Today’s higher education system is broken. The recent U.S. college admissions scandal served as a wake-up call to many, and confirmed what many others already knew: the process of securing a higher education is far from meritocratic, and fails to effectively match talent with opportunity. There’s a crucial need to re-design this system, and a new crop of programs like Lambda School, an entirely virtual school focused on coding and software training, are doing their part to shape the future of education.
Founded in 2017 by Austen Allred and Ben Nelson, Lambda School’s mission is to “find untapped or underutilized talent, and train that talent for the most in-demand jobs in the world.” It flips the traditional tuition process on its head by not charging its students any tuition until after they complete their courses and secure a job. This past month, Lambda School took another monumental step in achieving its mission by providing select students a living stipend throughout the duration of the program. Not only will these students learn with no upfront tuition costs, but they will be paid to learn. If this program proves successful, it should open the door for further applications across different industries beyond software, and could signal the makings of a new and better higher education model, one that is more affordable, more equitable, and ultimately more valuable for its students.
A Fresh Take On Education
Lambda School offers students across the U.S. and European Union virtual courses taught live by an expert instructional staff for tracks spanning web development, data science, and UX design. Students can choose whether to be full-time (every weekday from 8 a.m. to 5 p.m. for 9 months) or part-time (nights and weekends for 18 months). The curriculum involves building real software applications as part of a real software development team, mirroring the experience of a developer in the workforce.
As mentioned above, the schooling is offered at no upfront cost to interested students: instead of paying tuition, students can agree to pay a percentage of their income after they're employed (17% of income earned for the first two years of employment, only if the job pays more than US$50,000 per year, and capped at a maximum of US$30,000 total tuition). If a student doesn't find a job, or doesn't reach that level of income, he or she does not need to pay. Alternatively, students may choose to pay tuition of US$20,000 upfront with no income-based repayment.
This value proposition has resonated with both students and investors. There are currently more than 1,300 students enrolled in Lambda School courses, and a new cohort starts every 5 weeks. The over one thousand applications received each week are evaluated based on written responses as well as a series of pre-course assignments completed by applicants. To finance its growing operation, Lambda School has raised nearly US$50 million from private investors, including its most recent US$30 million Series B round closed in early 2019. The company is currently focused on accelerating growth, sacrificing profitability in the short-term to scale operations and give educational access to as many qualified applicants as possible. So far, it has proven its educational model in the software space with impressive job placement rates and outcomes: 86% of graduates report being hired within 180 days of completing the program, at a median starting salary of US$60,000.
Full Steam Ahead: Living Stipends
The Lambda School team is determined to continue innovating towards a better type of education arrangement, from both a financial and vocational perspective, and equip a new generation of talent with the skills needed to succeed in the workforce. To this end, in mid-March, Lambda School launched the Living Stipend Program, offering a select number of students US$2,000/month for 9 months, to be paid back over five years and at annual rate of 10% of the student’s secured income. This serves to help offset the living expenses many students struggle to manage while learning full-time. Lambda School is currently running a limited pilot phase of the program with 50 students, but plans to expand to a larger student population.
Allred noted that offering living stipends was an early idea in the evolution of Lambda School. The question was not if this program would be implemented, but when. The executive team was waiting until they “were confident enough in Lambda School’s job placement rates and had enough capital and infrastructure.” Furthermore, Allred hopes this launch catalyzes a broader infusion of capital into companies like Lambda School.
Pioneering Success
The application process for the Living Stipend Program is no different from the general Lambda School application. Applicants submit a written application, are interviewed over the phone, and complete pre-course work to ensure a good fit. Beyond the standard application process, Lambda School is also experimenting with different ways to identify Living Stipend candidates. Chief among these is a recently announced breakthrough partnership with Pioneer, a startup that hosts monthly virtual tournaments to identify the world’s most exceptional talent across different disciplines, and provides resources to push participants to actualize their ideas and potential. Anyone with an internet connection can apply to Pioneer to showcase their talent.
Lambda School joined forces with Pioneer to create a unique monthly tournament and custom leaderboard for current full-time Lambda School students. At the end of the tournament, the 5 highest-scoring players receive the 9-month stipend. This partnership was initiated through a longstanding friendship between Lambda School’s founders and Pioneer founder Daniel Gross. Gross, a former partner at the prestigious Y Combinator startup accelerator, was the partner assigned to the Lambda School team during their time in the program, and stayed in close touch throughout Lambda School’s evolution.
What cemented the partnership beyond this relationship is a mission shared by both companies. As Lambda School’s Allred noted: “both companies are trying to help people fulfill their potential--to identify and help train people that are held back mostly because they don’t have access to opportunities.” Gross expounded on this idea, explaining that the two companies are complementary and are working on opposite ends of the same problem. While Pioneer is “finding the tail and scouring the Internet for the rare few that will change the world, Lambda School is supporting the masses: educating the next million skilled workers in America and around the world.”
A Personal Mission
This mission holds special significance for Austen Allred, as it is a deeply personal mission based on his own entrepreneurial journey. Allred originally traveled from Utah to Silicon Valley in 2013, highly motivated but lacking the financial resources to fully support himself. After a stint living in his car and teaching himself how to program, followed by a return to Utah, Allred gave Silicon Valley another shot in 2016. Shortly thereafter, Allred started Lambda School with co-founder Ben Nelson, a school “for others like him, to invest in their future.”
Daniel Gross’s journey is equally unconventional and driven by a mixture of grit and circumstance. Originally from Jerusalem, he was accepted to Y Combinator at age 18, and subsequently sold his cloud data search engine company, Cue, to Apple for a reported US$40-50 million. It was following this sale that Gross returned to Y Combinator, this time as a partner, and crossed paths with Allred and Lambda School. In the same way that the team at Y Combinator took a chance on both Allred and Gross, each hopes to invest in the potential of the “thousands, maybe millions of people that have tremendous drive and grit, yet lack opportunity.”
The Start Of Something Bigger
In the first weeks following the launch of the Living Stipends Program, the response has been overwhelming, with hundreds of applications submitted hourly, necessitating a waiting list. Yet, in speaking with Allred, the excitement around the program lies not only in what it is today, but what it could become. As mentioned above, in Allred’s eyes, this pilot is a testing ground for the scalability of the Living Stipends Program and the broader Lambda School educational model to other verticals beyond software. He and his team are constantly studying job markets to understand where there are talent shortages, and have closely examined industries such as nursing in thinking about expansion opportunities.
Allred’s vision of Lambda School is “an economic clearing house where anybody can be transported with the skills and resources they need to the best job they are capable of and interested in.” As he pointed out, and as the chart below illustrates, in today’s job market, there are more open jobs than there are unemployed people.
Allred wants Lambda School to play a significant role in optimizing vocational training and placement so that the right people are matched with the right jobs, addressing this employment unbalance and eliminating unwanted unemployment. Will Lambda School succeed in meritocratizing higher education and forging a path for everybody on the planet to earn a meaningful wage? Allred is banking on it, as are the millions for whom the current system doesn’t work as it should.
