Auren Hoffman (00:02.802)
Hello fellow data nerds. My guest today is Austin Allred. Austin is the founder and CEO of Bloom Institute of Technology, a coding bootcamp that helps thousands of students get a job in tech. Austin, welcome to World of DaaS.
Austen Allred (00:07.054)
Austen Allred (00:20.633)
Yeah, thanks for having me. Good to be here.
Auren Hoffman (00:22.386)
I'm really excited. Um, now Bloom's kind of pioneered the idea of ISAs or income share agreements as, as a payment method for, you know, your coding boot camps outside of a few coding boot camps and maybe like schools like Purdue, there's not a lot of institutions that have really embraced ISAs. Why is that?
Austen Allred (00:42.545)
There are a couple of reasons. The biggest is that schools make less money from ISAs than they do from government-backed loans or charging upfront tuition or other types of loans. And I think that's probably the biggest and most obvious, is when schools take on more of the risk, they make less money on average. And then another one is the...
The university system and different portions of government view it as a threat and are trying to kill it. And in some instances have successfully done so. So yeah, there are different laws that but.
everybody has kind of been forced to shift to kind of loan based products with ISA like economics tied on instead of ISAs themselves. Or, you know, different types of instruments that are very, very similar to ISAs in terms of how payments actually flow, but technically different to comply with, you know, regulations in different states and that kind of thing.
Probably just the increased risk doesn't work for a lot of schools. Having people pay nothing if they don't get a job sucks. So don't want to do it.
Auren Hoffman (02:04.918)
Well, how does it technically work? So like somebody like with an ISA, like if there's a student who has an ISA, like what do they sign to like, because I imagine like collections can be annoying and could be somewhat of a problem over time. Does it look like kind of a loan, but it's tied to income or something or has it, has it worked?
Austen Allred (02:23.769)
Yeah, so the simplest way to think about an ISA is that it's a contract. So similar to any other contract, I mean, there can be very different terms based on who the provider is, who the servicer is.
And for all intents and purposes, most regulators just consider it a loan. And so they try to kind of shoehorn it into loan type economics. But so as a student, I can speak for Blumtech's ISAs. Ours basically says, okay, you agree that if you use our education and get a job that pays over X, then you'll pay us Y percent of your pre-tax income for Z years.
up to a cap of, I'm running out of variables, up to a cap of n. And if you don't, then after some amount of time, the ISA expires and you don't owe anything and that's kind of baked into the ISA.
Auren Hoffman (03:13.899)
Auren Hoffman (03:26.198)
Got it. And, but there's some way of like, if someone doesn't pay you back, like, um, and I'm sure in your case that really happens, but like, let's say that's the worry of like, someone who wants to give an ISA that they're, that the person doesn't pay them back later. Like, then you have to like go to, you have to somehow prove, because they can say, well, actually, my income is only X when it's really to X or something like you have to go like prove that somehow or.
Austen Allred (03:52.385)
Yeah, that's a whole thing. I'm in a whole work stream. So the base layer is you're required according to the contract to update us as to what your income is. And then at the end of the year, there's reconciliation where we get your taxes and we, you know.
Auren Hoffman (04:09.574)
Oh, you have the right to get their tax. Like they sign in the way they're right. Or you can like get the tax from the IRS.
Austen Allred (04:13.561)
So we don't have a right to get their taxes, but they are required to send us their taxes, or it's a default of the ISA. So it's similar to like, you know, if you have a cell phone plan, if you don't make a payment plan, you default on that payment plan, or you know, maybe a.
Yeah, there's not like, it's not like a car payment. We don't repo your car. There's nothing we can do, but you know, we would declare you in default and you owe what you were, generally it's, you know, some amount of money that if you default, you're supposed to have paid us. And that's kind of what happens. Obviously the vast majority of people, it's kind of a pain, but they'll okay, you know, once my taxes are filed, you know, here are my taxes. And COVID made that exceptionally complicated because everything was super delayed.
Auren Hoffman (04:35.575)
Austen Allred (05:01.251)
But generally speaking, for 95% of people, it's, OK, my income changed to this. Here's my pay stub. Or I'm just making payments, and all is good.
Auren Hoffman (05:01.483)
Auren Hoffman (05:09.036)
Auren Hoffman (05:13.738)
Okay, that makes sense. One of the interesting things is like, if you're an educational institution providing an ISA, you have in some ways an incentive to like kick out students that are not like taking it seriously, maybe not going to class, because you can be pretty confident they're not gonna get a job afterwards. They don't really know the material, right? Like, which...
Austen Allred (05:38.618)
Auren Hoffman (05:39.694)
To me, makes sense. It seems like your incentives are kind of aligned with their long-term success. And if they're not there, you might as well give your attention to somebody else that you think is aligned to that long-term asset. But I can imagine how certain universities would find that anathema to do that.
Austen Allred (05:57.313)
Well, yeah, that even goes back to admissions, right? We are more incentivized than any other school to figure out if you're going to be successful. For most schools, if they don't know if you're really gonna be successful, who cares? That's on you. Yeah, yeah. And obviously, if you look at, I mean, even if...
Auren Hoffman (06:13.278)
Right, right. As long as they pay, as long as they pay, they're fine. Yeah.
Austen Allred (06:22.729)
In the current university system, even if I thought that you might default on your student loans, which is, that's a, that's relatively difficult to do relative to, you know, not graduating or not getting a job, because you could find another way to pay stuff off and a relatively small, you know, number of people are going to default. Um, but in the, in the current university system, you don't even care about that.
Auren Hoffman (06:36.791)
Austen Allred (06:47.181)
You not only don't care if somebody doesn't graduate or doesn't get a job, you don't care if they even make a single payment on their loan ever. So that's how you end up with those programs.
Auren Hoffman (06:54.23)
Austen Allred (06:57.413)
The one that was popular, the Wall Street Journal did a report on it, USC, that was a social work master's degree that cost $120,000 a year. And the median income afterwards was like $30,000 a year. But you can't even make the interest payments, let alone start paying down the principal. So that ruins you financially for the rest of your life kind of thing.
Auren Hoffman (07:06.271)
Oh my gosh.
I'm going to go to bed.
Austen Allred (07:20.653)
For us, that's not really possible. First of all, you wouldn't pay us anything because you wouldn't get a qualifying job afterwards. And so we would look at that when we're enrolling you and say, hey, do we want to take on this risk? Does this make sense for us? And if we had a program like that, we would just shut it down because the numbers don't work. So the incentive alignment kind of flows all throughout everything that we do.
Auren Hoffman (07:39.81)
Auren Hoffman (07:44.414)
And so in some ways it's like you're just like a company would be really trying to interview somebody and really trying to assess like whether they would be a good fit. And sometimes they get it wrong, but they're really trying. They're not going to hire someone. They don't think it's going to do the work. You're really trying to do something similar where you're trying to really figure out like, are they really going to learn the material? Are they really going to be job worthy at the end?
Austen Allred (08:05.377)
Yeah, exactly. I think of it almost like, you know, in startups, you're talking to investors, the investors trying to, you know, figure out, do I think this company has a chance to go all the way? Is the founder going to do what they need to do? And it's a similar decision because, you know, if not, it's not just.
