy five percent graduation rate and a seventy five percent hiring rate those are pretty good numbers really quickly you're at you know fifty percent of the students who enroll were successful so as multiplier eat in really quickly and that's the name of the game is making it so that as many of the students who you can possibly make successful our successful that's that's why the incentive line matters right because traditional school you enroll and you know whether you get a high paying job or not you know of course they'd like you to get a high paying job but they don't need you to get a high paying job they got their money either way and so for you guys and it's not that you're nicer people than everybody it's that the business model actually depends on you successfully getting people high paying jobs which is what they want to and so like when everybody gets excited about lamb deal was talking about is which is like you know this mechanism it's income share agreement but that's kinda missing the point it's more about the fact that you your success is tied to the success of the student in a way that normal university is not and that's why your product is gonna be better that's why you're gonna train them better that's why you're gonna hustle harder to get them jobs that's why you're gonna filter candidates better because you need that to work for your business to work and that's not the case for a traditional school totally yeah there there already been a few points where we've kind of you know looked around the the room with at my executive team and you know our our executives are like they're the best in world at what they do you know and you look around and say you know we're at a point right now where we're doing a pretty damn good job and if our only incentive were was to like you know we produce to report at the end of all this or something like we would be patti ourselves on the back but we're looking at our business model and saying oh my gosh no we need to drive so much harder we need to do so much better to to get to where we want to be so so yeah i think you're right the yeah i say it's cool but the is itself isn't that interesting i mean it's nice to you know it's a more flexible financial instrument for students but the incentive alignment really is the key and we'll jump millions and millions of dollars into getting our hiring rate up a couple of points if the math works like that how are you austin i'm thirty you're only thirty wow okay how much money has the company raised just over a hundred twenty million and so you guys have i've only been around for three years how to hell does that happen so fast when when i first talked to austin i remember you had at you know we were talking i was like wanna invest in this company and at the time i remember you had in total graduated eighty students i think there's was a eighty students total in the pipeline and couldn't graduated and not graduated yet and i remember that same math you just did where you got to like four it takes about four thousand students to get to about a hundred million in revenue that was the math i did i think i got all of the variables wrong like the wrong way i i i have the wrong like assumption of how much you keep i had the wrong assumption of whatever but i i also got to four thousand i was like oh he's gonna get to four thousand for sure and you've you know you're you're you're on your way now but anyway sorry that that's that that's how great that wasn't that long ago when it was like eighty was the total number of students that i who had even experienced the goddamn thing dude austin being one twenty wasn't that long ago like right austin losing his virgin virginia wasn't that long ago and that's really what how needs to that not as they're talking like in the hundred million dollar range business yeah well i mean to be clear that's like a hundred million dollars of like you know i almost think about it like gm right like we don't sure it's it's cute to say look if we get four thousand students hired then we'll eventually get that hey we're not getting four thousand students here are hired we're a fraction of that b the the financing mechanism is probably the most important and most misunderstood aspect of land the school because the the cost it would you know if we could raise half a billion dollars and then just sit there and wait for that hundred million to come in we could do that but that's not that's not how it works right like our our equity investors do not want to put in you know a bunch of money to buy is sa they want to they want to build a technology company and so we have a different different pools of capital that are for basically borrowing against the is sa and you have to and so you kind of take what is the expected revenue per student at you know early on in the program and then you discount that a little and we can borrow against that and then after that it starts to trickle in over time but how how how how big will this get you think i mean multi billion dollar year business yeah for sure i mean so i you know think in terms of students right so century i mean yeah holy it's not gonna be easy to get there by any stretch right like there there's a reason no one's done this before that's because it's just really freaking hard but from from a kind of macroeconomic standpoint right think about how many people there are in the united states who are making thirty thousand dollars or less who could be making fifty thousand or more and you can you you can move those numbers to forty and seventy or thirty and fifty or whatever right like the number is outrageous and think about how many companies would hire those people if they had the right skills that number is outrageous just too so the difficult thing is you have to close that full loop so you have to take someone from having never heard of you to hired and repay which is like three different businesses baked in there and then you have to have that right match right so it's not too dissimilar from a two sided marketplace in some instances where you have to find the right person you have to find the right company you have to train the person then you have to get the person there and there are different mechanisms of doing that but it's so it's it's really difficult to do but if it works it's really really powerful and and last question for me on this how do how many people work there right now hundred seventy in change damn there's a lot of stuff to do in three years san well that's when we're gonna full time we have we have full time or part time kind ta we've got about three hundred or four hundred of those so it's a it's a big organization for sure what we understand when we were going through the acquisition process i was like oh it's either gonna be this big company this big tech company that big tech company this big tech company and i was like damn where would i actually wanna work and i was like i was like the only company i wanna go work at to earn out of