Today’s higher education system is essentially broken. The recent U.S. University admissions scandal served as a wake-up call to many stakeholders, and confirmed what many people already knew: the current process of securing a higher education is not at all meritocratic, and fails to effectively match talent with the right opportunity. There is an urgent need to re-design and redefine this entire system, and a new crop of innovative programs like Lambda School, a entirely virtual school focused on coding and software training, are doing their part to help shape the future of education positively.
Founded in 2017 by Ben Nelson and Austen Allred, Lambda School’s mission is to “identify untapped or underutilized talent, and train that talent for the most in-demand jobs in the world today. It essentially upturns the traditional tuition process on its head by not charging its students any upfront tuition fees or whatsoever until after they finish their courses and secure a job. This previous month, Lambda School took another remarkable step in achieving its mission by offering select students a living stipend throughout the duration of the program. Not only will these students able to learn with no upfront tuition costs, but they will be paid to actually learn these vital skills. If this program proves successful, it should open the door for further applications across multiple industries beyond software, and could be the signal to the makings of a new and better higher education model, one that is actually more affordable, more equitable, and ultimately gives more value for its students.
A Fresh Take On Education
Lambda School is offering students across the U.S. and European Union virtual courses taught live by an a seasoned expert instructional staff for tracks spanning data science, web development, and UX design. Students can make the choice whether to be full-time (each weekday from 8 a.m. to 5 p.m. for 9 months) or part-time (which includes nights and weekends for 18 months). The curriculum involves building actual software applications as part of a real software development team, mirroring the experience of a software developer in the workforce.
As aforementioned, the schooling is offered to selected students at no upfront cost: instead of paying tuition, students can reach a mutual agreement to pay a percentage of their income after they are employed (that is, 17% of income earned for the first two years of employment, only if the job pays above US$50,000 per annum, and capped at a maximum of US$30,000 total tuition). If a student cannot find a job yet, or doesn’t reach that level of income, he or she is not required to pay. As an alternative, students may choose to pay tuition of US$20,000 upfront removing the need for income-based repayment.
This value proposition has resonated with not just students but also investors. There are currently in excess of 1,300 students enrolled in Lambda School courses, and a new cohort begins every 5 weeks. The thousands of applications received each week are evaluated based on written responses of in addition to series of pre-course assignments completed by applicants. To finance its fast growing operations and team, Lambda School has raised almost US$50 million from private investors, including its latest US$30 million Series B round closed in early 2019. The company is now focused on accelerating growth, sacrificing profitability in the short-term to scale operations and grant educational access to as many qualified applicants as they possibly can. So far, it has proven its educational model in the software space with a remarkable job placement rates and outcomes: about 86% of graduates report being hired within first 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 poised to keep innovating towards a better kind of education arrangement, from both a vocational and financial perspective, and equip a new generation of talented people with the skills needed to succeed in the modern workforce. To this end, in mid-March, Lambda School first launched the Living Stipend Program, a program offering a select number of students US$2,000 per month up to 9 months, to be repaid over five years and at annual rate of 10 percent of the student’s secured income. This serves to help cater to some of the living expenses many students struggle with while learning full-time. Lambda School is currently running a limited pilot phase of this new program with about 50 students, but plans to expand to the larger student population.
Allred noted recently that offering living stipends to students was an early idea in the evolution of Lambda School. The main question was not if this program would be implemented at some point, but when. The executive team was patiently waiting until they “were confident enough in Lambda School’s job placement success rates and had enough financial capital and infrastructure.” Furthermore, Allred also hopes this launch catalyzes a broader infusion of capital into impactful companies like Lambda School.
The application process for the Living Stipend Program is not very different from the general Lambda School application. Applicants first and foremost submit a written application, are interviewed over the phone, and complete some pre-course work to ensure a good fit. Beyond the current standard application process, Lambda School is also experimenting with multiple viable ways to identify Living Stipend candidates. Chief among these is the recent announced breakthrough partnership with Pioneer, a new company that hosts monthly virtual tournaments to identify the world’s most brilliant talent across different disciplines, and provides the resources to push participants to actualize their ideas and potential. Anyone with an internet connection can submit an application to Pioneer to showcase their talent.
Lambda School has partnered with Pioneer to build a unique monthly tournament and custom leaderboard for current full-time Lambda School students. At the end of the tournament, the 5 highest-scoring participants receive the 9-month stipend. This special partnership was initiated through a longstanding friendship between Lambda School’s co founders and Pioneer founder Daniel Gross. Gross, a former partner at the renowned Y Combinator startup accelerator, was the partner who was assigned to the Lambda School team during their time in the program, and stayed in close touch throughout Lambda School’s evolution.
What sealed the partnership beyond this personal relationship is a mission shared by both companies. As cofounder Allred noted: “these two companies are trying to help people fulfill their true potential–to identify and help train people that are held back mostly because they do not have equal access to opportunities.” Gross expounded on this idea, explaining further that the two companies are complementary and are in uniquely working on opposite ends of the same problem. While Pioneer is focused on “finding the tail and scouring the Internet (online) for the rare few that will change the world, Lambda School is also supporting the masses: educating the next million skilled workers in America and around the world.”
A Personal Mission
This mission holds special prominence for Austen Allred, as it is a deeply personal mission based on his own entrepreneurial experiences and journey. Allred originally moved from Utah to Silicon Valley in 2013, highly motivated but lacking the financial resources to truly support himself. After a stint living in his car and self learning how to program, followed by a return to Utah, Allred decided to give Silicon Valley another shot in 2016. Shortly thereafter, Allred launched Lambda School with co-founder Ben Nelson, a school “for people like him, to invest in their future.”
Daniel Gross’s journey is similarly unconventional and inspired by a mixture of grit and circumstance. Originally from Jerusalem, he was accepted into Y Combinator at the young age 18, and subsequently sold his cloud data search engine company, Cue, to Apple for a reported figure of US$40-50 million. It was following this successful sale that Gross returned to Y Combinator, this time as a full time partner, and crossed paths with Allred and the Lambda School project. In a similar way as the team at Y Combinator took a chance on both Allred and Gross, each of them hopes to invest in the potential of the “thousands, possibly millions of very talented people that have tremendous drive and grit, yet lack the right opportunities to succeed.”
The Start Of Something Bigger
In the first weeks after the launch of the Living Stipends Program, the response has been welcoming and overwhelming, with hundreds of applications submitted daily, necessitating a waiting list. Yet, in speaking with Allred and his team, the excitement around the program lies not only in what it is now, but what it could become. As mentioned above, in Allred’s eyes, this pilot is a testing ground for the not just the feasibility but also the scalability of the Living Stipends Program and the broader Lambda School educational model to other verticals beyond software training. He and his team are constantly studying and analysing job markets trends to understand where there are talent shortfalls, and have closely examined industries such as nursing in thinking about future expansion opportunities.
Allred’s long term vision of Lambda School is “an economic clearing house where anyone can be transported with the skills and resources they need to succeed at the best job they are capable of and interested in.” As a recent market survey illustrates, in today’s job market, there are more open jobs than there are unemployed people.
Allred wants Lambda School to play a huge role in optimizing vocational training and placement so that the right people with the right set of skills are matched with the right jobs, addressing this current employment unbalance and eliminating unwanted unemployment or underemployment. Will Lambda School succeed in meritocratizing higher learning or education and forging a path for everyone on the planet to earn a meaningful living wage? Allred is banking on it, as are the millions of people for whom the current system doesn’t work as it should or designed to support.