What the hell is going on with Lambda School?
The complicated business of selling social good
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Austen Allred is either an asshole or a savior—depending on who you ask. Neither one is his formal title, of course. Officially, he is CEO of Bloom Institute of Technology, formerly known as Lambda School.
Austen has been accused of being, at various points, a liar, a racist, and a man cosplaying at being homeless. For those who believe the savior narrative, though, Austen’s company is selling the ‘American-Dream-As-A-Service,’ and it's actually Lambda School's naysayers who are the real assholes!
If you don't think Lambda School is a great thing, you're probably an asshole
This is all… rather a lot: it is a rare occurrence for a relatively small startup to attract so much attention, positive or negative. So for today, I’ll share with you an interview I conducted with Austen. Originally, in an effort to keep my life nice and easy, I was simply going to post the interview. But I couldn't help myself—I just had to do some analysis of all the claims and accusations being made by its stans and its critics. Why? Well, it strikes me that amidst all the hubbub, people seem to be forgetting to ask the key question: Is it a billion-dollar business or not?
- Bloom is a for-profit institution that sells coding classes, but which has positioned itself as the answer to the structural inequalities in American society.
- It has thus far failed to fix classism in American society; but on the plus side, it has managed to build a business that is likely doing $10-15M a year in a competitive market, and which provides a service that a decent chunk of its customers find valuable.
- As far as Austen’s being an asshole, I do not feel qualified to comment (judge not lest ye be not judged, etc.) but he has managed to obtain the enviable position of fame/notoriety.
- Whether Bloom is a billion-dollar business or not remains to be seen. My sense is that Bloom hasn't quite figured it out yet.
This piece is informed by my discussions with former students, industry experts, and an interview I had with Austen about Bloom’s rebrand. Before we dive into the problems, we need to separate hype from reality and analyze what the business actually is.
A Quick Summary
Bloom’s product is a 6-month coding bootcamp that claims to take computer novices and transform them into coding wizards. This, of course, is not unique in the slightest. There are over a hundred full-time, in-person bootcamps in the US and Canada, and over 120 universities offer somewhat comparable programs. Bloom also competes with more traditional computer science degrees offered at every major university, andit also competes with online courses like Udemy and Codecademy. Needless to say, most startups would simply not attack a market with hundreds of similar product offerings.
Bloom’s original attempt at differentiation was to offer its students the ability to finance their education by entering into an Income Share Agreement (ISA), which allowed them to either pay $20K upfront, or to make $30K in gradual payments over time once they had graduated and had a job paying $50K or more. This was not a loan, per se—it didn’t need to be paid back if the student failed to get a job after graduation.
The credit for the popularization of ISAs goes to Bloom. It means that schools are literally invested in the success of their students—in stark contrast to other financing options which demand that former students make loan repayments regardless of whether or not they had achieved success. Unfortunately, competitors caught on quickly to this trend: there are now 76+ bootcamps that offer ISAs.
But still, it helps to be early. Bloom’s innovation allowed them to grow quickly, and they have had ~2K students per year since 2020. With roughly 25K bootcamp grads per year in the U.S., this gives Bloom an ~8% market share. Nothing crazy, but it’s respectable. Assuming an average payout per student of $30K, and a 5-year payback period, the business should be doing between $10M and $15M in revenue per year.
With this context in mind, are these purported problems real? Are the complaints about Bloom all that dire?