any deal would be land school i was like the most exciting it was like top my list so i emailed austin and i was like hey you wanna buy my company it has nothing to do with what you guys do but we've done some live video stuff and pretty smart and he's like alright well you know what do you do oh yeah you looked at it and then was like you know we'll take you know seven percent of of lambda school and he was like yeah that they'll reply but i was like that that would have been you know it it i i think every kind of five years just like a handful of companies that are really interesting to work for it when i moved to silicon valley those were like stripe and angel i thought were the two most interesting companies to work at they were small at the time but i thought they might get big and right now would put lambda school in that bucket with i don't know what else i put what do you think austin what are the other like i super curious who else you're gonna name let me think like i think about who like the hot complex flex are i think flex sports kind of interesting dude i don't wanna hear that anymore that's been there done that we all know we all know that's bad at yeah four years ago it would have been the one like airbnb and uber at at you know to in the two thousand and nine range thousand ten eleven whatever that was like the time when when those are really exciting yeah i think i mean when i was starting land the school so you know couple years ago the ones that i was like oh my gosh these are gonna be incredible companies air table i was just like oh that's that's gonna be a winner you could already tell i'm sitting with notion for i mean per different purposes super super human i was just like oh finally someone's making a great product in this super super obvious space i'm in love with rome research i don't know how big the business gets but i think it's super interesting it's still super early i don't wanna hear about room research i can't stand this shit man i like because like it's like i'm sure the the the creators seem cool the products seem cool it just doesn't sense to me how a note taking app can so i i'm a i'm a small time i'm a part owner and a small note taping taking app and it does eighty k a month in revenue which is probably what rome does and i'm like wait what how does how does this company raise at a multi hundred million dollar valuation i don't get it i don't get how you could do that with a five dollar month thing well companies that vc yeah cup companies that vcs understand in general get like a thirty percent premium on on everything you know because they can explain it better to each other and so they all get it but but yeah sam this is good the more you and it's like when you insult a gen z and they all came for you and they all discovered our podcast is the same insult a rome research cult and they'll all be here to defend themselves up in arms of it's crazy man i don't get it like here's like here's what your computer gets my pen of paper i i don't get it but whatever awesome you should tell people about i know you probably told the story a bunch but frankly it's kind of it's kind of a great story which is your like i was sleeping in a car before i before i you know started lambda school type of thing so so explain explain that story so you you come to san francisco you wanna live the dream and you how the hell why were you sleeping in a car yeah so i mean going back a little bit further i i was going in college i was at by in pro utah and i was just kind of like i always knew i wanted to do something and i'd always love technology and for some reason it didn't click until i was like twenty that that was like a think that you could just like go run tech companies so i was like oh my gosh that's awesome and there's this place called silicon valley and so i would know and the provost scene like the utah start up scene is you know it's it's getting there now but at the time there'd been kind of omni and there was word perfect but it was a very sales driven culture for a variety of more mini reasons but i you know i've found that like everybody was just like hey let's build a marginally better crappy product and let's just go sell it like out of yeah and the i mean that works right like that totally works but i wanted like i had a real love for product and design and like the way things work and like you know changing the world in a way that you can't just like you know let's make a new saas app for dentists and like let's sell it like crazy so i i was pretty frustrated that i couldn't find that there and i wanted to be a part of that so is is even more than just silicon valley like i wanna be in somewhere where they make great products and they make great stuff and you know the the culture in utah was like yeah we'll find a developer off the shelf and they can like build the things so we can go sell it and like that was where the excitement was but i didn't have any money i didn't really have a job i didn't really have any you know super tangible skills and i saw on like hacker news there are some guy who would like reeves like reworked his honda civic to live in it and i was like oh my gosh i have that same two seater honda civic and it crazy as it sounds like i started looking at like rent in the bay area and it was like eight hundred bucks a month and i like you know who could afford eight hundred bucks a month that's ridiculous right for one room yeah so i just put an air mattress in my car and drove out there and said i'll figure it out and eventually did and it work out what was your what was your job before lambda i did like some marketing agency stuff like some seo stuff when that was a thing that people that like that was a career path for a while was like you could do seo in san francisco no just freelance like there's there's actually a company that i got connected into randomly that they needed like seo copy right so it wasn't like real seo was just like hey we need content about this thing and we don't even care what it says so we just need like we just need we need a monkey to pound out some words and i'll pay you like five dollars for every five hundred words that you pump out we we need thousand some words and twenty five percent of them need to say the word email totally one i i yeah i was working with a buddy on it and he probably had the better methodology he would get super high and just like crank stuff out like crazy well i tripping and nobody cared because it said the right amount of words in the right you know phrasing but i i never but then you you like you like thought of this idea and then you went through y comb and that's kinda how you guys between so you you're you go to san francisco you're in your car what happens between there lambda school yeah so actually i i started another company between there in atlanta school so that was a we're saying hey social media is all over the place but it's not fact checked and we're so relying on these reporters who are