Auren Hoffman (08:16.332)
Austen Allred (08:25.517)
you don't make money, you lose money, right? So the ratio of what percentage are successful in repay is far more important than, even if there's a standard loan portfolio, because if you enroll 100 people, you're paying the tuition effectively of 100 people, you're covering those costs. And if only 10% of those are successful, then either the 10 have to cover the costs of the 100, which is extremely difficult to do, or you're going to lose money net net.
So schools try not to be, you know, it's a different equation than a standard school is. And it's scary for schools, right? Schools aren't used to underwriting their students. They're not used to waiting for a delay of revenue to come in. They're not, you know, it's a completely different structure. And it requires you to operate completely differently in ways that we think are very healthy.
Auren Hoffman (09:18.07)
Now, what are some of the things that you learned about people that are maybe non-obvious things that are either like red flags that you shouldn't underwrite or green flags that you should underwrite?
Austen Allred (09:30.101)
Yeah, so when it comes to underwriting, the first thing we figured out is, you know, when we started, there are kind of traditional measures and metrics for underwriting and those didn't predict freaking anything. It was, you know, Yeah, FICO score. What is their job history like? What are their grades look like? The SAT and, you know, comparable
Auren Hoffman (09:42.326)
Like a FICO score or something.
Austen Allred (09:55.537)
cognitive assessments were actually the most predictive thing that we found Outside of the most predictive thing we found which is just hey if we put you in a course in a trial and we start to You know have you learn how to code are you able to do that and do you show up and do you do that? that was by far the most predictive which in retrospect is somewhat obvious, but
Auren Hoffman (10:14.39)
Got it. Because in your case, like it, in some ways, like accepting them is not the biggest problem. If you, if, as long as like every week or every few weeks, you make a decision, whether you want to keep working with that person or not. Right. Um, you could have a high acceptance rate and then like two weeks later, if they don't, if they're not showing up at all the classes, you can say, Hey, sorry. Like we require, we're going to show up all the classes. You didn't show up. So we're parting ways with you.
Austen Allred (10:29.313)
Yeah, I mean, so.
Austen Allred (10:40.985)
Yeah, even more so than showing up. Like here's, you know, in order to pass, and this is literally how we operate today, there is what we call sprint zero, and that's, you know, all this orientation free stuff, you know, get your feet wet writing code. And then there's sprint one. And I mean, we've done the amount of analysis we've done on all this stuff is outrageous. Sprint one is moderately difficult. You have to write a bunch of code. You have to learn a bunch of new things. You have to show up. You have to, you know,
in order to just to pass that sprint. And if you don't, so we've actually built our financial instruments such that if you don't pass that first sprint, we don't even really consider you enrolled. So there's kind of a, there's a trial. Yeah. Yeah, I should be careful. Like you're technically enrolled, but you don't owe us anything and you're not, you know. So it's...
Auren Hoffman (11:23.054)
Okay, got it. So it's almost like a pre-enrollment and then an enrollment.
Auren Hoffman (11:32.728)
Austen Allred (11:37.077)
So when we look at, you know, in our outcomes report and stuff, we, we kind of, we look at of the people who passed sprint one, what happened, because all sorts of people are going to sign up for sprint one and fail and, you know, if, or decide that it's not for them. And we want to know that as quickly as possible. We want you to know that as quickly as possible. And, you know, we can all avoid a lot of headache if it's not the right fit for you.
Auren Hoffman (12:00.03)
Now, it used to be, let's go back like, you know, 50, 100 years, like if you want to learn an important skill for a job, you would kind of apprentice for somebody else and, um, and you might be doing some very unglamorous things there, like sweep the floors or do other stuff while you're there. And then over time you would acquire those skills and then either you would kind of be made like a partner with them, or you would
Austen Allred (12:10.821)
Auren Hoffman (12:26.382)
you know, go somewhere else. And that could be like if you're cutting hair or if you want to be a lawyer or, um, you know, whatever it is, if you want to learn a trade, like plumbing or something like that, that used to be the case. Then at some point, like all the, there were schools for all those things. That's where you learned it. Like if you want to cut hair, you didn't go apprentice with someone. You actually went to like a hair cutting school, massage therapists go to massage therapy school, obviously lawyers go to law school. Like, why did that shift happen? It seems like the apprentice model is in some ways like
would be the way better model.
Austen Allred (12:58.937)
Yeah, so apprentice model is definitely superior to almost anything that exists now. There are two reasons that failed and fell down. And in some, some issues it does still exist. It's just relatively rare. But the biggest reason is because the apprentice model, so the right way to think about an apprenticeship model is when there's someone who's brand new, doesn't know anything,
Auren Hoffman (13:13.986)
Austen Allred (13:28.165)
the benefit that they provide to the company is pretty minimal and the cost of that person is very high, right?
Auren Hoffman (13:33.804)
Austen Allred (13:39.481)
But it makes sense to do that in a world where, hey, we're training up our future employees and they're going to stay with us for 30 years. What happens in software, and we've seen this a bunch of times, is someone will apprentice at a company for a year and then they get a job offer for twice as much somewhere else and they jump. And so the company is like, oh, I guess we incurred all the costs and we didn't receive any of the benefit.
Austen Allred (14:09.535)
hey you have to work with us for five years or you have to pay back you know the amount that we spent training you to but then people like oh that's modern day indentured servitude and so it kind of like it became a hot political thing
Auren Hoffman (14:23.294)
I mean, is it just the cost of minimum wage is so high? Um, like, you know.
Austen Allred (14:28.245)
No, it's the cost of taking the expert away from doing the thing that they do and having them teach you. So you have to build kind of a micro school in order to do that. And for a company, it's just, why would I do that? Like if I can go pick somebody up who is already at that stage, I'm just gonna do that and they can go to school wherever else. So there's kind of this bifurcation of like the training and the work.
Auren Hoffman (14:38.783)
Auren Hoffman (14:53.982)
Yeah, but it seems in most cases, these schools are funded by the state. Um, you know, yours being an exception, but in most cases, the government is funding these schools. So it's like where we used to have like the, the industry kind of. Uh, teach people, whether it's, you know, just think of lawyers or something. Like you used to actually work in a law firm. You would, you'd be sweeping the floors. You may even, you only, may only get paid like room and board back then. And I don't even know what you got paid. Um.
Austen Allred (15:12.293)
Auren Hoffman (15:21.474)
And you know, you do a whole bunch of things and then you would, you would actually then like start doing paralegals to things. And like, you would slowly kind of work your way up. And then at some point you would become like either a partner in that firm or you'd go hang, you know, paying your own shingle. You'd pass the bar exam, et cetera. Same thing with like a haircut, same thing with like, you know, whatever it might be. Um, you know, today, I mean, there's like, today you, it costs like 50 grand a year to go to like massage therapy school. Uh, right.
Austen Allred (15:39.841)
Yeah, exactly. So.
Austen Allred (15:45.557)
Yeah, it's crazy. So what really happened is the incentive to train somebody for a company went away because people started like, if you're going to shift jobs every three years, then the incentive to upscale people within your company is relatively small, right?
