#25 Austen Allred: building the leading online coding school and raising $122M+ to improve the education system
Co-Founder & CEO of Bloom Institute of Tech , startup helping people become software engineers, with $122M+ funding from inv like Gigafund (SpaceX), GV (GitLab), Stripe ($95B fintech) & YC (Coinbase)
We are Pol Fañanás and Gerard García, two friends passionate and curious about tech, startups, and VC sharing views from exceptional people creating the future. Thanks for reading!
Austen is Co-Founder & CEO of Bloom Institute of Technology (formerly Lambda School), an ed tech startup focused in helping people rewrite their futures by providing a coding school to train people remotely and supporting them in becoming software engineers or data scientists, that raised $122M+ funding from tier 1 investors like Gigafund (long term focused VC by one of Paypal Co-Founders and Founders Fund Founding Partner, investor in companies like SpaceX and Neuralink), GV (Google’s VC, $5B AUM and companies like $17B+ IPOed DevOps platform Gitlab), John Danner (investor and serial entrepreneur with experience in education and exits including 1 IPO), Stripe (leading fintech infra startup valued at $95B) and Y Combinator (world leading startup accelerator, $575B+ total value created and companies like $79B+ IPOed crypto exchange Coinbase).
He and his team built a state of the art school where beyond education, students get unique career coaching, job sourcing and community support, with a unique business model that only makes money if the students succeed and earn an annual income of $50,000 or more. As a result, lots of lives changed and new builders created, with thousands of Bloom grads hired by companies such as Apple, Google and Goldman Sachs.
Before Bloom, Austen was the Co-Founder of a media platform named GrassWire and co-authored a best seller growth hacking textbook. Originally, he was born and raised in a low income background, was a missionary in Ukraine and even lived in his car for a while, experiences that ignited a fire in him to rethink education and build a new way for people from different backgrounds to thrive and succeed without having to go through the old school inefficient and expensive university system.
Summary
👤 Story: Utah, low income background, founder, improving education
🥇 Win: great relationship with wife and kids, working in what you love
🚫 Fail and lesson: bad partner and bad hiring, always learning
🚀 Great founder: attacks big problems smartly and never gives up
💸 Great investor: not being bad, providing zoomed out view
📈 Markets: education, ecommerce, infrastructure
👍 3 investors: Jonh Danner, Luke Nosek & Stephen Oskoui (Gigafund), Shaun Maguire (Sequoia)
📖 3 books: “Les Miserables” by Victor Hugo, “Twilight of the Idols” by Friedrich Nietzsche, “The Wright Brothers” by David McCullough
What is your story?
I grew up in a small town in Utah in a low income type of environment, in my teenage years I went as missionary to Ukraine, knocked a lot of doors and learned my piece about being resilient while working in challenging situations without immediate outcomes.
After Ukraine I came back to Utah and when I was thinking about what to do in life I came across this predetermined system we all know about going to college, spending a lot of money to study a bunch of years in something that seems way less practical than it should, being a slave to your loans and then crossing your fingers and hoping to be able to pay for all the crazy amount of debt you have accumulated.
Probably influenced by being raised in a low socioeconomic environment in a family very averse to debt while seeing people around me get crazy loans, I started to seriously consider that this expected way to go didn’t made sense for someone like me.
This experience really stuck with me at the same time that I started to love tech more and more, so I dropped out of college wanting to work in tech, taught myself to code and got my first job that way. Then I went to Silicon Valley to try out in the big leagues but at first it didn’t worked out as well as expected and I ended up broke and homeless, sleeping in my car for a while.
Eventually I could earn a decent living and this idea of how to make education provide life altering outcomes started growing more and more, became Lambda/Bloom and ended up changing the life of a lot of people for the better.
What is the biggest win in your life?
First of all, my family.
My family and my relationship with my wife and kids is the biggest win and the thing I am most proud of in my whole life. Based on my experience I do not think is common to build a company while raising kids and being happily married so I am extremely thankful for this.
Second, the fact of waking up everyday and working on a problem I care about whilst supporting my family doing it. I do not believe Bloom is wildly successful yet - yes we have a lot of money raised, big number of employees and many students lives changed but there are still a bunch of things to do. Yet I am extremely happy about it all. With minimum wage I’d still do the same.
No one would have expected this things by the way I grew up, and I am hugely grateful for it all.
What is the biggest failure and lesson?
There are a million things I’d have done different before and after founding Lambda/Bloom.
For instance, before that, I started a company, a tiny company that failed miserably and went out in flames pretty much overnight. We ran out of money after a billionaire (who I am not going to name to not fall into lawsuit zone), with all the documents signed way beyond term sheet stage, ended up not sending the wire. After that I learned to have at healthy alert but also got a mindset where sometimes I’d focus too much on not failing instead of focusing in succeeding, which can be a wrong lesson and a big fail too.
After founding my current company, one that comes to my mind is that at first I was not very good at hiring, I didn’t know what really great talent looked like and I didn’t set up the infra for the school to be able to grow more seamlessly. It was way more bumpy than I’d have liked and I learned how to correct this mistake.
What is your description of a great founder?
Someone who attacks a big problem in a smart way and refuses to give up.Those two things are key and you need them both.