at the end of the day just like random people on social media trying to like figure out what's going on so we've built like a crowds sourced newsroom kind of a wikipedia for journalism basically where you can go in and the product would let you like pull in sources and fact check them and kinda try to do that in real time it was semi working but it didn't i mean it was so far from actually working we had a bunch of users but far from a revenue model which turns out is yeah you wanna be close to revenue model so it raised a little like half a million dollars burned through that and there's a long story and it ended up going to zero and then went to work at a company called lend up which was a kinda yc company in san francisco so that was basically me moving from hey i'm like ten steps away from money changing hands i wanna get as close to the money as i can and so i kinda went down the fintech e route which is a lot of white school worked because i was always thinking about risk in capital markets and you know how you can move money from one place to another and what the i are needs to be able to make that happen and how sec accusations happen and stuff like that and then when land school was just getting started i was like wait there's gotta be a different way that you could you know think about this risk and shift it around and pool and that kind of thing and could you you're mormon right right from i just went and lived in utah for i mean i what i'm i i lived in san francisco i gave it up my place now i just live on airbnb bs and i picked utah because the mormons fa the share out of me you know sean and i our friend sometimes when i'm out or sean's out he's our friend named stu subs in for one of us and he converted to mormon which is weird no one in his no one in his family's mormon like i've never heard of that and so he kinda like taught me about it and then i also had a friend of a friend with josh james the guy who started i and he like and so i'm like crazy fascinated with with mormons and the culture there was so unique and interesting what is it that makes this so this high penetration of interesting startup entrepreneurs yeah i mean i it's a few things like the for me the most formative period of my life and by a lot was serving a mission so for those you don't know mormons when they're it used to be when they're nineteen when they're eighteen now you basically put in your papers and you say hey send me somewhere and i'll go teach people about jesus and do service all day basically so i put in my papers when i was eighteen and then what they called a mission call so basically the letter comes and you gather around with all your family that says you've been called to serve in this area so for me it was done ukraine so eastern ukraine kind of up against the border of russia so you spend a little while trying to learn the language and kinda getting your feet wet and then you're basically just shipped out and you have to figure it out so i had to learn to speak russian yeah i i went on my mission in like crazy ask to be like y just learn to speak russian you only have two years on the mission anyways right so it's like what do you it's it's not that crazy dude what happens when you're when your family i'm here like that's just what you do right i mean so many people have to do that well it's one thing to do it like kind of on your own choice in your own accord like i wanna go to america that's why you know and i speak a little bit of english i'll improve it versus like you're told hey an organization ukraine is for you start brushing up you know you you wanna even if you wanted to spread the gospel you you literally have to first learn a language which takes months so what wouldn't did you even do the first few months when you don't not to speak russian yeah so so you go to the missionary training center and that's like like lyme school is kind of modeled after that actually so it's like you show up on day one and by the end of the day you're like you should know the alphabet and you should be praying in russian right and obviously it's terrible and you don't understand cases you don't understand the grammar but like just school equivalent of day one it just work what do you know day one of lambda i mean day one you should be submitting your first pull request right like and i don't think that's actually day one anymore that's but like yeah you're gonna build your first website using html and css like you're gonna go and the pace is intense and it's very much like you're gonna get thrown into the deep end and figure it out because that's the only way anybody learns anyway i mean like i so i you know i came back you know spoke russian fluently and went and took a couple college classes and they had you know a way that you can like test out based on what your level of russian was i think i got like three years of full like i got like a hundred credits of russian and you know you still go to the russian classes of the people who weren't living in the country and they're like you know try and figure it out and you're like oh my gosh there's there's no way there's no way so there's definitely something to immersion and just like getting thrown in mormon of question do you keep track of how many people you convert like do you know how many people you know sort of heard the message and and actually like sort of went down the path yeah what's like your quota i mean so it depends a lot right if you're in south america or africa it's very different than eastern ukraine so in my mission if you converted anybody like over the course of two years that was a win like like one is a win yeah yeah and like that my friends in south america like you know two or three on a weekend is normal so it just totally times i know the ukraine don't the ukraine don't need jesus that just not it i mean take twenty five years of government forced atheism and then layer on hey we're this american church you should join like it should there's not product market fit there right to say the least also stop could sales yeah stop drinking and smoking and only have sex with your partner who you're married to like the this is not it's not interesting to the average you're training this is like four here's your approach but how do how did you go about it what what's the sales funnel yeah that's a really good question there are a couple ways first is english classes so i taught in insane amount of english right and for a couple of reasons first that tends to bring out people who are a little bit more open minded about like if you're like hardcore russian orthodox you wish you go back to the soviet union like you're not gonna come to an english class and a lot of people i mean it's it's just a different culture right like people thought we were spies people did not like americans they did not trust americans they were kinda bummed the capitalism was a thing because their version of capitalism is basically run by the mafia so it's just super super