The Exchanges

Q the Valley could that happen. I do want to discuss a little bit internally, because as we said, so much has changed since our last conversation. Scaling the journey for you has been incredible, and the team's scaled a lot since too. And I guess a big thought for me is like, what have been the most challenging elements of scaling the team for you over the last 18 months?

A So it is much easier to get the right team together to do one thing. Like the complexity increases exponentially, not linearly. So we, for example, launched in the U S and then I was like, awesome. We're doing really well in the U S I'm going to go do exactly that in Europe. I know exactly the playbook. I can hire just a couple of people and they can run that playbook, but we didn't set things up in the right way where now, if we want to make a change in the U S now I have to make a change in two places. And so we had five different tracks running. We were on three different continents. We were spinning up in India as well. So we're starting on our Fourth continent. So we're in the U S Europe, Africa, and we're starting in Asia as well. And we just kind of did it too fast. We built an infrastructure where if we made a change, we now had to make it four times and we hadn't centralized the change making and the change management enough so that we could make a change once and it would flow out everywhere else, which is really where you need to be. I mean, there are different ways of doing it, I suppose, but we didn't have enough executive and managerial talent To make the changes in four places. Like, that's kind of what Uber did. They said, you know what, we're not going to centralize everything. Everybody's just going to be on their own tech stack. Uber's basically running, like…

AI assessment note: “we didn't have enough executive and managerial talent To make the changes in four places”

Q I love that context, and it was for a considerable time, not just kind of a night or two. So can I ask, what were some big lessons from that experience, and what did you come to learn about yourself from living in the Honda Civic?

A Um, I mean, I was really into You know, minimalism and Thoreau, so it hit just the right time, um, in my kind of philosophical beliefs. But yeah, I learned a lot. Living in Palo Alto in a car is a little disorienting, because there's, you know, you're surrounded by so much wealth, but you have none of it. You know, for example, you can just park on a street in Palo Alto and sleep, and nobody will notice, because people don't walk around and look in the windows of cars, generally speaking, unless there's a reason to. So I found that it was much easier to blend in with If the rest of society, if you're just not making any noise, then people would think. I had to start living by a very strict schedule, because the one thing about living in a car is when it gets warm outside and the sun comes up, it gets hot pretty quickly, and there's nothing you can do to work your way around that. So I worked out of the Hacker Dojo, which is a kind of 24 hour workspace in Mountain View. But yeah, I had to start living by a very strict schedule, and it made everything feel very urgent. So time was of the essence because every minute I spent not working was another day I was going to spend living in a car. And it worked, but it was, it was definitely stressful.

AI assessment note: “I had to start living by a very strict schedule, and it made everything feel”

Q Absolutely love it. Can I ask you a question that is off schedule, but when you look at that and sleeping in your car, to where you are now and to what you've built so far with Lambda, are you proud of yourself slightly? And I know nothing's ever done, and there's always more work Do you ever take the time to appreciate the journey?

A Oh, yeah. I mean, my wife and I talk about this all the time, and partially because she grew up in a family that was not very well off either, and then her dad started a company and ended up doing well kind of after she moved out. But when we first got married, we were actually engaged when I was living in the car, by the way, and we got married right after the founder was like, hey, I want to fund you. So that was another twist. We were living in like a super tiny apartment with our mattress on the floor, and that was Basically, it had like this little table that folded down from the wall, and we didn't pay ourselves really anything, and so she was a teacher, and we were living on a first-year teacher's salary, which was like, 18 K, or something like that, and we were totally happy, because we were both doing what we loved, and like, I still, to this day, if you gave me a room and a computer, and I could just try to do what I do, I would be happy. Of course, we have a house now, and we've got kids that we need to take care of, but I think one of the reasons that Lambda has been able to be successful Because when we started Lambda, we also went without a salary for a while, is that we're always content. So now everything is just a plus. I don't need to be rich. I don't need to be famous. I'm learning now I would prefer not to be famous in some aspects, but yeah, it's all a win.…

AI assessment note: “Oh, yeah. I mean, my wife and I talk about this all the time”

Q proliferation of capital that we have today, obviously, with secondaries, like, I've never seen them before in terms of size and scale. How do you feel about founder secondaries? Because I don't actually mind them, despite what a lot of investors think. Like, I think it's brilliant to remove that downside risk mentality from a founder's perception. How do you feel about them, and how do you think about them?