Auren Hoffman (16:00.396)
Austen Allred (16:02.021)
And employees recognized that wages weren't at as the same company wasn't going to grow as quickly as if you job hopped all the time. So, you know, the default right now is, you know, engineers are not staying at places more than two or three years in most instances. And, you know, that that's true, not just in software. That's the, you know, my.
my grandpa would have looked at how often I switched jobs early in my career and could not believe it. But for me, staying in a place for a couple of years, that's a good run. So then the industry says, okay, we're not training anybody or we'll build schools and you can pay the school or whatever. There are governments that have done a really good job of incorporating that. So Canada is actually a really good example and they're...
Auren Hoffman (16:34.716)
Austen Allred (16:51.705)
the Canadian government's partnership with Waterloo, where Canada says, you know what, we are going to cover the cost of these apprenticeships when all these people go into the company. And so as a company, you actually make money to have.
undergrad Waterloo students interning at your company. That's a no brainer, right? And then the government looks and says, hey, actually if we get all these software engineers trained up, it's gonna pay for itself in taxes 10 times over, over the course of their career. I mean, we've done studies, like we could...
we could easily pay for all of Bloom Tech with a tiny fraction of the increase in taxes that our grads pay, right? When you're moving somebody from making 30 grand a year for where they don't really pay any federal income tax to six figures a year, you know, now their annual income tax just went up $30,000 a year, and they're gonna pay that plus raises for the next 30 years. So, you know, the...
Auren Hoffman (17:51.07)
Yep. Yeah, even more after they live in California.
Austen Allred (17:57.177)
That's millions of dollars of tax increase for each person we take from minimum wage to software engineer. And we can do that for a few thousand dollars. So it would make sense for the government to lean in there, but it's just, they haven't done that as much in the US. It's really, it falls back on the student for the student to cover it all. So it's different in different countries.
Auren Hoffman (18:20.126)
It's interesting because like the, you have all these things happening at once, but you also have just like the raw cost of education being going up, you know, two to three times the rate of inflation for the last 40 years. And just like becoming a much, much larger type of thing that people might not always like see that cost because they're getting a loan. They're getting a relatively low interest loan to pay it. But like.
Why is just the cost of actually, you would think with technology and everything, the cost of training people and the cost of helping them along actually should go down over time, not go up. There's a lot of different tools we can use to really help train people at scale. Why is that cost going up so much?
Austen Allred (19:06.125)
Yeah, so there are a number of causes. So there are causes of what economic features allow that to happen. And that one's pretty easy to point at. Basically,
Similar to what we were talking about earlier, how if a university doesn't have to underwrite the student, they just take the money. And it's fully guaranteed by the federal government. So a normal private lender would look at that USC program we talked about and said, we're not lending to those people, they're all gonna default. And then there wouldn't be any enrollment and it would shut down in a traditional private market.
Auren Hoffman (19:26.732)
Auren Hoffman (19:40.043)
Austen Allred (19:48.109)
What happened is basically the government said, okay, now that training has moved into the university and we really want people to get trained because it's so much better for them, we're not going to pay for it all because that's a handout, but we want people to have some skin in the game, but we will guarantee any...
loan without any type of looking at repayment because we want equality of opportunity. So basically students, you can borrow unlimited amounts of money from the government.
telling that to an 18 year old, they're just, you know, they're shopping and you can say, you can buy whatever you want, pick which university you want to go to. They start going to the university that looks the most posh and not caring, you know, what it's going to cost. And so those, the amount of money available for 18 year olds to take out in loans and the cost of tuition rise in direct correlation with each other.
And then, you know, so you start to look at like, well, where is that going? You know, is the quality of instruction getting better? Is the ratio of teacher to student getting way better? And basically the number of professors and instructors and TAs has stayed basically flat and the number of administrators has gone up almost 20 X over the past 30 years. So it's all going to, you know, administration. And then on top of that, what happens is now you have
Auren Hoffman (21:11.694)
Austen Allred (21:18.697)
hundreds of thousands of people within university administration who are you know dependent upon that system continuing to operate and They're gonna make darn sure that it's going to continue to operate exactly the same way it does so it's It's a it's a difficult cycle and then politically if you if you want to say hey, let's pull back on that it's just I mean I talked to I'm not gonna name the particular individual but like
someone who is extremely high up in the Department of Education. And they said, look, I know right now that a lot of the loans that we're giving as the federal government are going to people who will never be able to pay them back. I know that the school knows that only the student doesn't know that. And so I said, well, why don't you just cut that off then? Like, stop doing that. He's like, I would never touch that political third rail. That would be, you know.
Auren Hoffman (22:12.481)
Austen Allred (22:16.825)
That's, to do that you have to say, hey, there are people that I don't want to give access to particular programs, and that's just not worth the political risk for him.
Auren Hoffman (22:23.554)
But it seems like generally those people are going to, in some ways, like, you know, if you actually, if you go to a massage therapy school, you actually do get a pretty good job. Or if you go to a haircut school, if you go to a plumbing school or electrician school, like you probably do get a pretty good well-paying job afterwards. And you can like, and you know, the schools are probably not too expensive and you can like pay them off. But like, if you're going to like a social work school and paying a hundred grand,
for that social work school. That's like a very different class of thing. In some ways, it's intellectually interesting to go do that and maybe it's fun to go there. But if you're taking yourself two years out of the job market to go there, it doesn't seem like a good trade.
Austen Allred (23:11.293)
I talked to a university president of a very prestigious public university who said, look, I have, and the reason we were talking is because he said, look, we have 10,000 students a year enrolling in these specific programs. And I know that the four years after they graduate, they're going to make less than they would have if they would have just gone and got whatever job they could.
high school and started working up in whatever that is. And that's college grads, and I think that school was 15 grand a year. So they're gonna end up with 60 grand in debt and with a worse job than they would have had if they did nothing.
Auren Hoffman (23:41.323)
Yeah, that's crazy.
Auren Hoffman (23:53.15)
Yeah, potentially even more than 60 grand because they still have to pay for their housing and other food and yeah, other types of things during that time, you know, unless they have a job, you know, while they're going.
Austen Allred (23:56.841)
Oh, for sure. That's just tuition. Yeah.
Austen Allred (24:04.597)
Yeah, and this is the university president who was a very successful business owner, operator, but he came to me because he said, I can't shut that program down.
or it will cause like a revolt among, I have tenured faculty who I have to, there's a whole thing and I can't keep the tenured faculty on unless there's tuition money coming in. So I'm kind of boxed into a corner. So he was talking like, could we find a way to work together to sneak in enough practical skill as a requirement for these types of degrees so they could actually get hired? But that shows you the kind of like.
Auren Hoffman (24:22.71)
Auren Hoffman (24:37.771)
Mm-hmm. It's like the surreptitious way of like, well, let's actually get them skilled through another way, another alternative. Yeah.
Austen Allred (24:46.677)
Yeah, the gymnastics that he's trying to jump around for something that he knows should be shut down. But even as a university president, you know, he was very wealthy. He theoretically had all the power, and he still felt like he didn't have the power to actually do that. And, you know, that was somebody that I respect, and he is trying to do his best within those circumstances. There are other, you know, the...
The default is you don't really care, or there are entire universities where that's true for 95% of the school. And, you know, but what are you gonna do, shut it down? So it's...
