Re:Lambda School’s Misleading Promises
by shalmanese on Thursday February 20, 2020 @03:25AM
(#22373582)
I've had a look at the books at a few different types of training style companies and the economics are always grim. It's one of those businesses where to the outsider, it's impossible to believe they're not spinning off unbelievable amounts of cash but they are always pretty marginal.
As additional evidence for this, the number of 1B+ exits in this space can be counted on one hand. General Assembly, for example, was acquired for ~$400M and it was one of the largest players. There was a player from Utah whose name eludes me now that had a, I think, ~$2B exit but that might be the only one.
Re:Lambda School’s Misleading Promises
by dathanb82 on Thursday February 20, 2020 @12:29PM
(#22376756)
> There was a player from Utah whose name eludes me now that had a, I think, ~$2B exit but that might be the only one.
Are you thinking of Instructure? They're based in Salt Lake City, and Marketwatch gives their current market cap as $1.86B
Re:Lambda School’s Misleading Promises
by shalmanese on Wednesday February 26, 2020 @06:58AM
(#22422218)
Yeah, I'm pretty sure that was the one, thanks!
20-30x students per cohort who paid ~$20K upfront for a 12 week program. 20% signing fee (based on 1st year comp) from employer on placement.
We definitely were not paying top of market as some of these students ended up at Uber and Facebook. That said the all in 1st year cost between base + signing bonus + equity wasn't much short of $200K. So:
30 * $20K + 28 * $200K * 20% = $1.72M/cohort
As for outgoings, all of the mentors were volunteers. As were most of the instructors. The content is mostly a one-time sunk cost to produce and is redelivered across cohorts. The largest overhead would have been a building lease. The biggest constraint on growth is how large you can make a cohort or how many cohorts you run (either multiple per year, or opening new locations).
Really felt like a bit of a racket that had found what was almost an arbitrage: between the inability of Bay Area companies to find local talent, the huge costs and risk associated trying to relocate people via H1B, and the desire for people to re-skill at any cost because tech jobs/salaries were distorting everything else in their city.
Sure it's not a $1B outcome. It's a pretty profitable and repeatable business, and especially given the limited downside risk (mostly carried by the students, who've already paid).