A So going back to thinking about upside versus downside, the reason Lambda School is so successful is Is because people who don't have a lot of money have to think way more about downside risk than people who do. So at Lambda School, we cover the downside risk for you. If it doesn't work out, you don't pay anything. And that allows you not only from a cash balance perspective, but from a psychological perspective to just think about the upside instead of being in constant fear of the downside. And I think that is true for founders as well. I've talked to a lot of founders who've done secondary, and transparently, I have done basically zero secondary relative to where Lambda is at, which I don't know, frankly, if that's ideal, but it actually aligns incentives, because until then, the founder is concerned about downside risk way, way more, and there are very practical, very real decisions that a founder makes around how fast do you grow, what do you do in this scenario, that you make a different decision if you're thinking about Potential downside versus if you're thinking about potential upside. And what VCs want is for you to be just thinking about and optimizing for the upside. So another way is Steve from Gigafund who led our most recent round. He has this mental model that he shared with me recently of you need to survive today and optimize for 10 years from now. A founder w…

AI assessment note: “it actually aligns incentives, because until then, the founder is concerned about downside risk”

Q respect, but I respect it too. Question for you, it's like, I'm always thinking Like, you know, I'm at the start of my career. I'm now on a number of different boards. I'm just obsessed with being the best board member that I can be. In your eyes, how would you advise me? How can I be the best board member to you that you deserve? What can I do?

A So I think the tricky thing for board members is that you've seen a hundred times the companies, and so it's really tempting to just pattern match and be like, hey, all these companies are doing X, you should do X as well. But what's really more healthy, I think, is like, if you can get into the company from first principles enough, That you understand what their unique challenges are, then you can try to advise on those unique challenges. And one of the best things that an investor named John Danner, who is on our board, has always said to me is like, figure out exactly what your ask is, and then come to us with exactly that ask, and we will go crush it for you. But until then, you're just going to be getting random advice, and it's probably stuff that you've thought about 10 times as much as the board, and to some extent, that's kind of on your fault, so it's on you. I think, have the founder come to you with something very specific, And then try to work on that for them.

AI assessment note: “have the founder come to you with something very specific, And then try to work”

Q Can I ask, how do you think about decision making? And what I mean by that specifically is like reversible versus irreversible decision making, and really kind of getting comfortable making decisions within perfect data. What have been your lessons on doing that? Having had, I guess, that experience, especially on the geographic expansion.

A Basically, every decision that we make is reversible, but it's reversible with pain, and the hard thing is, it's jobs. So if we start a program, let's say we started a part-time program in Europe, there are students in that, and they're going to be in that for at least 18 months. So we can pull back and know that, hey, 18 months from now, we will make a change from there, but you have to run that play. Molly, our COO, has kind of created this, a little bit of a lexicon internally of, Plays. Like, if you're going to run a play, you have to run the play through to its end. You can't stop halfway in the play most of the time, and you can stop and change and decide to run another play, but decisions that you make have consequences, and you need to run the play out to the end, which is different in a school than a software product, right? Like, in a software product, it doesn't matter. You just change everything, and you don't have to think about it. We had to build change management in, because our students were just getting whiplashed, and I was saying, well, yeah, it's different, but it's better. And students were saying, yeah, it's better, but it's not what I expected. And what's more important when you're in a learning state is expectations being met exactly more so than it getting marginally better and whiplashing you. That's been one of our big learnings of moving from kind o…

AI assessment note: “every decision that we make is reversible, but it's reversible with pain”

Q Why are you sad about that, if you don't mind me asking?