Auren Hoffman (25:26.386)
But even like top tier universities in like money programs, let's say engineering, computer science, et cetera, like the quality of the education is not always very good. I mean, I'm thinking of myself, I was an engineer. I went to UC Berkeley. Um, you know, my worst classes where I learned the least were the ones taught by Nobel laureates. Um, like they just didn't know how to teach. They were not like successful. I do like, they had a lot of other important skills about them, but.
Austen Allred (25:39.395)
Austen Allred (25:47.877)
Auren Hoffman (25:54.978)
teaching an 18 year old was not one of them.
Austen Allred (25:58.149)
Well, that's a different incentive problem that universities have, which, I mean, their appeal to some students is, hey, we have this very distinguished faculty, right? But the appeal to get those distinguished faculty to be faculty is not, hey, do you want to teach a bunch of 18-year-olds? It's, do you want to get a big salary and do interesting research and then?
Auren Hoffman (26:09.42)
Auren Hoffman (26:17.143)
and big lab and have a bunch of postdocs and stuff, right?
Austen Allred (26:22.997)
Yeah, and we'll, you know, you'll have to teach a class a couple times a week in order to like, you know, you have to do your time there. But yeah, so that's, I mean, there are positive and negatives of research being bundled into a university as well, which I'm grateful that we don't have to worry about. For us, if you're there to teach, it's because you love teaching, and that's all you want to do in this world. But yeah, so there's a big bundle of issues kind of coalescing all at once.
Auren Hoffman (26:52.522)
Now, speaking of college presidents, in the last like maybe six months, we've seen the heads of Stanford, Penn and Harvard all fired, you know, for, for various reasons. What do you, is this a, is this kind of coincidence or is this kind of a trend? Like, what do you make of all this?
Austen Allred (27:08.413)
Um, I think it's a, it's a little bit of a reckoning. Um, they're, you know, I don't want to get like too terribly political, but the, those, those specific organizations themselves became very political and the way to progress was not.
necessarily success in academia so much as it was championing political causes. And that has become, you know, the Overton window of what was acceptable there has dramatically shifted over the last couple of years. I think about that a lot, like the just what's acceptable politically to champion and not and how hard you need to champion it and how hard you need to.
pretend like you championed something has shifted. So I think they just got caught up in that without going into any of the specific individuals because then there's more complication there. I think the requirements for being a university president are very different today than they were 40 years ago. And I think what is really happening with this scandal is people are...
second-guessing that. And the presence of those universities I think are just kind of cannon fodder, honestly. They were given roles that they otherwise, you know, in other circumstances, wouldn't have been given. And then when people changed their minds about whether that was a good idea, they were fired and they're just kind of caught in the middle of all of that.
Auren Hoffman (28:47.294)
What I've seen personally is, let's say what someone does when they're 17 years old, if they're applying to a four-year university. I haven't seen that these really great universities have made people significantly better. So if you go to a...
SAT score of X, let's say you can go to a top tier university or the next tier or the third tier down, whatever. I haven't found that it makes much of a difference when that person is 22. Are they actually learned? Does Harvard or Stanford or MIT actually teach you more? Obviously they get people with higher SATs, but if that same student went to a quote unquote less prestigious university, would they actually learn anything less?
Austen Allred (29:40.173)
Not really. I think among the more interesting experiments in that regard was the Teal Fellowship. And so the design of the Teal Fellowship was basically saying, hey, we think that, and there are different strata of universities, right, to be
to be accepted, at least historically, into the Ivy League, you had to be perfect on the SAT. Your grades had to be perfect in every way. You had to be accomplished in every imaginable way. And Peter Thiel's thesis was that those universities don't add that much value. They're just the gathering place for all of those people who are extremely successful thus far.
And so he said, I bet I can take those same people, teach them not really anything, set them out into the world and let, you know, see how successful they'll become. And I mean, from that, we have Figma, we have a theory. It's been enormously successful. So I do think, and I don't think this is true at every university. I think the Delta between the education you would get at an Ivy league school and a top 50 university is very, very small, if anything.
And as this, you know, Claudine Gay and Harvard scandal unfolded, I think you saw shades of that because Harvard opened up an extension school where you can, anybody can enroll, you pay.
outrageous amounts of money and you get the exact same education that you would get as a Harvard undergrad and they give you a Harvard degree. But the people who went to Harvard as a Harvard undergrad, not the extension school, hate that because they want to have a Harvard degree that signifies not what they've learned, but how elite they are. And so, you know, when
Auren Hoffman (31:36.033)
Austen Allred (31:38.021)
Chris Ruffo who caused the whole Claudine Gay Harvard president thing to unfold when people realized that he went to the Harvard Extension School, they started saying like, oh, well, yeah, of course you learned all the same stuff at Harvard, but you're not the same thing. You don't qualify as Harvard. And so I think that is symbolic of the fact that the-
Auren Hoffman (31:55.414)
Austen Allred (32:03.309)
at least in the Ivy League, because I don't think this is true across all universities, but the selection nature is far more important than the education itself.
Auren Hoffman (32:14.346)
Now, you know, we're talking about, you know, we've been telling a lot of these non quote unquote nonprofit colleges and universities, you know, they're graduating roughly, I think, like 65% of students over six years. But like the for profit universities even have a worse, you know, graduation record, people are much more dead, they're having even more trouble. Like, why is the incentive so disaligned just because of what you're saying before, it's just so easy to get that easy federal aid money.
Um, that you just like want to get as many people in as possible.
Austen Allred (32:43.473)
That's exactly it. Yeah, I mean, there are multiple institutions with graduation rates sub 20%, pulling in $500 million a year in financial aid. Like, that's a grift, you know? In my eyes, that's a grift.
Auren Hoffman (33:01.45)
Yeah. Why does that keep? Because I could see why, you know, senators and Department of Education, they're like, okay, well, I don't want like, you know, there's some, I made this deal with these longstanding, you know, state institutions in my state and nonprofits in my, you know, quote unquote nonprofits, like, you know, universities, et cetera.
But like, why is it just, they're getting like, why does that persist for these for-profit, many of them are like clearly failing their students. Like if they're working well, like great. Like if they're working well, like I'm all for it. But there's many of them like where it's like, there's clear data that they're aggrifed. Like why does that persist?
Austen Allred (33:38.245)
Austen Allred (33:47.853)
Because while there are for-profits that are clearly aggrifed, they're not alone in that. And they're definitely public organizations. I mean...
To be very specific, if you look at some of the worst performing... So as a regulator, you can't just be like, I don't like that school, shut it down without a cause. You have to create rules and guidelines. And if you were to create a rule or a guideline that would say... Let's take the University of Phoenix as an example. I think at times they actually have a really high...
Auren Hoffman (34:09.876)
Austen Allred (34:27.257)
They have programs that are actually really solid and they have a bunch of programs that are just a joke. And their enrollment criteria is non-existent. So yeah, there are rifty aspects of that, right? But even still, the University of Phoenix still outperforms a whole lot of public schools that are near and dear to a whole lot of people's hearts, including a lot of the HBCUs.
Auren Hoffman (34:29.389)
Austen Allred (34:55.213)
the historically black colleges where, you know, that's, if there's a place that politicians want to make sure people are getting an education, it's, you know, those underprivileged populations. There is not, at least I don't know a rule that would shut down the worst performing for-profit schools that doesn't also shut down 80% of the HBCUs. So.
