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Lambda School is a predatory bootcamp that lies about students outcomes

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Re: Lambda School is a predatory bootcamp that lies about students outcomes

#51

Post by Tomminn »

seriousquestion wrote: post #7

Colleges are predatory, putting kids deep into debt that they may never be able to repay and can't even remove with bankruptcy. And said debt has exploded in recent decades with no corresponding improvement in outcomes. Whereas Lambda aligns their interests with the student. If their students don't get a job, Lambda doesn't get paid. Why is a better model being attacked like this?

Then great, you'll be interested in a salary sharing agreement with me.

I promise to impart wisdom upon you that will help you get a job over 100k, and ONLY if you get such a job, ONLY then do you have to give me 30% of your earnings for ONLY 2 years. Do we have a deal?

Also, this offer is extended to ANYONE reading. I'm that generous.

* * *

Breaking character now. If there is any volatility in peoples lifetime earnings, agreements such as these will generate revenue even if the school provides nothing. It may very well be that the most profitable state of the school is to contribute precisely nothing to peoples careers, because that requires the lowest financial investment from the wisdom provider.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#52

Post by austenallred »

sandofsky wrote: post #14
seriousquestion wrote: post #7

Colleges are predatory, putting kids deep into debt that they may never be able to repay and can't even remove with bankruptcy. And said debt has exploded in recent decades with no corresponding improvement in outcomes. Whereas Lambda aligns their interests with the student. If their students don't get a job, Lambda doesn't get paid. Why is a better model being attacked like this?

> Colleges are predatory, putting kids deep into debt that they may never be able to repay and can't even remove with bankruptcy. We're not talking about colleges. The fact other scams exist in the world has zero bearing on whether one specific company is scamming people. > Whereas Lambda aligns their interests with the student. They align themselves with their investors. That's their fiduciary duty. If you want to u…

That isn't how any of this works.

There has been a constant allegation that Lambda School sells its ISAs and therefore no longer has incentives that are aligned with students. The assertion is that, in “Big Short” style, we sell off all the risk of our students being placed to someone else and don’t have to care about outcomes.

Nothing could be further from the truth.

When Lambda School finances ISAs here’s how it works:

We get together with investors and say, “Based on past performance, we predict this ISA will be worth $x.” We can then receive an advance of $x, minus interest and a possible margin of error.

Importantly:

1. That amount needs to be paid back, plus interest. 2. If the value of the ISAs ends up being less than predicted, either we have to reimburse investors for the loss, or we won’t be able to continue borrowing in the future.

This is not a unique or predatory structure in any way.

If a student drops out, doesn’t get hired, or doesn’t pay back, Lambda School makes less money. If a student does great, gets hired, and pays back quickly, Lambda School makes more money.

This is not a scandal, and holds true to incentive alignment in any way. Lambda School remains entirely aligned with its students.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#53

Post by austenallred »

smegma2 wrote: post #11
potions wrote: post #5

Lambda School seems questionable for a few reasons I was already aware of as a semi-habitual hirer of bootcampers: trying to scale too fast & degrading the product, possibly disaligned incentives if ISAs are sold off immediately, etc. If I weren't aware of these issues, this tweet/thread would not have taught me about them. However -- "Naturally they're partnered with Amazon"...to get people jobs as programmers at Am…

I find it surprising that they sell their ISAs (it seems to be true based on a quick look at this https://www.theverge.com/2020/2/12/21135134/lambda-school-st... ). Doesn't this look bad to prospective students? It implies that they don't think that they'll pay off. Is there a good faith explanation for this?

The cash to train students needs to come from somewhere. So in Lambda School's case that's either VCs or some other investors.

Instead of running the entire school on venture capital, which wouldn't make sense (VCs need a huge return per dollar), we use an advance from investors based on the future value of an ISA to offset the cost.

If we work with investors to say that an ISA will be worth $x, we can borrow $x minus interest the same way you would be able to for any other asset.

Of course, that amount needs to be repaid. So it's still completely risk-aligned.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#54

Post by Grustaf »

smegma2 wrote: post #11
potions wrote: post #5

Lambda School seems questionable for a few reasons I was already aware of as a semi-habitual hirer of bootcampers: trying to scale too fast & degrading the product, possibly disaligned incentives if ISAs are sold off immediately, etc. If I weren't aware of these issues, this tweet/thread would not have taught me about them. However -- "Naturally they're partnered with Amazon"...to get people jobs as programmers at Am…

I find it surprising that they sell their ISAs (it seems to be true based on a quick look at this https://www.theverge.com/2020/2/12/21135134/lambda-school-st... ). Doesn't this look bad to prospective students? It implies that they don't think that they'll pay off. Is there a good faith explanation for this?

In theory they need to provide value in the long-term if they want to be able to continue selling ISAs.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#55

Post by Grustaf »

seriousquestion wrote: post #7

Colleges are predatory, putting kids deep into debt that they may never be able to repay and can't even remove with bankruptcy. And said debt has exploded in recent decades with no corresponding improvement in outcomes. Whereas Lambda aligns their interests with the student. If their students don't get a job, Lambda doesn't get paid. Why is a better model being attacked like this?

Surely you are conflating student loan institutions with colleges?