A I actually kind of wish we could go back to 2010 Silicon Valley, actually. Because then it was getting expensive, but it was still like the romantic notion of a place where all of the people who want to build something to change the world go gather is really, really special. And I was really grateful to be a part of that. And I know that Lambda would not be what it is today if we were doing it all remotely, just random lunches and dinners and meeting up with other founders and investors and people that I really admire was really, really unique. And I think Patrick Collison has said something about the idea that in 50 years we'll probably look back at the Bay Area as one of the greatest squanderings of potential wealth that the world has ever known, and I tend to agree. I think it could have been something absolutely incredible if it were governed better and we built more housing. I mean, the government, I think, is just a wreck, and we decided not to build more housing for a variety of reasons, but I think it kind of makes me sad for what could have been.

AI assessment note: “I think it kind of makes me sad for what could have been.”

Q Well, I'm so pleased you said the word risk there, because that was my subsequent question was, if that's the relationship to money, what's the relationship to risk for you then?

A I think for me, I basically got to a point where it feels like there is no risk anymore. The worst case scenario is you have to go get a job, and I had a company blow up, and I had to go get a job, and it was fine. So, for me, the important thing is, maybe it's a psychological trick I play on myself, I don't know, but making it feel like there's no downside, and let's just go play. I don't know if that's wise, necessarily. I'm not successful, but realizing how quickly you can bounce back if you hit rock bottom, because I did that in a very real way, I think that's been pretty important.

AI assessment note: “I basically got to a point where it feels like there is no risk anymore.”

Q the equation. In terms of founders where it's just not quite hitting yet, so just pre you changing that business model, how do you balance between the vision and the mission of the founder, so in your case, you know, wanting to fundamentally improve career opportunities for people and democratize income inequality, versus kind of The realization for when something's not working. How do you balance between vision and reality?

A I mean, in my mind, that's actually not something you have to balance. It's just, here is our vision. You have to be brutally honest with yourself. Are we on the path that gets us there? And if not, how do we find that path? First of all, I think you have to actually have the vision, and you can tell pretty quickly. In my mind, a vision is worthwhile when you tell it to people, and they say, yeah, that totally makes sense. I love it. I'm just not sure if you can get there. So I would always say, you know, we want to basically eliminate unemployment and make income mobility instant or easy. I'm just like, what if there were an easy way you can just like snap your fingers and you'd have all the training and all the resources you need to get to a new job. And it was risk-free. So you didn't pay for it unless you got there. And everyone's like, yeah, yeah, that's, that's a cool idea, but that's not possible. And then you have to find the first thing that you can do to prove that there's some element of that, that you can get working.

AI assessment note: “in my mind, that's actually not something you have to balance.”

Q it was the first batch with jobs. Uh, that was phenomenal to see. I do have one final element that I want to discuss before the quick fire, which is something that actually Jeff told me about, which was your incredible speed of execution when it comes kind of iterating on the business. And so his question was, how do you iterate on all facets of the business so fast?

A I think that's kind of the key, and that's really difficult to do. I mean, I think it's just something that we had to build into our DNA. So we very much run, we run a lot of experiments, we run them concurrently, and we run them quickly. So, you know, Jeff Bezos tells a story of what if you're a major league batter, and every time you hit a home run right now, you score a run. But what if every time you hit a home run, you scored a million runs? You should just be swinging for the fences and Every single time. And I think that's true in startups to some degree, where if you find something that really hits you win. So the focus should be more on the number of at bats than almost anything else. There's no other metric determined success of you winning in baseball as much as how many swings you're taking. If each run is worth a million points. So for us, we've built a culture when we have an idea, I want it shipped by the end of the day. Not by tomorrow, not by Monday. If there's something that takes three weeks to get it out there, we need to ship it right now. There have been some times, for example, we had this crazy idea a few weeks ago. What if we had a student who's in the front end section of the cohort when they get to their project week, and then there's students on the back end, and then there's an iOS student. What if we had them all come together and build an app inst…

AI assessment note: “we run a lot of experiments, we run them concurrently, and we run them quickly.”