Auren Hoffman (35:02.636)
Austen Allred (35:21.101)
What do you do if you're a regulator there? I don't know the answer, but that's the reason, because while there are...
Auren Hoffman (35:26.274)
Well, you can make, if you're regular, you can find a way, like you could give a, you know, a federal grant to certain types of nonprofits you feel are good. And then you could just say, Hey, we're not going to cover loans. If you're, if your default rate is over X or something, like, you know, we're just not going to, and, and historically, like, we're just not going to give you new loans, there's, there's lots of ways you can do that. Like regulators are, have historically been very good about picking and choosing things like things like that.
Austen Allred (35:53.965)
Yeah, so the one that they released most recently was called the 90-10 rule. And that said that only if you're a for-profit school specifically, and there's some nonprofit designations that also matter, but only 90% of your revenue can come from federal aid basically, from grants and loans and all of that stuff.
And that rule has been moderately successful because it at least like, 90% is very high.
Auren Hoffman (36:26.715)
90% seems like super high.
Austen Allred (36:31.097)
But that is the main bottleneck at most of the biggest schools that are trying to grow, is that 10%. So all of their focus is on growing the 10% to be higher, because the rest of it comes free. They can enroll as much as they care to with federal loans, and that 10% becomes the blocker. So what I've seen in our world is a lot of, you know,
Auren Hoffman (36:45.74)
Auren Hoffman (36:52.981)
Austen Allred (36:59.769)
the code boot camps that are bought by the universities aren't necessarily bought because the university wants a, so code boot camps, generally speaking, don't qualify for any Title IV funding. So we have to go figure it out on our own in the private market. And that becomes, basically every dollar of revenue that a code boot camp brings in looks like $10 of revenue to a lot of universities because that,
they could earn, I guess, $9 of revenue.
Auren Hoffman (37:29.954)
So why don't code boot camps qualify for loans, whereas like other types of things in education do?
Austen Allred (37:39.895)
That's a really good question. And the short answer is, title four.
Auren Hoffman (37:43.478)
Cause I know that if you want to get like, if you want to get like a, if you want to go to a hair cutting school, you can get a federal, you can get a loan to go to a hair cutting school. Um, you know, you want to go to massage therapy school, you can get a loan. Like why not coding?
Austen Allred (37:52.988)
So Title IV was...
Austen Allred (37:57.413)
Well, a lot of the schools actually don't qualify for Title IV, which is the federally-backed loans. You can get private loans. But the Title IV, which is the law that kind of is the Department of Education establishing a loan system with subsidized, guaranteed loans, you know, that type of thing, is very...
Auren Hoffman (38:04.129)
Auren Hoffman (38:14.07)
Austen Allred (38:19.013)
There are a couple of carve outs, but it's basically you have to be a four year degree granting institution that's fully accredited. And a number of boot camps have gone that way and say, okay, let's like, let's have a, you know, let's get the accreditation. But then they find that.
By the time you get the accreditation, you're just the same as every other, like all the things that are unique about what we do, most of them would have to go away in order to get that accreditation. You can't be job specific, you can't be very practical, you can't be very hands-on, you have to all of a sudden abide by the rules of those governing bodies, and they say, hey, we want you to have two years of liberal arts education. You can't, so okay, even if I don't believe in that, or.
think that that's what all of our students want, now I have to throw you into two years of liberal arts stuff. To be clear, I have nothing against the liberal arts, I just don't think that every school in every instance needs to teach that. There are different paths and different goals and different objectives.
Auren Hoffman (39:13.26)
Austen Allred (39:24.633)
So yeah, that's a short version. As Title IV has very intentionally limited who is eligible for federal funding to the institutions that will abide by those rules.
Auren Hoffman (39:39.05)
Now I understand at BloomTech you were generating cash even before you did Y Combinator and then since then you've raised like over a hundred million dollars, like would you have, if you can go back, you know, many years, would you have raised that much? Um, um, was that the right like thing to do?
Austen Allred (39:58.061)
Yeah, it's a tricky question because on the one hand, it was too much. On the other hand, it was not enough. Uh, I think if I, if I would have known what I know now, I would have done things very differently, of course. But at the same time, there was no way to know what I know now without having gone through all of that. Um, I mean, you know, I, I invest in startups and I talk to founders all the time.
Auren Hoffman (40:05.584)
That's always the case.
Auren Hoffman (40:15.831)
Austen Allred (40:22.393)
Without exception, my advice is always like be extremely careful about hiring. Smaller teams are so much better. So if I were to restart BloomTech again, knowing what I know now in 2017, I would have raised less money, I would have kept teams smaller. But it's tough to say because at the time we thought.
that it was so obvious that everything was going to work so well that it was just going to be a land grab and you had to be the biggest and the fastest and the best. What ended up happening is actually it's such a difficult business to make work that
huge amounts of money were raised and pretty much everybody died other than us. So if I had, if I would have been able to predict that, then yeah, I would have raised less, but that we didn't know that was true at the time. We thought it was, you know, whoever gets the biggest fastest wins. And luckily we were able to, you know, we raised enough money to be really big, really fast. But in kind of early 2019, we started saying, okay, actually there's different,
Auren Hoffman (41:09.972)
Austen Allred (41:35.763)
approach we have to take here in order to make this work in the long run. We have to productize more, we have to think more carefully about costs, we have to plan on less revenue per student than other schools are planning on. And kinda since early 2020, I mean we were burning huge amounts of money at the time.
And the thought was we'll just keep burning and raising more. And that was kosher. But we decided to kind of hard pivot and go directly for casual positivity back then. And it was harder than we thought it was going to be. But I think we would have been dead if we hadn't done that. And most of the other schools are dead or are very close to dead.
Auren Hoffman (42:20.854)
Now, you've talked a lot about hiring executives and how hard it is, especially for a young founder who might not be like a subject matter for what they're looking for. Like, what have you learned from that?
Austen Allred (42:36.577)
Yeah, I think about this a lot. I don't know that I have like a generalizable, like, you know, like now I feel like I know what a great executive looks like. It's still really hard even in the interview process to determine whether an executive will be a great fit. One of the things about executives is generally speaking, they're great communicators. They know about the space more than you. They know how to say what you want to hear. So they're like,
probably 50% of the potential executives you interview are going to crush the interview relative to what you're used to. So it's just really, really hard to hire for. I haven't found the silver bullet that lets you make sure that you're always hiring a great executive. And then firing an executive is extremely painful, especially if they've hired a bunch of people underneath them or brought people from where they used to work. When you're hiring an executive, you're hiring a bunch of people.
Auren Hoffman (43:13.663)
Auren Hoffman (43:31.884)
Austen Allred (43:36.821)
The couple of things that I have found that, I've at least identified a few red flags that have been true throughout my career. If an executive says...
I generally ask, okay, what are the, you know, we really need to move this metric quickly. What are the first things that you do? And if their answer is I'm going to hire four people who are then going to hire five people each, and then we can get to work, that's a big red flag. I want an executive who is what we call a player coach, who can jump in, you know, even when you're hiring, say, a VP of engineering, I want them to get their hands dirty writing code before they touch.
