Making the American Dream Real Again

GV, formerly Google Ventures, leads a $14M Series A in Lambda School, an education startup that is using code to make the American Dream real again.

GV, formerly Google Ventures, is one of the best known strategic venture capital firms, which entered a league of its own thanks to its prescient early investment in a taxi hailing company you might have heard of called Uber. On Monday, they led a $14M Series A investment in Lambda School, a coding academy that started less than 2 years ago and has already grown to 700 currently enrolled students.

What’s in a Name?

Lambda School’s name derives from their early idea to teach the coding language Haskell, where a “lambda” or “\” designates a function without a name. Needless to say, Lambda School has come a very long way from this original idea, and the origin story says nothing about what they actually do today.

So…what does Lambda School actually…do?

Read about Lambda School in the popular press and you might think of Lambda School as a “coding school”, “tech school”, or a “coding bootcamp”. Those descriptions work for drab, clickbait jockeys, content to imagine that Lambda School merely “teaches students how to code”, but I beg to differ. Does Apple merely “make computers” or Tesla merely “make cars”? Well, yes, but that’s not why people are buying.

Students are not enrolling in Lambda School because of the great teachers, intense full-time curriculum, or unique tuition model. They are buying into Lambda School because it is making the American Dream real again and they want in on the action.

The American Dream

The American Dream is really simple. Work hard, and regardless of where you come from, what you look like, or how you pronounce your name, you will find success here in America. It’s that simple.

The American Dream still exists, but the stories we Americans tell to keep the Dream alive have been fading. Nearly 150 years ago Americans were reading “rags to riches” stories popularized by Horatio Alger, where shoeshine boys rose from the streets to become wealthy men. Today, we have somehow wound up in a narrative dead-end where all the “rags to riches” stories involve college dropouts from Harvard University.

For most of America, stories about “Harvard to riches” isn’t a believable retelling of the American Dream. The stories of Gates or Zuckerberg end up with the protagonist becoming a billionaire tech mogul; an outcome that even the most optimistic Americans find absurdly unrealistic. By contrast, the Alger stories were never about becoming a captain of industry, but instead about affording good food and the comfort of a house rather than a flea-ridden tenement.

To rekindle the American Dream, we don’t need yet another story of a young founder who becomes a billionaire through luck, hard work, and gobs of venture capital. We need stories about real people making the transition from paying rent to buying a house. Companies that can credibly, and authentically, tell this story, are onto something.

Making The Dream Real Again

Whether intentionally or not, Lambda School has hit upon a narrative formula (or rather, Tweeting formula, from their prolific Tweeter-in-Chief, @AustenAllred) that is making the American Dream real again in the minds of their customers, the students. Here are some examples:

These are pictures of Lambda School graduates with their offer letters in hand. These pictures are a visual story for thousands of aspiring students, that Lambda School’s 30 week full-time programs in Computer Science, User Design, Android and iOS Development are helping real people, get real jobs, that pay real money.

Getting Real

Lambda School runs a selective admissions process, so “real people” is not just anyone. However, neither are these elite Liberal Arts college graduates putting the technical finishing touches on their resume. Course Report, the U.S. News and World Report equivalent for the technical education world, has nearly 40 reviews by Lambda School graduates, including former baristas, unemployed 40-somethings, and working mom’s.

Secondly, many startups in Silicon Valley sell their products to other startups, which is OK in the early days, but risky as the company inevitably has to sell to normal, Fortune 1000 corporations. Lambda School’s “hiring partners” definitely include many startups, but with over 75 companies, including IBM, Slack, and Eventbrite, there is a clear path to working with larger tech companies to place students in “real jobs”. Furthermore, their graduates are not doing data entry or other “IT” tasks, but starting as legitimate, entry level web and mobile developers.

Finally, at its core, Lambda School is laser focused on teaching value-added skills to their students, as measured by the difference between their pre and post-graduation salaries. As of now, the median salary increase for a Lambda School graduate is ~$50,000, which is definitely “real money” to students formerly making $18 / hour in food service. The laser focus on high quality graduate job placement stems from Lambda’s business model of having students pay their tuition using Income Share Agreements. ISAs are a unique funding model I’ve written about before, where Lambda School is paid back from a student’s future earnings. This revenue model incentivizes them to help their students find a great job upon graduation.

Rising Sun

Back in August, I theorized that we were witnessing the dawn of a new trend in higher education, called Transparent Education:

In the Transparent Education model, student and educator incentives are completely aligned: spend the least amount of time in school, learn the most possible, and get the highest paying job possible after graduation. Transparent Education stands in stark contrast to the Low Visibility Education where a student can obtain a traditional Federal student loan, for the same amount of money, no matter the major, and no matter the expected post-graduation salary. New education startups, such as Lambda School and App Academy, offer the most exciting examples of Transparent Education.

With the latest round of funding for Lambda School, I’m excited to speculate that the sun just rose a few inches higher.

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Micah

Micah is the author of Rethink the MBA. He works and lives in Silicon Valley.

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