Q Can I ask a total curveball here, Austin? But when I listen to you, it seems so thought through, methodical, and well-processed driven. Almost, it seems kind of seamless. What was the biggest challenge in the building of Lambda, and was there a real sticking moment where there was a real question for you?

A Oh, yeah. I mean, so, in our instance, it was never, hey, does this make sense? Like, can we get users to sign up? That's never really been an issue. The issue has been, fundamentally, can you make it happen? I think because I come from kind of a growth marketing background, my intuition is to just promise something that's so amazing that everybody will absolutely sign up. It's not difficult to imagine a scenario where you can get a lot of people that would love to do something. At LendUp, that was something that I learned is, you know, LendUp would give people loans that couldn't otherwise get loans. It turns out, if your value proposition is, hey, you need money, we'll loan you some money, and you can't get it anywhere else, you win. That's not difficult. The difficult thing was, okay, now we have to hire 50 machine learning engineers and figure out who we can lend to and who we cannot, because we're playing a risk game to some degree. And so I think Lambda School is similar in the sense that if we can promise, hey, you'll get a job or it's free, we'll always have people to sign up. The question was, can you make it work? So in the early days, you know, we would talk to other schools and they would say, there's no way this will work For four or five different reasons. One, you can't train people online. We tried it, and it didn't work. Even people that paid 20,000 dollars, we…

AI assessment note: “The issue has been, fundamentally, can you make it happen?”

Q What's your biggest weakness, do you think, Austin? Mine is documentation and operations. I mean, I'm honestly, ask my business partner, Fred, I'm truly world class at being operationally terrible. What would you say your biggest weakness is?

A It's probably not too dissimilar from that in some ways. I tend to move really fast and do things 80% of the way and jump from thing to thing at kind of lightning pace. I'm not very good at finishing things or making sure things are well documented. I'm not I'm not as good at thinking about the edge cases of what I want to do. I just think about the first kind of 80%, and Caleb, who's the president of the school, one of the reasons we got to where we are is because he was so good at thinking about all the details that sometimes it's literally my mind doesn't even register, and I'm happy to dive in and be opinionated on those details, but oftentimes I don't even think about them, the fact that they exist, as my wife will attest, and Molly is just Thorough. She's thorough and thoughtful, and she wants to be behind the scenes, making sure that everything is just running very, very smoothly, and that's where she wants to be. She doesn't want to be out in front in public and pushing. She wants to be organizing. Maybe she'll listen to this and be like, oh, you're putting words in my mouth, and I want to be out in front just pushing the boundaries of what's possible. So it's a really symbiotic relationship.

AI assessment note: “I'm not very good at finishing things or making sure things are well documented.”

Q Because I totally agree, but it's so easy in this industry to be pulled into the wanting more, wanting more growth, wanting more money, wanting a higher secondary value, wanting whatever. And it's just so all consuming, that kind of Hunt for materialism and capitalism. Do you find you have to, like, actively pull yourself back from that? And what works in terms of, like, retaining that self?

A Yeah, so I take my personal finance, my personal wants, and hold it separately from, like, the company wants. And the nice thing about private markets the way they are right now is it's all paper money. Like, whatever your last valuation was actually doesn't matter. And there are times when it does matter and money changes hands, and it's weird to me that it's, like, actual money. Changing hands. But think about it like points on a scoreboard. It's not so much that if you're a basketball player, you can't take those points and turn them into currency, but you still want to score the most points. You want to make the biggest difference. You want to do as well as you possibly can. And then in a weird way, it can flow through to personal finances. But for me, as I said, like you could pay me minimum wage to do what I do now, and I would be perfectly happy. I probably wouldn't be very effective because it's hard. I think that's one of the things people underestimate about being poor or not is how your mindset can shift. But I would be perfectly happy.

