September 18, 2020

How To Assess Your Relationship To Risk and Money, Why San Francisco Is A Case Study For The Greatest Squandering of Wealth in History & Why Complexity Increases Exponentially with Scale | Austen Allred on 20VC with Harry Stebbings

The reason Lambda School is so successful is that they cover the downside for their students: Students don’t have to pay anything until they get a job
- “If it doesn’t work out, you don’t pay anything” – Austen Allred
When you raise a round of capital, chances are you’re also letting that investor join your board
- “It is a marriage” – Austen Allred
Hiring a Chief Operating Officer requires customization, you can’t just hire one off the shelf. You want the COO’s strengths to be the founder’s weaknesses and vice versa.
- “It’s a really symbiotic relationship” – Austen Allred
Silicon Valley was like Florence during the Renaissance except for tech
Austen believes that because so many people are moving out of San Francisco, you no longer have to go there to network and build a great company. The next tech city will be in the cloud.
- “I definitely think we won’t ever really go back to 2019 Silicon Valley” – Austen Allred

Austen’s favorite book is Les Miserables by Victor Hugo
- “Les Miserables is just the best book ever written” – Austen Allred

Austen dropped out of college because he knew he wanted to be in tech and he felt tuition was too expensive
- Austen bought a car, drove to Silicon Valley, and spent two months living in his car
  - He spent that time teaching himself how to code and eventually got a job
Austen later set out to start his own company and was blogging about everything he was learning and going through
- A founder from Utah read it his blog and agree to fund him
  - Unfortunately, that company failed because the main investor decided to pull out of the funding round
The second company Austen started was Lambda School

The reason Lambda School is so successful is that they cover the downside for their students: Students don’t have to pay anything until they get a job
- “If it doesn’t work out, you don’t pay anything” – Austen Allred
  - It lets potential customers relax about the psychological and monetary downside and instead allows them to focus on the upside (getting a high paying tech job)

When you raise a round of capital, chances are you’re also letting that investor join your board
- “It is a marriage” – Austen Allred
  - To be a good board member, look at problems from first-principle thinking and don’t try to pattern match from other companies
There are also investors that just want to put in money and be hands-off. Some Lambda School investors don’t even read the company updates from Austen.
Austen has had chances to sell Lambda School but he doesn’t see that happening anytime soon:
- “We’ve had chances to sell Lambda School. I could be sitting on a beach right now, but all I want to be doing is run Lambda.” – Austen Allred

When building a company, complexity scales exponentially:
- If you make a change in your US offices, you then need to go make that same change in your intentional offices
- Likewise, if you find a problem in one office, chances are it’s also in other ones as well
You can either centralize or decentralize your company, both strategies can work:
- “Uber’s basically running like 200 tiny companies in every city. Or you can centralize it more, a la Amazon, and just have everything talk to each other via API.” – Austen Allred

Hiring a Chief Operating Officer requires customization, you can’t just hire one off the shelf. You want the COO’s strengths to be the founder’s weaknesses and vice versa.
- Austen recently hired Molly Graham as the COO of Lambda School
  - “It’s a really symbiotic relationship” – Austen Allred
    - In her former roles, Molly was the Vice President of Operations at the Chan Zuckerberg Initiative (CZI) and the Chief Operating Officer at Quip

Before COVID, Austen always worked with his executive team in person at the company’s office
- However, since the pandemic, everyone’s been working from home in all different areas
  - Silicon Valley was like Florence during the Renaissance except for tech
  - Austen believes that because so many people are moving out of San Francisco, you no longer have to go there to network and build a great company. The next tech city will be in the cloud.
    - “I definitely think we won’t ever really go back to 2019 Silicon Valley” – Austen Allred

Austen’s favorite book is Les Miserables by Victor Hugo
- “Les Miserables is just the best book ever written” – Austen Allred
Austen doesn’t drink alcohol
In 10 years, Austen sees Lambda School training 500k to 1 million students a year and increasing their student incomes by a $10 billion a year