Auren Hoffman (44:00.974)
Austen Allred (44:19.239)
the management piece. So I've become very averse to people who just want to manage and don't want to do the thing. Another example is like in a marketing role if you're like it's a lot of people are like yeah look I know how to do marketing I know how to do you know performance based ads but I don't you know that's just so easy to hire out
Auren Hoffman (44:43.692)
Austen Allred (44:43.693)
I found that a lot of times, no, they have no idea how to do that. They have no actual expertise there. They just.
Auren Hoffman (44:48.002)
Also, those things change a lot, so maybe they really did know how to do it 15 years ago, but it's not the same today.
Austen Allred (44:53.909)
Yeah, and the number of times I've, there are people who are extremely successful on resumes in Silicon Valley who jump from roll to roll. And some of those resumes look phenomenal. And you're like, oh my gosh, you helped X grow to become that wildly successful. And then sometimes you can figure it out in doing, you know.
Auren Hoffman (45:14.027)
Austen Allred (45:20.573)
references, you talk to someone who's like, no, they were an idiot. They were just, you know, Facebook wasn't firing people back then. If you were like competent, you were along for the ride because they were hiring as many people as they possibly could. And that guy was a bozo. He just was there. Um, and then he did the same thing of those other two companies. You're like, oh my gosh, that's, you know, that's crazy. Um, but there are a lot of those out there. So it's, it's tricky.
Auren Hoffman (45:39.342)
Auren Hoffman (45:44.866)
Well, it's hard to, at any level, it's hard to assess certain types of roles. Like for engineering, it's relatively easy to assess if someone's going to be good. But for something like marketing, as you mentioned, it's incredibly difficult to assess and, you know, in engineering, you know, my guess is the average engineer at Facebook is like quite good. Um, and so, you know,
Austen Allred (46:06.747)
Auren Hoffman (46:07.418)
even if you just went off the resume, it wouldn't be like the worst thing in the world. And then obviously you have a lot of like very normal questions you can ask people in an interview that would like really suss out if they're a good engineer. Whereas like in marketing, my guess is the average person on Facebook is not that very good. And it's not clear, you know, who would have good marketing people. And then it'd be like really hard to even know how to interview them in the first place.
Austen Allred (46:34.681)
That's one of the other things that I learned is you know I used to be like oh my gosh that person was you know they were there in the early days at Uber as an example or a Google like they must be so Great, and they must have learned so much, but if you were early you know
to borrow your example, if you're in marketing at Google, you could sit on your hands all day and Google was gonna absolutely crush it. And, you know, first, yeah, like you, and I, you know, one of our investors shared that whenever anybody asks him about what product market fit is, one time he went into the old Oracle offices, like in the early 90s.
Auren Hoffman (46:57.954)
Correct. Yeah, totally. Just take orders.
Austen Allred (47:19.785)
And he's like, all right, I need to, you know, you guys are growing like crazy. I need to figure out how you guys do sales and marketing. Um, and he's like, okay, well, let me take you to the sales and marketing floor. And he, you know, he walked up to a guy who just sitting there and he's like, well, what do you do all day? He's like, I don't know. The phone rang. He picked it up. He took an order for half a million dollars. He put the phone down. He's like, that's that sales and marketing and Oracle. I'm like, okay, it's, it's a.
Auren Hoffman (47:42.211)
Austen Allred (47:45.469)
So would that person be able to come help your startup grow? Not necessarily. So it's just hard.
Auren Hoffman (47:46.242)
Auren Hoffman (47:49.93)
Yeah. When we think about execs, so one of the things about the execs is like, you know, in a certain level, like you're very good at strategy and you really want to do strategy, you don't want to do, as you mentioned, like the, maybe like the, the rote stuff, the stuff that you did like early on in your career. And, um, which kind of makes sense. You've, you've kind of like, you've already, you've, you,
You can do strategy better than anyone else, but you might not be able to do those PPC campaigns better than anybody else. So is there a sense where for certain companies, they should just rent execs rather than own them? Like for a lot of these execs, you could rent them for a day a month. The execs could do like a hundred percent strategy. They would be happier because they're only doing strategy all day long. You could get the benefit of like the core thing. And then you have all these other more doer people.
who get the benefit of these experienced execs without having to have that person all day.
Austen Allred (48:51.697)
So I fundamentally don't believe that that's true, actually. My experience has been, like I think of each, craftsman is too strong of a word, but like if you don't, so there's a difference between,
Auren Hoffman (48:56.341)
Austen Allred (49:12.665)
You know, I am, we'll take a marketing executive example. Again, I don't have time to run ad campaigns or to write copy myself and I can't. And I think if you're not in the weeds enough to understand all of the individual tiny pieces of what's going on, you're actually not going to be good at strategy. So.
Auren Hoffman (49:34.882)
Got it. And then for something like marketing, which is changing so often, then that means if someone hasn't been doing it for a few years, they're just not going to be good at it.
Austen Allred (49:44.865)
Yeah, my experience has been the people who are best at doing the little stuff are also the best at strategy. They're not actually unique skill sets.
Auren Hoffman (49:51.358)
OK, interesting. OK, that actually makes some sense with me. The.
Austen Allred (49:58.329)
Yeah, it's like, you know, if you're talking about, you know, basketball, for example, like who is the best, you know, who would be the best analyst of a basketball game? Michael Jordan would be a better analyst than any of them, you know? But anyway, that may be a contrived example, but.
Auren Hoffman (50:16.746)
Yep. Yeah. Interesting. Now you're super active on Twitter. You know, you, you're, uh, managed to be very open about your opinions and your role as CEO. Is that like, um, do you see that's like a feature or a bug? Like, is that, is that something like more CEO should do? Or how do you, how do you think about that?
Austen Allred (50:37.473)
Yeah, it started out as, I thought it was a bug, right? I had a bad habit of being on Twitter. And when we got into Y Combinator, I was like, okay, I'm actually gonna shut this off. I'm not gonna touch Twitter once during the entirety of Y Combinator. That was my goal. And then about halfway through Y Combinator, we were trying to test something with hiring partners and CTOs. I needed a bunch of people. So I tweeted.
Auren Hoffman (50:46.598)
Austen Allred (51:07.681)
that we were NY Combinator and that I needed some feedback from some CTOs. And I got like 200 responses within 30 seconds. And I was like, okay, I can't pretend like this isn't valuable. So then over time it served different functions within the company of, you know, when we were like, there's a time when everything I tweeted and everything I said even internally would leak and become an article. That sucked. But.
Auren Hoffman (51:14.204)
Oh my gosh.
Auren Hoffman (51:20.798)
Austen Allred (51:37.073)
Yeah, so it's a trade off. I think now I have very intentionally tried to push, like when I'm saying something controversial on Twitter right now, it's on purpose. Because I want to push the boundaries of what I have said on Twitter, because I've found that when you do that, people expect.
personalities to say controversial things or to not say controversial things. And as long as you're within that Overton window of the acceptability of your specific Twitter account, people are less offended. Um, then if you're trying to be super professional and you let something slip in, then people are watching you like crazy. So I, I try to push it. Um,
Auren Hoffman (52:18.962)
Yeah, yeah. Yeah, it's almost like a vaccine. Like if you let it a little bit, it makes you stronger and stuff like that.
