Lambda School for X: Don't pay us until you’re making money 💵
Start a home appliance repair school, teach students to start their own local repair business (for free), but take a cut of their future profits...
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On episode #117 of My First Million podcast, Sam and Shaan interviewed the founder of Lambda School, Austen Allred. Lambda School teaches students online web development and data science. But here’s the kicker…They don’t charge students until they are earning $50,000 in salary after they graduate. They take 17% of your salary, if and only if, you’re making $50,000 / year. Once you hit $30,000 or 24 monthly payments (whichever is first) your student debt is paid off.
This payment plan is called an ISA or Income Share Agreement.
Lambda School’s success is directly tied to the students success—unlike tradition universities and schools.
There’s no doubt to the success of Lambda School. The company started 3 years ago with 20 students and now enroll 300-400 students per month. Sam estimates Lambda could be pulling in $130M of lifetime revenue so far but this might be a little optimistic. Lamda School raised $120 million. They employ 170 full time workers and over 300 part timers.
Lambda School for _______?
Could you apply the Lambda School’s ISA to other business startup ideas?
One idea is to apply the ISA concept to service based trade skills (like home appliance repair) rather than education, which could result in graduates starting their own businesses rather than just a salaried job.
This way you could work an agreement that would give you part ownership of their business, rather than part of their salary. Instead of the student spending money on the training, they could put that money towards starting their trade business.
A few examples would be home appliance repairs, plumbers or pool maintenance. There is a growing demand for service based businesses as the younger generations prefer to be hands-off and outsource all types of inconveniences such as food delivery. A big inconvenience is your fridge or ice maker breaking down and not knowing how to fix it and not wanting to put in the effort to repair it. So what do you do? Call an appliance repair person, of course.
I expect the demand for these types of services to continue to increase.
You could start an appliance repair school, train students to not only master appliance repair, but also teach them the basics of starting and growing their business. Or you could upsell the business consulting portion after they graduate from the appliance repair part.
What other ideas could be applied to the Lambda School model?
Let us know in the comment section…