different right people then the other one is just your brute force numbers so you know there were probably six months at a time where i would spend twelve hours a day knocking on doors or approaching people in the street and your top of the funnel is huge and it doesn't you know your funnel is not very efficient and you have a sales funnel like that and most companies you would get fired but that's just what you did so so were you like extremely motivated every morning when you woke up like i'm gonna do this or was it like well no i'm gonna enjoy the ukraine and i'm gonna do a little bit of this no it's super shocked and there are times like months at a time when i was kinda depressed honestly and every you know that's not unique to me i think that's just like when you so yeah you keep a really intense calendar and you follow the calendar to the letter what we call them planners and you set goals every week and you report on those goals so you know everybody in the mission reports their numbers up to the mission president and so you're keeping really i mean steven covey this is this is business school yeah i mean steven i mean stephen covey like it basically took the mormon missionary planner system and turned it into seven habits like that this is this is like you know when i when i hear somebody's time in the military and i'm like wow that's an incredible amount of adversity resilience and sort of like you really developed yourself during that time but this is that with you know less of some things but more of other things which is like sales human psychology marketing you know you have to develop those skills in order to be successful here so i i may only work with mormons going forward but yeah well so well they're my i think mckinsey or bain they used to have a joke where it was like military what was no military mckinsey or mormons yeah i think exactly they went to hire i think it's harvard actually the was it harvard harvard business school is military mckinsey and mormons yeah yeah that's that's like how my my school also that's how i i now believe so is that okay if we just jump right into some ideas because you tweeted something there's two ideas that i wanna bring up to you the first is levels because i see you're wearing it i anyway and sean and i were beta testers for and it was cool the second is college applications so you tweeted out something today that was crazy fascinating you said that colleges earn close at five hundred million dollars a year i think from college out applications what what's that what's the what's that i mean it's such a build up just like you gave up at the same thing see yeah like what's that what's that about so here's like the forty dollar application i fill out that there's five hundred million dollars worth of it yeah i mean do the math on that right and you you can actually look at it broken down by like school and it's like you know ucla will have a hundred thousand people apply and they'll all pay eighty bucks right like it starts to get crazy money so isn't there like a common application yeah so there there is something called the common application which i mean the the interesting thing is if you're ucla like you don't wanna use a common application because then where's that eight million dollars yeah you you do and you don't so the common application you can basically like set a trigger and be like yeah i will accept applications from the common application the problem with it is everybody who's using the common application is just spray and praying to everywhere yeah it's like d dot com right and it yeah exactly it's or like the linkedin like one click apply unless lincoln is a sponsor and then it's a different no they're not a a sponsor or an enemy as far as i'm concerned yeah it leslie wanna pays five thousand dollars and then in that case yeah we'll talk about it yeah but looks like so the way you use the common application is to get your acceptance right down because you're gonna get a hundred thousand applications of people that aren't really interested in going to your school they're just gonna check everybody and hit submit and now you have a two percent acceptance rate because a hundred thousand people who are never gonna go to your school applied and for some mess up reason that's like the main metric that the school rankings use like the us weekly school ranking like the first thing it looks at is the acceptance rate which is a weird set of incentives to be like the school that turns down the most people must be the best school but that's yeah that's the other game that people play so there is no business down this path is what you're saying i don't know like the the incentives are just messed up right so you have to like you have to work backwards and the incentives of like what does the school want the school wants a ton of applications it wants those applications to be as expensive as possible and it wants to be able to broadcast as low of an application percentage acceptance as possible so maybe they're and like that's who you really need to serve at the end of the day like you can serve this the would be applicant in that world but like the schools have the quasi monopoly so if you don't please the school somehow there's nothing in there so the business that i saw that was in this space i i've talked about this before this was the company i was i could have invested in at the seed is now a billion dollar plus company and it's called a applied and what they do is they they went to the colleges and they they basically realized as one insight which is colleges make three times more from international students than domestic students oh that's a killer business and so they went to the schools and they said hey you know if i'm sitting in malaysia right now or in the philippines and i wanna apply you know what do i even i even know that brown is a university i think it's a color so hey bro why don't you pay me three thousand dollars for every student that you admit that's international and i'll just up your international volume for you and the schools like why aren't sure it's success fee based right i'm making thirty k off this person i i'll give you three and so then they went and signed all these deals with all the universities and then they went to the students in malaysia to the philippines who wanted to come to the us and they're like hey we will we'll make it super easy to apply right you you do a common app here i will send that common app everywhere and it's like this international student like you know what are those like human trafficking things it's like that but with a you know with with less evil and that business is a makes like ivy league yeah oh that's super smart yeah i mean the the thing that makes money more than anything else in higher education international students and that's one of the reasons that so many universities are struggling right now is i mean a yeah the it's their the desire to come to america to go to college is lower than