Austen Allred (52:27.765)
Yeah, exactly. I actually used the word, like, I want to inoculate my Twitter account against, you know, uh, and maybe that's a bad strategy. We'll, I guess we'll learn in the long run. Um, but it seems to be working so far. We'll see.
Auren Hoffman (52:31.646)
Auren Hoffman (52:40.766)
Speaking of some interesting tweets, you have this tweet about simulation theory and Mormonism. Can you explain that connection a little bit? I thought that was really interesting.
Austen Allred (52:49.485)
So that was a little bit tongue-in-cheek, but you know, I love reading all of the whether it's you know religious or science fiction or whether it's Fight Club or The Matrix, you know all the different like what is real, what is not, what is, you know, because for me it's just like if you think about life for even just a second, like this is kind of crazy isn't it? Like we're all just sitting on this floating rock flying through the universe and like there's all, you know, that's kind of weird.
Auren Hoffman (53:01.154)
Auren Hoffman (53:16.748)
Austen Allred (53:19.654)
So I was, I can't remember how it came up, but someone was joking about, you know, I was reading a book that was, I can't remember the author, but it was basically like,
All that we have, even our understanding of matter, is all perceptive based on space time. And maybe it's all fake. Maybe we're all just living in this giant VR and there is no reality. Or at least we don't really under, we see shades of what reality is, but we don't really know. And so I was tweeting somewhat jokingly about that, that space time was fake and reality is fake and whatever else. And so someone responded like, oh, it sounds like it's the first time you've heard of simulation theory. And I was like, haha. So I,
Auren Hoffman (53:58.222)
Austen Allred (54:01.407)
So kind of layers with, so I grew up a Mormon. I'm still an active member of the church. I'm not, yeah, I'm very fallible-ist. I don't know what the right answer is and I don't pretend to know what the right answer is, but it's just, so anyway, I joked that Mormons also believe in simulation theory because the core tenet of Mormonism is that
God, or at least the person that we think of as God, used to be a person like we are now, and our goal is to become like him, and life is basically, I'll use the word simulation, obviously that's not the word that...
Joseph Smith or Mormonism would use. But basically it's a big test to see how we would do and if we would be able to become like God was. And if you do become like God was, then you kind of perpetuate the cycle and you go create your own universes and children and whatever else. And of course that's not like, it's a little bit apocryphal and you have to read some old texts that sometimes are taken out of context to get there a little bit. But I was like, yeah, it's basically a simulation theory. It's just that
Instead of alien beings putting us in a computer program, it's God saying, all right, we're gonna run a simulation, we're gonna call it Earth life and see how you do. And if you do really well, then after you die, it's good. And if not, after you die, it's bad. So there are a lot of religious analogs to simulation theory. Just who is the creator, who is in charge of the simulation. And there are parts of that aren't true. And they're...
Differences that break down, but I was joking a little bit. So so yeah
Auren Hoffman (55:46.838)
It's interesting because for my friends who are like hardcore AI and machine learning engineers, I'd say five, five to 10 years ago, like all of them were pretty much hardcore atheists. And then, you know, in the last few years, like an increasing number of them believe they're in a simulation. So they're essentially become creationists. They've gone from atheist to creationists over those 10 years.
Austen Allred (56:08.814)
Yeah, that's interesting thing about simulation theory is if you believe in simulation theory, then I mean you can still be atheist I suppose, but something created the simulation theoretically, right? So yeah, yeah it's uh yeah it's interesting. Maybe we're all just filling our
Auren Hoffman (56:18.894)
Correct. You believe in some sort of God.
Auren Hoffman (56:30.474)
Now you're also running a rolling fund and I'm a big fan of these like dual threat CEOs, investors who are also currently operating a running company. It's like what kind of investor experience or wisdom is like, you know, do you get from like running BloomTech?
Austen Allred (56:49.025)
Yeah, I mean, I think my fundamental belief with regard to rolling funds is that as a founder CEO, you're just in a better spot to like my, I don't, I don't ever like reach out to people that I'm not interested in meeting like for the like, I don't even.
I don't even think of what I do most of the time is investing. I'm just a founder. And as a founder, you stumble upon really interesting people and interesting companies, and I think you have better context to make those judgments. So originally my rolling fund grew out of, I was just investing out of my own salary, which wasn't big. So it was like a thousand dollars here, $5,000 there. And I know as a founder that like, that's barely even worth the time to cash the check and to go through all the legal hassle of like accepting that money.
Auren Hoffman (57:21.279)
Auren Hoffman (57:34.039)
Austen Allred (57:41.489)
So I was actually talking to Sehiel, the founder of Gumroad about that. And he tweeted out like, Hey, I'm going to raise a rolling fund for Austin. Sign up here if you want to participate in Austin's rolling fund. And so really for me, nothing has changed. In fact, I even
hired a guy to do all of the back office stuff. So for me, I just keep living my life as a normal founder. I run into really interesting people and really interesting companies. And instead of me being like, wow, I'm a huge fan, I say, wow, I'm a huge fan. Can I throw in $20,000? And if they say yes, then I send an email to the guy that manages all the back office for me and say, hey, put $20,000 in this company and I'm done. And I think, you know, it's...
Auren Hoffman (58:14.303)
Auren Hoffman (58:22.411)
Austen Allred (58:27.181)
I don't know how you can...
Auren Hoffman (58:27.278)
I get why being a founder CEO would make you a much better investor. How does being an investor make you a better CEO?
Austen Allred (58:36.165)
That's a good question. I mean, my biggest takeaway from investing has been that all the other stuff, there's market, there's product, there's founder. Basically, I've learned that founder is 10 times as important as anything else. And that's a little bit.
And they're different funds that focus on different aspects of that. And they're really successful funds that just look for companies that have an edge on go-to-market, as an example, right? But I think realizing how long and how difficult it is and what, you know, you really have to have the right stuff to go all the way.
Auren Hoffman (59:04.747)
Auren Hoffman (59:08.142)
Look for market. Yeah.
Austen Allred (59:26.489)
I think it helps me do a check on myself. I'm like, where are my gaps? What am I missing? And the other thing is it's really inspiring and uplifting. And personally, I like it to talk with people who have a lot of ambition. And most of the time when I'm investing, it's very early. Not always pre-revenue, but the companies aren't doing.
enough revenue that you can just like run it through an Excel model and, you know, determine whether or not to invest that way. You're looking for raw potential and betting on people based on raw potential most of the time. Um, so that's been really rewarding. I really liked that.
Auren Hoffman (01:00:07.91)
Okay, two last questions versus what is a conspiracy theory that you believe?
Austen Allred (01:00:14.553)
What's a conspiracy theory that I don't believe? I'll start at the... I don't even know what's a conspiracy theory anymore. Let's see. I have a hard time believing that Lee Harvey Oswald acted alone. Or that he was...
Auren Hoffman (01:00:16.619)
Auren Hoffman (01:00:26.168)
Ha ha ha!
Austen Allred (01:00:38.509)
I don't know whether he was the person who shot JFK or not, but I don't think it was just like a solo person going rogue and acting independently. So it used to be a conspiracy theory. I totally believe that the COVID virus was created in a lab that was partially government funded.
