Austen Allred: Lambda School, Y Combinator, and Democratization of VC Investing

Austen Allred is the Co-Founder and CEO of Lambda School. It is an online platform that trains you remotely to become a web developer or a data scientist. The user pays no tuition until hired. Austen’s start-up journey began in 2017 with him living in his two-door Civic while participating in Y Combinator (YC), the famous San Francisco-based seed accelerator. This experience became the foundation of Lambda School’s rapid growth. Before founding Lambda School, Austen was the co-founder of media platform GrassWire. He co-authored the growth hacking textbook Secret Sauce, which became a best-seller and provided him the personal seed money to build Lambda. In this interview, co-hosts Tiger and Arsh interview Austen about Lambda School’s business model, his entrepreneurship journey, the future of higher education and credentialism, the powerful influence of Y Combinator in Silicon Valley and whether it’s become less prestigious than before, how Austen got involved in angel investing, the stellar rise of Clubhouse, and many other topics in tech and business. We dig into the details of Lambda School’s operations and philosophy with Austen: Who ends up studying with Lambda? What is the selection process? What is the common trajectory of Lambda graduates? Could Lambda School’s educational model work in fields outside of computer science? From the perspective of Princeton students, Tiger and Arsh also ask Austen’s thoughts on higher education and credentialism. A liberal arts education is often seen as valuable in the sense that it provides students with many useful assets to enter the workforce with: skills and knowledge, a degree or diploma, and opportunities to network and become involved in their field before graduation. However, companies like Google are now giving accreditation for people who take their software engineering and computer science courses. Tech companies seem to be putting higher value on having particular skills, not on having the broad knowledge of a liberal arts education. Is that the future trend? Where it will matter less and less whether someone went to Princeton or some other Ivy League school? Or will it actually matter more since liberal arts education will become rarer? Austen is a seasoned entrepreneur and well-connected in the Silicon Valley community. Since Austen is an alumnus of YC, we ask him whether he thinks YC’s prestige and quality have come down over the years as it is now accepting hundreds, instead of just dozens, of companies into its incubator programs every year. It seems unrealistic to expect that there would be hundreds of high-quality startups every year, so is YC simply doing “spray and pray” rather than being actually selective? Does it still function as a true testament to the quality of a startup, or has it more become a place that could give startups more exposure to the VC community but actually adds little value to the companies themselves? Austen is an early investor of Clubhouse, an audio-only social media app that has recently become increasingly popular amongst people in tech. Austen believes that Clubhouse could easily become a $100 billion company. Tiger, however, is not a fan of Clubhouse and believes that it provides a less thoughtful alternative to podcasts and simply adds more noise to the discourse. They debate the growth potential and future possibilities of Clubhouse. Last but not least, Austen talks about how he got into angel investing and why the vast majority of Americans have missed out on the tremendous wealth creation that has mostly concentrated in Silicon Valley and taken advantage of by VCs in the past few decades. How could we democratize access to the private market boom? Is such democratization risky or constructive to building a more egalitarian society?