On Wednesday, Lambda School announced a $30m Series B funding, led by Geoff Lewis of Bedrock Capital, in addition to Google Ventures, GGV Capital, Vy Capital, Y Combinator and Ashton Kutcher's Sound Ventures.
The round brings the total capital invested in Lambda to $48 million at a post-money valuation of $150 million.
If you haven’t heard about them, Lambda School is an education startup that offers tuition-free software development and data science courses. Students don’t pay a dime while they’re taking classes. Instead, they commit 17% of their income for 2 years once they’ve landed a job that pays at least $50k per year (up to a maximum of $30k).
The announcement was paired with this this New York Times article and this Forbes profile, and immediately, the easy-to-dismiss skeptics showed up.
Here’s the response from people.
Even The Hustle, a well-known newsletter, led an issue this week with the following subject line: “For the low price of 17% of your income.”
It seems like nowadays, it’s cool to earn points by taking a swing at others who don’t conform with norms. The response to those articles is everything that’s wrong with the intellectual types: they dismiss anything new as irrelevant, and they display a worrying lack of curiosity for diving deeper into a topic.
What’s the difference between the European system - free education, you pay back once you hit certain threshold - and Lambda?
“Show me the incentive and I will show you the outcome.” - Charlie Munger
Universities get funded by tax payers, regardless of whether their students get a job. Lambda won’t because Income Share Agreements makes sure of that. This means Lambda can hire a staff of 50+ people exclusively to help graduates land a high paying job.
33% of the interviews end up in a hire, and 83% of Lambda grads land jobs at companies including Google, Amazon, United HealthCare, Best Buy, AT&T, and Verizon. On average, a Lambda graduate increases his or her income by $47,000.
Just take a look at this Twitter thread by @austenallred to admire the beauty of aligned incentives.
They aim to use the money to invest in students and open up operations in the EU (and UK.) In fact, Lambda School just announced three new full-time cohorts running in the EU. April 22nd, May 28th, and July 8th.
If you ever wondered what would be the Lambda School for Europe, or the Lambda School for X, the answer might just be Lambda School.
My personal take is that Lambda will continue to grow by focusing on the success of their students, finding new gaps in employment they can fulfill, while opening up new geographic regions (Canada, Europe, remote).
If (and it’s a big if) they can figure out the growth cycle correctly and keep investing in students, then the sky is the limit.
If they can get more successful students (by expanding the curriculum, better career support and opening up new markets), they can get more happy hiring partners, which means they’ll earn the $30k per student over two years, which means more money to re-invest and double down in a better curriculum, better career support and new markets, which means even more successful students and the cycle starts all over again.
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