Auren Hoffman (01:01:01.554)
US government funded. Yeah.
Austen Allred (01:01:03.249)
Correct, correct. Yeah, I'll stop there. Yeah.
Auren Hoffman (01:01:06.962)
Okay. Yeah, those are, those are some of the classic ones. Uh, for, for sure. Um, all right. Last question. We ask all of our guests, what conventional wisdom or advice do you think is generally bad advice?
Austen Allred (01:01:18.741)
Oh, most of it. If I like I used to. Because, you know, I had such a big Twitter following at the time. I learned a lot from Twitter and I learned what was going to be celebrated on Twitter. And now at least as far as management of companies goes, I think most any advice is going to be widely celebrated on Twitter is probably bad.
Auren Hoffman (01:01:22.498)
Austen Allred (01:01:50.299)
So I think really small teams perform really well. I think ruthless firing without any PIP is a better way to run a company. I think...
Austen Allred (01:02:08.069)
is either a fake term or a good thing and for a company to be really successful and I actually think most people like to be micromanaged but those are a few of them.
Auren Hoffman (01:02:19.87)
Ooh, I like that one. Most people like to be micromanaged. That's, that would be non-obvious. Why do you think that?
Austen Allred (01:02:26.537)
People want to, I will say top performers want to be micromanaged. They want to understand what your feedback is. They want somebody to bounce ideas off of and they're comfortable sharing what they're working on and how they're working on it. The notion of micromanagement implies that like I'm over here trying to do my work and then like the leadership keeps on like bugging me. And I'm sure that's the case sometimes when, but like...
if the leadership is doing what the leadership ought to be doing, those times when you're asking, you know, checking in and reviewing stuff are among the most important things that happen in a company. So I don't know where, I don't know what the etymology of that word is and where it comes from, but I don't.
Auren Hoffman (01:03:14.338)
like you don't have time to micromanage everyone you, you know, that you work with. Um, you know, so in some ways, like if you're spending all this time micromanaging someone, that's not good for you personally, right? It might be good for them, but it's not good for you.
Austen Allred (01:03:31.633)
I think it's, I actually disagree with that too. I think it's painful, but I think it's not, like if you look at most of the most successful companies that have ever existed, the CEO is always in everybody's business all the time. And I think you just, you have to be in order to be successful.
Auren Hoffman (01:03:35.199)
Auren Hoffman (01:03:49.196)
Austen Allred (01:03:53.225)
And the times when we've done the worst as a company are the times I've been the most hands-off and like hey I'm you know, I don't I have questions here. It doesn't feel right, but I'm not gonna like bug that person that's actually one of my weaknesses is I don't want to like I Don't want to bother you and I don't want to be overwhelming but every top performer I've ever worked with is actually like begging like please like get in my bit like
Auren Hoffman (01:04:17.206)
Austen Allred (01:04:18.229)
I want to know what you think. I want you to be more involved. The more involved you are, the more aggressive you are, the more intense you are, the better my life is. And that's another thing of conventional wisdom is you actually do not want all of your employees to be happy. You want the top performers to be happy and you want the low performers to be super annoyed and pissed off and you have to fire them or let them quit.
Auren Hoffman (01:04:21.879)
Austen Allred (01:04:45.685)
So the people who operate on a mental model of like, how's everybody feeling, it's the wrong metric. And that was me, so, yeah.
Auren Hoffman (01:04:52.289)
I have one more question for you. Um, so your name is Austin, A U S T E N. Um, which I may have, I can imagine has caused you a lot of interests over the years because very different from the city. Do you think your, your life would be different if it was I N?
Austen Allred (01:05:01.361)
Austen Allred (01:05:11.309)
So, yeah, the reason my name is Austin A-U-S-T-E-N is actually my mom was a big fan of Jane Austen, and that's how you spell her name. I actually, my wife and I talk about this a lot because she has a funnily spelled name too, and it's annoying at times. I don't even notice if people spell my name A-U-S-T-I-N, but I will say it is great for...
usernames and domain names and you know, much less competition.
Auren Hoffman (01:05:39.422)
Yep. Yeah. You are. I follow you at Austin A U S T E N on Twitter. I imagine it would have been much harder to get the I N one. Yeah. Okay. This is great. Well, as I mentioned, I follow you on Twitter. I definitely encourage our listeners to engage with you there. Thank you again, also not read for joining us in world of death. It's been a ton of fun.
Austen Allred (01:05:48.673)
Yeah, if you're trying to get John, that's a tough one. So yeah.
Austen Allred (01:06:03.557)
Awesome, yeah, that's been great. Thanks for chatting.
Auren Hoffman (01:06:06.751)
Alright, that's great. This is amazing.
Austen Allred is the founder and CEO of the Bloom Institute of Technology (formerly known as Lambda School), a coding bootcamp that’s helped thousands of students get a job in tech.
In this episode, Auren and Austen dive deep on the business model of higher education. The discussion kicks off with an exploration of Income Share Agreements (ISAs) and how BloomTech has used them as an alternative to student loans. Austen shares insights on the financial incentives and regulatory pressures that have prevented more schools from embracing ISAs, and how the current student loan regime works.
Auren and Austen discuss different funding models at public and private universities, the decline of apprenticeship, and the structural factors that have caused the cost of education to skyrocket in the last few decades. Austen sheds light on questionable practices of for-profit colleges and the intriguing dynamics of universities acquiring coding bootcamps.
As the conversation unfolds, Austen shares insights on how being an investor makes him a better CEO and even delves into intriguing conspiracy theories. The episode wraps up with Austen debunking common management advice and offering unconventional perspectives on micromanagement and employee satisfaction.
Greg Lukianoff is the President and CEO of the Foundation for Individual Rights and Expression (FIRE). He’s also a bestselling author of several books, including The Coddling of the American Mind and most recently The Canceling of the American Mind.
On this episode of World of DaaS, Auren and Greg delve into the current state of cancel culture. Greg reveals surprising stats on which schools are the best and worst for free speech in 2024 and breaks down the escalating levels of shoutdowns and violence observed on campuses in 2020 and 2021.
Beyond campus dynamics, the discussion expands to the broader significance of the situation in academia and what the value of a degree should be in the workforce. Greg advocates for a shift in focus from degrees as a metric of value, and talks about what smart companies are looking towards for alternative hiring criteria. Auren and Greg also explore of the origins of cancel culture in 2014, tying in historical lessons on censorship and highlighting the interplay between free speech and the contemporary culture of safetyism.
David is a co-founder and partner at Craft Ventures, one of the foremost SaaS VCs. He was the former COO at Paypal and he’s invested in over 20 unicorns, including AirBnB, Facebook, Palantir, Uber, and SpaceX.
David and Auren discuss the state of SaaS in 2023 and consider how layoffs, seat contraction, and the broader macro environment could affect the ecosystem this year. David shares some advice on how companies should be positioning themselves to weather the downturn. They also talk about bubbles and cycles in tech, how to spot stand-out founders early, and which analysts have the best record on foreign policy.
You can find Auren Hoffman on Twitter at @auren and David Sacks on Twitter at @DavidSacks