it has been in a while but they're i mean not even because of covid the trump administration is basically i think at times intentionally being like hey if we you know stop this revenue flow then all the universities hurt and all with those guys basically talk so by the way why why do you schools charge three does war for like what is their shitty justification for that a can i mean that's crazy easy it's like yeah you guys wanna come here so much more than we want you here so you're paying full freight or like an in state student we're gonna cut our tuition and third or whatever like basically it's it's international students subs local students so i think there's probably an opportunity there to cater to international students who who would like to not pay the three x rate and and and and so maybe there's a there's an opportunity to either as a university differentiate by not doing that or like come up with some shitty system that like it'll you apply as a domestic you you create like a body double that that sort of yeah like gets them in at the domestic rates well i've i husband been kind of fascinated by this but like and when you hear about in know old olden days people would get into all sorts of colleges and like and there i've heard number of stories of people applying under a fake name or like i mean now i'm sure they've locked it down but for a while you could just tell a school you had like a perfect sat and they'd be like awesome like least come here and they never check like that's crazy but anyway i actually think there's there's something to schools moving away from the sat and act that's gonna be really interesting so a new a new sat a new act i yeah i don't i don't totally know what the right angle is but basically if you look at the that uc is one of the they're kind of like the same way california from a regulatory standpoint whatever california does a lot of other states tend to follow do you see is kind of that for colleges so you see kind of sets expectations and they're moving away from the sat and act entirely and basically what they're saying is hey these tests are racist because different populations perform differently so we need to find a different measure that you know matches that and they so they went back and they did a study and the study came back and said okay yes that's true but it's also a leveling feature because if you're a poor student who's really smart there's no way in hell you're gonna have the same extra extracurricular as someone who who came for money so your only shot is these standardized tests so net net you know it's going to hurt diversity but the push pushback against the sat was so strong that they killed it anyway and so now there's like this there's this black hole of like what is the right way to evaluate you know who should become a student and you know what one of the main reasons in my opinion that employers are like it's really easy to hire a stanford grad because you know they're gonna have a high act score they're gonna have a high iq they're gonna come from wealth they're like all the risks are gone generally speaking wow so check this out okay so i'm just googling this while we're talking you know all about this i imagine the the so is this how it works the college board owns the sat is that correct yes that the company called the college board and then educational testing service that's the one who administer the test is that right i don't know what that means administer what's the difference between administer they run like the brick and mortar like primary health test or like creates the test and then you show up at like a for me it was like you go to a high a local high school and there's people there making sure you don't cheat and like handing out your scant trunks and stuff okay so the so educational testing service that's the name of the company etfs right that wow they did two point one billion dollars in revenue last year and then the company the college board it's a not profit so this is all public in two thousand and eighteen they did north of a billion in sales and something like two hundred million dollars in in profit yeah fucking crazy and all they all they do is make the test that's nuts i mean that's a lot but that's pretty crazy i what they really did is got all of the universities to agree that that was the thing right like if you have that then you you know you do whatever you want on the other side and the revenue has almost doubled in ten years yeah because i mean it's now like that and they kinda started this meme that like the reason some kids aren't getting into good schools is because they never take it so they kind of they they're trying for like a bill that like government would fund taking the the sat here or the act like any high school student just signs up and they get a check from the government now they're kind of force it into like hey school districts you should really find a way to pool money and like guarantee you every student takes it so it's that's good business is there a world where is there a world where somebody i'm and by the way didn't even look up the act i have no idea how to that big is it it looks like it's a little bit smaller but in the same book but in the same ballpark maybe what about is there a world where this where a new standardized test could exist well so i think the pushback you can standardize test is going to be big enough and broad enough that i don't know if that's the angle you can take i mean their companies like criteria corp has a test called the cc cat the criteria cognitive aptitude tests let's basically think sat for adults right for adults entering the workforce and there are enormous companies with hundreds of thousands of employees that we'll use that as one of their criteria for deciding whether or not to employ you now there are some legal foot work that you need to do because in the us for basically everybody other than the military it's illegal to hire based on iq alone for obvious reasons for some reason the military just does what it wants like so you can't really get into the military with an iq of below eighty five and military test that rigorously and it's fine and everywhere else you know the argument is made the iq is a sub optimal measure which i agree with but it's also a really easy way for employers to you know rule people out or to you know find the diamond and the rough whatever so there's i know there's still something around how do you test and how do you find the right type of talent that is interesting i don't know what it is so i have a half baked idea here when i was in the seventh grade i took this test i don't know if you guys took it but it's it was called the the ti the talent identification program did you guys ever do this mh we did something similar ours was called the iowa agenda that was in yeah so so the one i took was actually it was called the duke tip program and it was basically duke universities endowment had created this thing called the