Why Lambda School works

After the Massive Open Online Courses (MOOCs) mania fizzled out some time in 2015/2016, there was a period of 2-3 years when the education industry (yet again) mostly soured on education technology startups. But after a brief respite, there is a new darling in town now: Lambda School

While journalists continue being skeptical as usual, the data on salary increases before and after people go through the school is impressive. We're told there are hundreds of people whose yearly salary jumped $50,000 or more after completing the course. Some student stories are inevitably a bit more reserved, but the overall picture is impressive.

Back in 2014, as someone who was involved in and spent a lot of time thinking about the education business, I wrote a post called Why it's so hard to make ourselves better. In the post, I discussed the reasons for why we didn't see more big companies being built in online education. I wrote:

The problem with the “customer value proposition” of most education and healthcare products is that they offer:

    • an uncertain, often unmeasurable benefit in the future
    • in exchange for effort (learning) or giving up “easy pleasure” (not eating that desert) today

and then clarified this further by pointing out that:

The challenge with education and healthcare is that often, they can offer neither:

    • Measurability: although we’re making progress in quantifying both domains, isolating the impact of a new product remains difficult.
    • Immediacy: as it turns out, (for now), our bodies and brains just need some time to change.

So why does Lambda School work? Among other things, they figured out a way to overcome these exact challenges:

  1. Lambda made the reward huge — learning most skills that MOOCs offered, for example, wouldn't really move the needle on your expected income in a few years. Lambda picked a domain where a highly valuable skill is both in massive shortage and can be taught in 12 months. So the reward became $50,000 per year of extra income. For virtually every student, that's life changing.
  2. Lambda made the reward measurable — Lambda made incremental student income after completing the school one if not the primary metric they focus on and market. This is very different to most MOOCs or other online education companies, who market a much more vague value proposition. Making the reward not only measurable, but doing so in a "currency" that people care about as much as money massively increases motivation.
  3. Lambda brought the reward forward — most education startups teach you skills that may be valuable at some point in the future, often years out. Lambda found a domain where you could teach someone something extremely valuable in 12 months.
  4. Lambda reduced the financial cost  instead of paying upfront, Lambda uses Income Sharing Agreements where students don't have to pay anything unless they get a better job that pays more money. This removes two problems for students. First, they don't have to worry about where to borrow the money for tuition if they don't have savings. Second, but perhaps even more importantly, the students don't have to worry about wasting their money on a useless course.
  5. Lambda reduced the effort cost — by building a strong curriculum and tools such as peer-to-peer support, mentors, recruiting help for finding the next job, etc., Lambda School reduced the effort of going through the program.

In summary, Lambda offers a big, measurable reward that you can get rather soon, and they significantly reduce both the financial cost and the effort cost of achieving that reward. No wonder it seems to be working.