In January 2020, as news broke about Lambda School's scummy behavior, Graham gave Austen a pep talk which he later expanded into the essay, "Haters." It has aged like a fine milk. https://paulgraham.com/fh.html
> There are of course some people who are genuine frauds. How can you distinguish between x calling y a fraud because x is a hater, and because y is a fraud? Look at neutral opinion. Actual frauds are usually pretty conspicuous. Thoughtful people are rarely taken in by them. So if there are some thoughtful people who like y, you can usually assume y is not a fraud.
I guess all those folks calling these guys "frauds" weren't "thoughtful" enough.
I wish PG was right about this, but there are plenty of examples of frauds that were not conspicuous and took in lots of thoughtful people (Bernie Madoff being one of the most obvious and public examples).
This is pretty poor writing by PG here. What is "neutral opinion"... fact? Or the people who answer "I don't know" in political polls? And saying "Actual frauds are usually pretty conspicuous" is silly. If an attempt at fraud were really obvious, it wouldn't trick many people. The big frauds are the ones that are outwardly plausible and therefore trick lots of people.
(Edit: I've been informed on a side channel that non-disparagement clauses can no longer be enforced. IANAL--can someone elaborate?)
As someone who was a low-ranking insider at Lambda some years back, it was my perception that the people calling Lambda out presented a mixed bag in terms of veracity.
Someone here commenting on this story said that Lambda counted their student TAs in their employment stats, for example, but to the best of my knowledge this never happened. There were a handful (like three or four that I know of) that we did hire as full-time staff doing real jobs, and I'm pretty sure we counted them as employed, but not the student TAs.
With respect to this ruling, it says that students were subjected to up to $4,000 finance charges. I hadn't heard of that at all. Reading the details, it turns out that's the difference between the published upfront cost of paying Lambda versus using an ISA. The upfront cost wasn't hidden; it was published right next to the ISA cost. But because they weren't the same value, and it was probably more expensive to use the ISA, they called the difference a finance charge. Which is fine, but if Lambda had simply not allowed people to pay upfront, there wouldn't have been a "finance charge" to complain about. In other words the finance charge was already published in the rules for how the ISA would be repaid. So, factually accurate, but a strange thing to complain about, like complaining that the upfront cost of a house is lower than the mortgage cost.
Still others complain about the selling of the ISAs to investors, and say that that means that Lambda would still make money no matter how well their students performed. However, this would be a very short-sighted strategy as no investors would buy the ISAs if the students weren't performing. So selling them didn't really remove any of Lambda's impetus to place students in jobs. (It did improve the cash flow situation, however, which is why it happened.) From what I saw, the goal of placing students was ever-present regardless of whether or not Lambda was currently selling ISAs.
My point is, there's a lot of information out there by a lot of people who aren't sure about what they're talking about. And it can be tough to know what's real and what's not.
One thing I can say with certainty is that all the instructors who worked there back in the day were absolutely fucking passionate about getting students into jobs and changing the world, in that naive startup way. Some of the success stories from those early cohorts are the things I'm most proud of in my entire tech and teaching career.
As part of my layoff agreement, I had to sign a non-disparagement clause to get my severance.
“… all the instructors who worked there back in the day were absolutely fucking passionate about getting students into jobs and changing the world”
100%
The fundamental concept had merit, but the business had a very very low probability of succeeding financially. Once the financials flipped, the original mission went out the window.
I’m proud of the work I did there and I know we gave many students great opportunities. It was sad, but not surprising to see it go so wrong. But for a time, for many students, good things happened.
> Someone here commenting on this story said that Lambda counted their student TAs in their employment stats, for example, but to the best of my knowledge this never happened. There were a handful (like three or four that I know of) that we did hire as full-time staff doing real jobs, and I'm pretty sure we counted them as employed, but not the student TAs.
That's true. A source of confusion is that the school did hire at least one bootcamp graduate as an instructor, though he graduated from a different bootcamp. And it's worth pointing out that the marketing material promised world class instruction, and a fresh bootcamp grad with zero industry experience is the very opposite of that. For that matter, the head of the data science program was the CEO's brother, whose only industry experience was from a no-name company in Utah.
> With respect to this ruling...
It's a waste of time to argue the semantics of income share agreements at this point. They always operated in a gray area, which is why Lambda School hired lobbiests to try to make them officially legal. That effort failed, and the law has decided they're just another form of loans with convoluted hoops to jump through.
I imagine that they got that $4,000 number from all the people who attended the program, received zero practical skills to get jobs, went on to further training (another bootcamp or even an associates degree) and still had to pay back the company because the terms of the ISAs lasted anywhere from five to eight years.