talented identification program they did it for seventh graders which was kind of like earlier in the funnel before you even take your psa that sort of thing and they created this and it was their own little test and if you took it you basically got this certificate that was like congratulations you're like in the program just for taking it and your parents were all happy because like this university says you're your talented potentially and then if you did good if you're like in the top twenty percent or ten percent or whatever you would get this like special thing which is like we have identified you as a talented person that we would love to have you someday come to this school and it was there like way of is getting a whole bunch of people to know about duke and then apply to it that's kind of when did and it worked on me like i literally went to duke and i remember getting note like recognized in this thing back in seventh grade and it planted a seed and so i wonder if you could create a new tip program and maybe you do it like for you know a minority students or in in lower associate economic classes where you you go to certain neighborhoods and you basically host these free things that you can come take and then that's your leads for colleges will actually even potentially pay to have access to these leads and to market to these students because they wanna you know hit their cro have bigger have diversity but be able to surface out who are the most talented students in these like like you barnes the system stuff yeah yeah that's actually totally work that totally works here here all of the you know minority kids who test really well on this thing that you probably want to come to your school you're gonna pay me five hundred bucks a lead to start marketing to them now exactly yeah i don't know actually know the pricing you can pay me twenty five thousand i'll do the marketing for you even better right and you basically just appreciate this like this engine that just functions for the universities now i know if some people are gonna probably think that's you know a little predatory or whatnot but i think know i'm just throwing not ideas here yeah i wanna hear something crazy that i've that i've i had a i knew guys who ran gm quiz companies like gm study supply you know what i mean teaches you how to do on the gm yeah and they would tell me that a qualified lead like someone who is ex smart or you know like whatever i don't how to qualify the lead but like they would charge or they would pay harvard and many other schools something like two or three thousand dollars per lead is that accurate austin sure for what like what was the like an nba school lead like someone to get on the phone with you about why you should apply to harvard for a while there was like the the education like hot swap market so like if you could get someone who is on the phone who willing to like sign up for a student loan to go to university of phoenix like yeah easily couple grand right and like there's some schools if your tuition is forty five thousand dollars a year and you're like an online school you could have a fifteen thousand dollar c per student and and not care which is like messed up right but the reality messed up i mean the it i mean it's just math yeah i think like the value is are difficult yeah the willingness of people to sign up for forty five thousand dollars of student loans after a phone call is what's messed up right like that's that shouldn't be true and the reason the reason it works is because he's got like university of phoenix they were able to tap into the government financial aid so if i had to give you forty five thousand i wouldn't do it but if i just get to go to school and i'm gonna take out this loan and it kinda feels like this later problem that i don't have to worry about and that you don't deliver on giving me a diploma that helps me get a good job then that's you know fucked up i mean they're they're so this kind of caused this environment where for a long time there a bunch of schools that had like higher student loan default rates than graduation rates right so like forty percent of the people who are taking out loans to go to your school are defaulting and twenty percent of them are graduating and that's just like oh my gosh that's that's a t but i mean the the reality is if you can we've created this weird world where it doesn't face people the thought of paying forty thousand dollars a year intuition and the fact that that like people definitely don't understand the interest on that right like if you're you know if you go to nyu and you have a hundred thousand dollars in student debt and you're paying off a thousand bucks a month you can pay that for the rest of your life and you won't even touch the principal and that's just like doesn't it doesn't sink in with people so that's that's that's the tough part austin this whole idea of these tests i find to be just like crazy fascinating another test that i i was obsessed which for a little while and i just consider you probably know a lot about this is strengths finder you know strength finder is it strengths you know i'm talking about strength finder it's owned by gall which is most famous for they're pulling but they own this thing do you know anything about that yeah there there there are a few different versions of it basically to the listener it's like a fifty dollar test right it's personality test yeah it's a fifty dollar personality test and it's famous for the book strengths finder but sorry go ahead yeah and there there are a few different versions of this and there are some you know like every every ats has their own little version right so hired has their own version and linkedin has their own version and it's just like if you as an employer think that you can get a person to take the test and then it will make you n percent better at hiring then yeah what's a fifty dollar test who cares but then you do the math on the other side of that like oh my gosh a for doing enough you know you have to develop the test and that might cost you a hundred thousand dollars but then anything on top of like two thousand people taking it is just gravy that's a great business to be in how big do you think that strengths finder thing is i've been trying to figure that out they're privately owned if you told me that that one fifty dollar test makes two hundred million dollars a year i wouldn't be surprised i guess it's in that let's see strengths finder what's the name i guess it's gall so usually i can home by guessing bundle yeah i usually you can like try to back into it by a number of employees or something i've been trying i've been trying to figure this out i've used web archive i've used everything on their website they'll say like this many people it and i'm like okay i guess that's the only guest estimation that i have well what's what's the number how many people i over a hundred million people have tried it it says oh it's gotta be i guess two