AI assessment note: “I take my personal finance, my personal wants, and hold it separately from”

Q of kind of Jeff being special and when the people are too good and, you know, the opportunity is too good. Can I ask, you've been through kind of several rounds of VC, both with Lambda and with your prior company. In terms of kind of advice and guidance for founders, having been through those experiences, what would your advice be to founders when really approaching the investor selection element?

A The first company, we took what we could get. There was an optionality. It wasn't, hey, do we want to take money from this investor or that investor? It was, hey, is there money to take? So the first advice I would give was just to have a business. Steve Martin wrote a book that's called so good. They can't ignore you. I think that's what I think about in terms of VC. We didn't have a pitch deck for a series B. We didn't raise money. We just spent all of our time building a great business and we built a business. It was good enough that we didn't have to think about it. And, you know, we had four or five major players in the series B and I didn't spend time fundraising necessarily. So that's a huge win from a company perspective. I think about Parker Conrad, when he was raising for his company, they started before Zenefits. He was talking to somebody, and he's told this story about how they said, you know, if you were the Twitter guys, you could just walk in here and walk out with a check, but you're not the Twitter guys, so you have to do X, Y, Z, and you have to be super well prepared. Parker's thought process just went to like, wait, how can I just be the Twitter guys? And not that Lambda's the Twitter guys by any stretch of the imagination, but You can get to a point, at least in this funding environment, where fundraising isn't a problem, and it's just an optimization of w…

AI assessment note: “first advice I would give was just to have a business”

Q Not at all, but I would love to kick off with you. So tell me about your background, Austin, and what gave you the initial idea for Lambda School and really that aha moment?

A My background is long and crazy, but we'll keep it short. So I was working at a company called LendUp. I believe you've interviewed Sasha from LendUp on the show before. Was thinking a lot about income inequality and how you can help people move from where they are to a place of better financial health, which was, and it's the entire goal of Linda and felt like there was still something lacking and that we can help people bridge the gap from today to tomorrow, but there wasn't really anything out there that was moving people's incomes. And at the end of the day, that's what really matters. So I started thinking a lot about that and, you know, seeing the disparity between before I moved to San Francisco, I was living in a small town in the middle of nowhere in Utah and And seeing the opportunity gap between what was afforded there versus San Francisco, just, I feel like there was something missing. I didn't know what it was, but we just started out with an online code school and started working on it.

AI assessment note: “I was working at a company called LendUp. Was thinking a lot about income inequality”

Q is like to hear, and before we discuss finding product market fit, obviously a lot of businesses take pre-seed and seed funding in the earliest days, and you said to me before that you were determined to never raise VC again before you started Lambda. Two years later, and forty-eight million dollars later, I have to ask, what fundamentally changed your mind to raise for Lambda versus the initial disregard?

A Yeah, I think there was an error in the way I was thinking. So, before my last company, you know, we, we'd raised what was then a seed round, what would now be like a pre-seed round. We'd raised kind of half a 1,600,000 dollars, and we were going out to raise what then you would call a series A, what now you'd call a seed round, because all the names changed. We were raising, you know, a couple million dollars, which felt like a lot at the time, and to be clear, it is a lot. And so, you know, we had all the documents done, we had our lead investor in, everything was fine, we only had a couple months of Cash left in the bank, but who cares? Because we're just about to close this round and we got through the due diligence. And then the person that was leading that round just called and said, uh, well, actually he had his assistant call and say, actually, I'm no longer going to invest. And that was on December, 23rd. And that was the end of the company. So I had a pretty visceral reaction to that. I mean, my daughter was born a couple months later and was in the hospital for a long time. And I'd spent all of my money making our contractors and employees whole And so it was not a good time, and I was not in a good place, and I was determined never to be put in that position again, and I felt like raising VC put you in that position. What I failed to realize is that it wasn't VC per…

AI assessment note: “What I failed to realize is that it wasn't VC per se that put me in that position.”