> Still others complain about the selling of the ISAs to investors, and say that that means that Lambda would still make money no matter how well their students performed. However, this would be a very short-sighted strategy as no investors would buy the ISAs if the students weren't performing.
Given the ISAs disappeared from the marketplaces that resold them to hedge funds, that sounds like exactly what happened. The issue is that it fooled prospective students into thinking, "Hey, if this company is able to run off ISAs, the program must work!" In fact the company made money by leaving hedge funds as bag holders.
> My point is, there's a lot of information out there by a lot of people who aren't sure about what they're talking about. And it can be tough to know what's real and what's not.
The same is probably true of Bernie Madoff, Charles Ponzi, and Sam Bankman-Fried. When someone acts like a sociopath for long enough, people start to assume that everything they do is unethical. There is a long list of crimes that the company committed which have been verified from multiple sources. A few people on the internet getting the details wrong doesn't invalidate that.
> As part of my layoff agreement, I had to sign a non-disparagement clause to get my severance.
They did the same thing to students who scrounge together the money to hire a lawyer to get out of their ISAs. These students had to any reference to Lambda School from their LinkedIn profile and tell nobody about what happened. While you did it to make money, imagine how it would feel sign away your right to free speech for fear of a $30,000 debt.
> I imagine that they got that $4,000 number from all the people who attended the program, received zero practical skills to get jobs, went on to further training
But to be clear, that's not where they said they got the $4000 number. It would be one of those things that'd be nice to correctly know. Do ISAs come with a hidden $4000 fee? The answer: no. Did they have to pay $4000 more because of additional training? No. Did the ISAs last 8 years? No. (At least not for any of the years I was there.)
> Given the ISAs disappeared from the marketplaces that resold them to hedge funds, that sounds like exactly what happened.
I have no knowledge of their final disposition, whether or not the purchasers realized gains on the ISAs.
I know other companies like App Academy and Launch School have had successes with ISAs. For me, this is the real pisser of all this. I think done right it's a workable, useful model, but it got dragged through the mud here, and now we're left with the same old bullshit loans that are fucking the country over. I don't care about Lambda, but I really wish ISAs had been worked on to greater effect globally and hadn't gotten this tarnished image.
> A few people on the internet getting the details wrong doesn't invalidate that.
Of course not. But it also doesn't make the wrong details right, or something you should believe, which is what this subthread is all about.
How can we be expected to make any learned decisions about these sorts of financing instruments if we're throwing bad information in with the good?
I'm the founder of Launch School and I have been thinking about ISAs, coding bootcamps, and software ed for over a decade. I've tried to insert my thoughts here and there, for example:
Thanks for replying! The reviews of Launch School are impressive.
I think you're dead on with that first link. I've heard of some schools that did not apply an effective filter up front, despite instructor pleas, and suffered for it greatly with lowered job placement, ultimately failing with the ISA model.
I feel there's a class of students for whom ISAs are perfect, and, just like you said, a class of students for whom they are ineffective. The ones where the ISA works and standard school is out of reach have incredible success stories.
I found something similar when I taught a nearly free C++ class. I put a really simple test on the front with a refundable $20 fee (if you took the course). Everyone who ultimately took the class was really motivated. $20 was all it took to filter. $5 might have even worked since I speculate the effect is psychological, not economical.
The second link is good food for thought, some stuff I hadn't considered. If the ISAs are sold cheaply enough, you really don't need much student success to get a return.
IIRC, in Lambda's case, the ISA sales were stopped while the company was still young (having gotten another round) [caveat: I didn't have much visibility into this side of things], and anecdotally I think they had some of their biggest successes early on, but I agree with your points on this.
One thing that really impressed me about Lambda was how diverse in every respect the student body was, people from just every walk of life. Waaay more so than I'd seen at any university. I credit the ISA for making this possible.
One of my missions in life is to enable people to get the training they want to get. ISAs were wonderful in that regard.
I think you have to be careful about looking at the diverse student body as "giving them an opportunity". For example, predatory for-profit universities specifically target low-income minority populations not to serve them but because they make for easy prey[1]. I'm not saying Lambda or any particular bootcamp is in this category, just that having a diverse student body isn't a feature unless you know for a fact that you're helping 100% of the students.[2]
Education has a couple of unique attributes that makes it difficult to assess:
1. the value cannot be perceived until much later after the service is rendered
2. alternatives are mutually exclusive; eg, people usually just attend one university or coding bootcamp, not all of them (or even two of them)
This is in contrast to, say, a restaurant where diners can immediately determine if they like the food and can compare it with competitors (because they dine at all the restaurants).