hundred to five hundred million here business i have no idea i'm totally guessing but like that would be nuts speak because they do it one time so austin i'm curious before you came on the podcast i don't know if you had any time to think about one or two ideas that are that are interesting to you that you think that you know us so the audience might be interested in or just you know half baked startup up ideas that you can't pursue because you're running lambda school we'll thought we'll give us some ideas that are that are cool to you yeah there's one that i like i've been thinking around the edges of it and i can't quite like so so it came partially from my experience running around in school partially from if you read the blog post of frank lu who is the ceo of snowflake that just went public you know he talks a lot about how much like activity at companies is wasted yep and then you know there's a whole kind of lean thinking and lean methodology and lean manufacturing and all this stuff and i've been reading a bunch of books about that because i'm you know i i wanna run a very efficient organization at lambda school so i'm trying to figure out like is there a way that you could parse out like how much and and you know again everybody that works at lab school i'm sure is working on really hard stuff they're working really hard but i'm not sure that if if i knew why everybody was working on it at any given time and i were playing god that i would be focusing that amount of time and effort on that thing so i'm trying to figure out i mean i know some companies will use like usa asana in a way that will like figure out what everybody's working on and make sure the prioritization makes sense but i i feel like they're missing product there especially in a remote world where everyone's just kinda doing their own thing and everyone's working long hours but i guess something like ninety percent of the effort is just unnecessary it's like finding way to channel that right how do you find all the slack in the system that's not laziness it's you know some combination of like laziness plus you know just not being focused on the high priority things or chasing down the wrong going down the wrong rabbit holes this idea that i'm gonna say is definitely extreme and i might get roasted for bringing it up but let's just like played out and listen to what it is which is there's this guy named joe lam you know who joe is yeah really you heard of him yeah oh okay i don't press okay so then it sounds like you have some type of experience with them but you could talk about if you want but basically joe some billionaire guy who has its company software company he buys software companies and outsource of jobs to india and then he it was you got trouble because he would install this key stroke software into the indian employee's computers so you could see their screen and where they type at all times and like that sounds evil sounds crazy but like i mean sense i mean obviously it would work right like like that's when and i've seen there is a there's a company i think this in yc called sq or something where it would basically like the idea was hey you want to like keep in it's trying to find the non invasive way of doing that and i think they ended up like they would take like pictures of your screen and a picture of you and like share it with everybody else at random periods but like and and i i think they were legitimately trying yeah they're they're legitimately trying to do like you're working remotely with a group of people video conferencing is really high bandwidth what's like a lower bandwidth solution to that thing i don't think that's the right solution necessarily but there's there's something there right like the the coordination problem and you know the crossover thing you can you can debate whether or not you you'd would want to work with a company that puts a key logger on your computer i think you have well you this the answer is no you would not want to but like what like i i would wanna objectively see the results to experiment i would not be surprised if they are phenomenal i i would not be surprised one bit i know a tiny bit about crossover and joe and then you'd have to ask yourself why and like is there a way where this is you feel more comfortable doing this that is something similar right so there's there's two questions right first is is joe or is crossover just willing to pay people that wouldn't have that job any other way and like i mean they're being open to everybody who will take a programming test to decide if you'll be a programmer and then paying them like thirty bucks an hour like yeah you're gonna find people that do not love the idea of that software being installed on their computer but for thirty bucks an hour i'll do whatever you want because i'm in bangladesh and i will live like a king if you pay me that and she's said i know someone's gonna take that out context i'm not talking about bangladesh i'm not just like the the fact of the matter is there places with lower cost of living and lower salary expectations and you can pay those people more so now that i've dodged that bullet the other angles our our trick is we just step in so many muddy you know puddle that you know people can't pick which one we para people who wanna cancel us by saying so many things that you know off the cuff then then it just becomes a safe space actually awesome do know what who is yeah last episode we put the lyrics of w into the gp three thing but ai i think it it had it right more so i did it today came up with a great new song called walk the plank i'll tell you what it's about i don't know what that's a eu for but okay so anyway the other way you could find a way to get the same like effect for the employer or the organizer without being quite so like you know on he logger he logger in the us would not work but is there something that's a little lighter way i think stan lesson was working on a company that was doing something like that for operations heavy companies where the the idea was you have people who are like doing very rote regiment operations heavy stuff all the time but they don't think like a programmer so they can't be like okay here's exactly how you should it so the idea was you know the software will watch you do the thing and then we'll kind of spit out the instructions or the playbook for what that is and then you can have a programmer or running in behind them and automating it which is a lot but i mean companies like flex part there's a whole lot of that happening right like there's this there's this company called cs grocer it's based in somewhere up here where i'm in new york it's the maybe the third or fourth or fifth largest privately held company in america and it's a grocery they they they wholesale groceries to you know stores and they made a change in the eighties where they started paying their workers by their warehouse workers they give them a small hourly rate but then a they had to