Ben Nelson is the CTO and Co-founder of Lambda School, a 9-month online education/training program. They are also one a few schools with Income Share Agreements. Brian Ardinger, Inside Outside Innovation founder, spoke with Ben about Lambda School’s disruption of the education market, the creation of an online school, and the use of an Income Share Agreement.
Through an Income Share Agreement, students agree to pay back the costs of their training, once they receive a $50,000 a year job. A percentage of their income, up to $30,000, is paid back over the next two-year period.
New Business Model & Trends: Schools with Income Share Agreements
- We started as a code boot camp. Now we’re in our own category. Competitors are changing to mimic the model. Competition doesn’t usually kill early startups.
- Universities are overshooting the mark. Saddling students with big debt and students are wising up. People can get in trouble financially.
- Fast tech change. People need to switch in the middle of their careers. Lambda is putting elasticity in the labor market.
- More people are moving towards portfolio work and we’re seeing job categories getting disrupted. Need new training – e.g. truck drivers. Provide a path in a new industry.
- Online can scale with more students. Lambda margins can absorb longer payback period and better instructors.
- With students graduating, income share agreements are a valuable security that debt can be borrowed against.
Y Combinator & Lambda’s Future
- How can this become a billion dollar company. How do you scale the idea?
- It’s a school for startups, and they teach you how to do it, with weekly investor meetings. Provides a network to fundraise. Avoid pitfalls with standardizations.
- Amazon started with books. We teach software engineering now. Looking at how to expand into other areas like nursing school.
- We don’t want to focus on ed research. We’re about jobs and accessibility.
Skills and Traits Attractive to the Model & Challenges
- We live in a distracting world. Ability to focus and remove distractions is essential. Lambda wants people who are hungry. It’s difficult to predict these qualities. They don’t ask for test scores.
- Lambda has a free course called Intro to programming. Through it they check student’s aptitudes. It’s an open-ended course, with no deadline. If students perform well, we can invest in them.
- We must maintain high standards, but we’re not exclusive. We want a high bar but will accept anyone willing to do the work.
- Need scalable processes for placing students.
- Provide more depth and a guided job search. Remove false finish line of graduation. Your certificate is your job.
For more information on Lambda and Schools with Income Share Agreements
For more information about Ben, Lambda School and schools with Income Share Agreements, check out www.Lambdaschool.com.
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