Those two attributes make it very easy to lead with hype and marketing and vulnerable people are particularly susceptible to it. imo it's not appropriate to deploy the standard startup playbook in edu, especially if you find yourself attracting vulnerable students.
Ok, now combine that with ISAs, which has some positive qualities but are not as incentive aligning as marketed. And then if you sell the ISA in bundles, then it becomes even less incentive aligning. Well, I guess it's now aligning with investors and loan brokers. But it's certainly not aligning more with student outcomes.
It all makes for a very delicate situation where you have vulnerable students biting on the ISA bait.
I know it seems like I'm just complaining but I've been thinking about these problems for a long time and I come with solutions. Or, particularly, a solution: imo the best thing an edu institution can do is allow students to leave easily.
Why do we never think of restaurants as predatory? The idea is ludicrous to even consider. There are of course terrible restaurants but we can just not dine there again and eat elsewhere. There are lots of restaurants around.
And here's the issue: there are also lots of edu institutions around but every single one of them deploy the marketing->entrapment playbook.[3]
How does marketing work when you have a bad school? Because of the time-lapse between value received and service rendered. The ISA is easily abused in this environment because it's both the marketing and the trap.
Anyway, I'm just riffing here... btw, huge fan of your books and work! Despite what I wrote above, I knew Lambda was making an honest attempt at their curriculum when they hired you.
[1] https://failstatemovie.com/
[2] imo, edu institutions need to be judged on how they treat their most vulnerable students, unlike startups who are judged on their best wins (https://twitter.com/cglee/status/1781129096250179640)
[3] https://medium.com/launch-school/educational-entrapment-f5cc0472051e
I agree with you on the dangers of targeting minorities. My thinking is still, though, that there is a category of people well-served by ISAs, and those people are underrepresented in schools with traditional payment models.
I've often thought that anyone can be a dev--if they want it. Meaning, it has to be someone who likes the material enough to put in the effort. It doesn't matter if you're smart enough; it only matters if you're going to put in the time. There's a reason I'm not a CPA. I'm absolutely smart enough, but eff that!
And lots of times schools do advertise "we guarantee you a position in a high paying job if you just put your ass in that seat for 6 months". Who wouldn't want that? But they leave off the "you gotta want it" part. And then people get trapped.
Related to "easy to leave", we fought to filter the front-end heavily for people who "wanted it". And we fought to allow students to attend for as long as possible with no obligation. The goal was to allow them to discover if they wanted it. However, this was not realized while I was there. So much more I could say here about how that didn't happen, but I'd wager you have a pretty good guess.
Hand-in-hand with wanting it (IMHO) is having a comprehensive, heavy-hitting curriculum. The guy who hired me left Lambda ages ago, but he and I came up with a list of things people should learn to be decent devs... and that was one helluva list. Needless to say, not all of it got covered, and as time went on, less and less of it did.
I love that California community colleges are now free. Easy to leave!
I really appreciate the conversation, btw. I also like geeking out about this topic, and it sounds like I could learn a lot from the ground you've already covered. I'll check out the reading after I finish prepping for class next week. (0-1 Knapsack and dynamic programming. Phew.)
We have a saying at Launch School: habits over enthusiasm. I've noticed that wanting it isn't enough. Desire is fine but what the real key is a commitment to studying. I think we're saying the same thing with different phrases.
Agree that ISAs can be useful. But it's a tool that can be used to harm or help. Elevating it beyond a financial tool to some sort of educational breakthrough was a disservice, imo.
We agree on the value of community colleges. I wish they were better funded and more people worked to drive CC graduates to six-figure jobs.
I am the founder of BlueWave Labs - we accept junior developers and UI/UX designers to give them Canadian experience by building open source products, to help them land their full time IT jobs and would love to talk to anyone who has put some thought on bootcamps. BWL is a bit different from bootcamps but the main idea is the same: to help people land full time jobs.
Graham also wrote Crazy New Ideas[1] in response to criticism of Mighty, in which he claimed that if "reasonable domain experts" propose an idea it can't be crazy.
The more we see the legacy of PG’s various protégés and “thought leadership” out in the world the more I start to think Jessica Livingston might have been responsible for much more of YC’s successful trajectory than people realized at the time.
> Thanks to Austen Allred, Trevor Blackwell, Patrick Collison, Christine Ford, Daniel Gackle, Jessica Livingston, Robert Morris, Elon Musk, Harj Taggar, and Peter Thiel for reading drafts of this.