I never talked to a great founder who didn’t question if they should be working on that, if it is possible, if they are wasting time and money, etc. You do not give up but you also have to solve the problem in the right direction. Not giving up doing useless things is not a great way to go neither.
What is your description of a great investor?
Stage 1: not being a bad investor. And there are infinite ways of not being a bad one like avoiding not sending the wire when you signed and committed.
Then, based on my experience as an angel investor and raising money for my startup, I’d say that the job of an investor is to help a founder see blindspots, see around the corner. As investor and even founder in later stages, you have seen so much that early stage founders have not seen yet, you have a very zoomed out view versus the zoomed in view the founder tends to have - the idea is to use that to give the founder a more complete picture of the adventure.
Best investors acknowledge that is the founder who at the end of the day knows better all the operational details and context. Most investors could not even understand it, less match them. But as an investor what you can do is help the founder see the zoomed out version, help see what is happening that the founder is not seeing and guide towards the right direction, focusing in the right things and pointing out the risks the founder is not aware of, while making connections to make it happen.
What markets are you most interested in?
Good question, a few come to my mind. I am not the kind of investor with a thesis, I just stumble with companies in my day to day and if they are interesting I get in.
Education. I tend to not get in but I’m seeing really interesting stuff happening in areas such as homeschooling and K-12. There are new schools providing superior outcome than any preexisting private or public ones, taking kids from the bottom and bringing them to the top. Finally the software is there making this a reality.
E-commerce. Companies helping small business by providing a layer of support via tools, acquisitions, rollups, etc
Infrastructure. There is a lot of infrastructure online that needs to happen, specially with an open source angle. For instance I’ve seen fascinating stuff being built around devops tools trying to redo the javascript stack or nft labs trying to create infra/rails for NFTs. In general, stuff for others to built on top.
3 startups you like and why?
Replit. I am as big investor as I can be in the company and it is one of my favourite late stage startups. They have powerful tools that used to be on desktop and now are in the cloud and I believe they are one of the drivers of this new paradigm of being able to have software that is incredibly powerful without the need of it working in your local computer, but using a virtual machine that leverages the infrastructure (both software and hardware) of Replit, happening in a super powerful computer far away.
Riogrande. One example of the ecommerce market opportunity I talked about, a company buying and doing rollups of all sorts of ecommerce business in Latin America.
3 investors you like and why?
Jonh Danner. There are very few people who understand education and sold a company for a bunch of money and took a company to IPO. He is one of these and his expertise has been really great for us.
Luke Nosek and Stephen Oskoui (Gigafund). Luke is one of Paypal’s Co-Founders and also Founders Fund’s Founding Partner and Stephen was a Venture Partner at Founders Fund and Founder and CEO of a marketing company that drove $1B+ in sales for its clients. They are both impressive and invest very differently, when they look at something they don’t focus on the classical 10 years cycle but look for companies which can be astronomically big 50 years from now and orient everything around that. Also they are very careful with who is on the board and take care of incentives for the lung run. Is the founder for the long haul? Is the market big enough for it to be a world changing company? To see an investor focused so much on the future, bold to do big bets and willing to get huge returns instead of the average 10 years and 10x, is something exciting.
Shaun Maguire (Sequoia). He led our Series A when he was at GV. Incredibly helpful and among the smartest people I’ve seen. You can say that of a lot Silicon Valley investors since the level is so high, but he stands out. PhD in physics from Caltech, worked in DARPA (Defense Advanced Research Projects Agency of the US Dept of Defense), founded two companies one of them being aquired for $800M - great investor.
3 books you feel everyone should read and why?
“Les Miserables” by Victor Hugo. A favourite without a doubt.
“Twilight of the Idols” by Friedrich Nietzsche. It impacted the way I look at the world.
“The Wright Brothers” by David McCullough. Fascinating to learn more about their creative path and the way they built the first plane. It hit me in the right time.
WILDCARD QUESTION
Tech is changing the world fast and the education system seems to be falling behind and get broken by the day. Critics abound but alternatives do not. What do you think is wrong with the current education system and how would you improve it?
More felt in the US but true internationally, we really have just one education system, the 4 years university path. A lot of funding goes there, to an old type of school with a specific style accredited by a specific system. If you build a new great school that that does not fit that profile, there will be no funding for you. In the case of the United States, if you are not a Title IV school following the traditional 4 years university system, you will not be backed by the federal system. So this this type of incentive scheme ends up pulling the entire education system to a very specific profile where inefficiencies grow, there is no deviation on what is though and a small deviation on how it is taught.
If I could so something about it both from a public and private angle, first I will empower a vocational education system where everything will start over, from teaching to learning. Universities were originally intended to be for academia or some specific degrees like law and history, very liberal arts were the main priorities. Now we have to do sciences and engineering but we don’t have a vocational super practical system that is actually the most efficient for that. Yet it has been done that way because that is how the preexisting incentives scheme is fixed. We need to change it.
Second thing, if schools are going to take government funding and loans, I would have them guarantee outcomes somehow. Right now schools simply do not have to really care about the success of students, about their wellbeing, about if they can pay loans or not - it is just about if students show up and write a check. Schools don’t care about nothing more. Incentives are misaligned.
There are a lot of new opportunities for improvement and it is time to consider thinking about this problem very differently.
Big thanks Austen for sharing your views with us!
Big thanks to you, reader, for your time and interest!
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