hit a quota for boxes packed oh i know like that is is fast it's i wrote all about it on my twitter thing i'll i'll share to you but if you google cs grocer warehouse workers incentives or something it's a pretty famous case study i believe but they like built all this great technology to try to automate a lot of stuff and then for the workers they just change how they paid them and like revenue like went through the roof they're like alright we're not like this is just fair guys we're not just gonna like people just start packing like so many more boxes i mean that's old like charlie mu like analogy of when he you know he's there's a guy who's is working for fedex and they're trying to like get these airplanes packed on time and every night they're failing they're trying all these different things and finally it said you know what we're gonna show up on friday or whatever and as soon as this plane is packed everybody can go home and it was like okay two hours they're out of there incentives i mean that's that's supposed to be analogy yeah about the importance of incentives but i've trying to figure out if there's a way to do that within land school it's not draco and i haven't found it yet but i'm super interested in that i've told this story before but i worked at this place with this kinda of crazy billionaire guy i worked under him in indonesia and he he bought this software from boeing the boeing used either it's boeing software or the same software boeing used and they used it to like manage their factory so the same sort of when whenever you have this like kind of assembly line process you can kinda just measure inputs and outputs quite you know it doesn't feel like it's like a human question it's like you know how much are you inputting and how much are you outputting and he used it in our office with people on their computers and basically like everybody on the on a giant wall next to everybody was this huge projection and everybody got one every square represented one person in the company and it would just have this like color and like this like meter basically different based on yeah you're like being yeah on how product productive of you're being and nobody really even under what is measuring and how it all works you just knew something installed on your laptop and you were just like furiously trying to do shit because you just didn't want your shit to go red and so like he's like placebo productivity in a in a way wow you know he could do it because he was you know pretty crazy he had all kinds of crazy like if you got pregnant he was like the woman needs to be at home so you you no longer have a job here like he was like pretty wild and is is now actually in jail for for you know different fraud he committed but it was a it was a very interesting work experience nonetheless less last i have two more quick ones and obviously you guys wanna be lambda school for many things all the valuable ones and let everybody chase all the not valuable ones so like what do you think when you just see a new lambda school for x come out and what do you think are the ones that you're you guys are gonna pursue and what do you think is something you're not gonna do that other people should i mean my first answer is always i like oh good luck like i for a while it was just like oh land the school that's like i'd i ran the math on that that's easy i'm gonna do that and a year later they're like oh my gosh like i have to get five things working and none of them are going to work so this sucks i yeah can i told you that has anyone successfully done it i haven't seen anybody make the model work yet which is saying something because there been i don't know how many i mean the the one model that does work is like hey you're gonna owe us ten percent of your income for five years and hear a bunch of videos like it's hard not not to make that work but it's not like it's not gonna get save either what what does it cost you y'all all to educate somebody us like north of fifteen ten fifteen ten right so you're so you have to basically make sure that you're able to recoup that whereas you put the videos up on a website okay your cost of educated yeah and then you you might you know your average successful student might pay you thirty thousand dollars and you might make two thousand dollars a student but if your cost for five hundred bucks a student who cares that's just a very different business than the one that we're running and i i don't think it would grow very well because people would you know eventually you're gonna find a different way to do that we the intensive expensive high quality one is pretty difficult to make work i had a guy pitched me one this morning give me your instant reaction to it so he said it's lambda school for mortgage mortgage loan officers or something like that it's basically like the the loan officer who issue who issues mortgages and what he was saying was that you know there's this large you know same thing as software engineers like there's there's more capacity for hiring folks who can do this then we have folks who are trained to do it the current model for how it's done is like kinda broken it's like run through a bank you have to like get certified in this like slow process by the bank or something like that basically it was like you know in two months you can get trained and certified to be issuing these the people who are high volume at this are making like three hundred k year at the bottom end they're making like seventy to a hundred k year and with interest rates being so low there's just a you know high demand for people to to to be mortgage lending professionals so what's the austin all official quick take on that i mean my first response is just a lot of nervous around macroeconomic environment like i mean that's that feels like a short term arbitrage that might work for a little bit and then go away i'm part of that is because i don't believe i mean i don't believe that mortgage officers add like an insane amount of value versus like in a quasi automated process so i'm nervous about the long term in the short term you could probably i i don't know enough about the industry you could probably spin it out spin it up and get some cash spinning off like the interesting thing about that is like you can't like fail at becoming a mortgage officer very easily right like the reason land school is so difficult and so powerful because you can it's really hard to become a software engineer but when you are you get you get paid really well and so that's just a different end of the market what what's the this is what what's the likelihood that you guys are gonna just fail miserably i mean are is this a company that like like well if this works it's gonna be the biggest thing ever and it's gonna be massive or is there a likelihood that you just go to zero or and i mean you what i mean there always probability what do you pay your probability of failure at fifty two percent that's a pretty good and i mean