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#56

Post by maxerickson »

austenallred wrote: post #53
smegma2 wrote: post #11

Earlier quoted context omitted.

I find it surprising that they sell their ISAs (it seems to be true based on a quick look at this https://www.theverge.com/2020/2/12/21135134/lambda-school-st... ). Doesn't this look bad to prospective students? It implies that they don't think that they'll pay off. Is there a good faith explanation for this?

The cash to train students needs to come from somewhere. So in Lambda School's case that's either VCs or some other investors. Instead of running the entire school on venture capital, which wouldn't make sense (VCs need a huge return per dollar), we use an advance from investors based on the future value of an ISA to offset the cost. If we work with investors to say that an ISA will be worth $x, we can borrow $x minu…

The cash to train students needs to come from somewhere. So in Lambda School's case that's either VCs or some other investors.

This makes sense for liquidity, but ultimately the ISAs are what has to provide the funding (or it's not a viable business).

As the investment terms improve, the portion of the ISA payout spent on training has to go down.

You are correct that the ISAs need to pay out to be an interesting investment, but if you are pricing the ISA to what the investment market will pay instead of what the training costs, it's not exactly a better deal for the students.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#57

Post by offtop5 »

seriousquestion wrote: post #7

Colleges are predatory, putting kids deep into debt that they may never be able to repay and can't even remove with bankruptcy. And said debt has exploded in recent decades with no corresponding improvement in outcomes. Whereas Lambda aligns their interests with the student. If their students don't get a job, Lambda doesn't get paid. Why is a better model being attacked like this?

College is more about learning how to communicate with other adults, and building a solid social circle. There's a very real stratification between people who finish college, and people who don't. For example you're far likely to meet a quality partner attending, or being someone who previously attended college.

I'd always tell people to go to the absolute cheapest college they can if they can't get a scholarship, but you still need to go. Given the American educational system, your average high school graduate can barely read and write. I recall once I was talking to an international student who was ashamed he needed to take remedial English at college, I then let him know I knew at least one person who as a native English speaker needed to take the same class.

Exceptions do exist, I have noticed those from upper middle class backgrounds often can skip college altogether as they already carry with them a sort of status. But for someone who grew up poor like me college was a requirement

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#58

Post by austenallred »

maxerickson wrote: post #56
austenallred wrote: post #53

Earlier quoted context omitted.

The cash to train students needs to come from somewhere. So in Lambda School's case that's either VCs or some other investors. Instead of running the entire school on venture capital, which wouldn't make sense (VCs need a huge return per dollar), we use an advance from investors based on the future value of an ISA to offset the cost. If we work with investors to say that an ISA will be worth $x, we can borrow $x minu…

The cash to train students needs to come from somewhere. So in Lambda School's case that's either VCs or some other investors. This makes sense for liquidity, but ultimately the ISAs are what has to provide the funding (or it's not a viable business). As the investment terms improve, the portion of the ISA payout spent on training has to go down. You are correct that the ISAs need to pay out to be an interesting inve…

You’re forgetting the student in all of this. At the end of the day the decision maker is the student who decides if it’s a good deal.

The financing is all cashflow management behind the scenes that doesn’t really matter.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#59

Post by barry-cotter »

Tarsul wrote: post #48
beckman466 wrote: post #39

Earlier quoted context omitted.

> the fact that this "holy shit amazing" job in a highly-skilled and in-demand field pays less than I was earning at McDonald's when I was 14 makes me extremely concerned about what Americans have been convinced is normal. “Amazon Can Only Claim Their Jobs Are Decent Because American Work Has Gotten So Miserable Amazon maims its workers and drives wages down, yet the company still attracts job applicants and claims t…

thanks for that link. "More than 53 million people— 44 percent of all workers ages 18–64 in the United States— earn low hourly wages", which is defined as earning 2/3 of the median male worker. The median hourly wage for those 53 million people is $10.22. One might argue about semantics but these stats are devastating nonetheless.

Forty four percent of the workforce earns less than two thirds of the median male wage is devastating? There are hundreds of millions of people who live on less than $2 a day. The US has the highest average household consumption in the world by a very large margin. If you think US living standards are inadequate the rest of the world is much, much worse.

Re: Lambda School is a predatory bootcamp that lies about students outcomes

#60

Post by offtop5 »

Tomminn wrote: post #51
seriousquestion wrote: post #7

Colleges are predatory, putting kids deep into debt that they may never be able to repay and can't even remove with bankruptcy. And said debt has exploded in recent decades with no corresponding improvement in outcomes. Whereas Lambda aligns their interests with the student. If their students don't get a job, Lambda doesn't get paid. Why is a better model being attacked like this?

Then great, you'll be interested in a salary sharing agreement with me. I promise to impart wisdom upon you that will help you get a job over 100k, and ONLY if you get such a job, ONLY then do you have to give me 30% of your earnings for ONLY 2 years. Do we have a deal? Also, this offer is extended to ANYONE reading. I'm that generous. * * * Breaking character now. If there is any volatility in peoples lifetime earni…

Factor in most of America makes less than 50,000 a year. If you go out to a small town and pitch this offer you would have no shortage of people ready to sign up.
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