Lambda School Cuts Staff and Salaries Amid ‘Uncertainty in Hiring and...

Edtech Business

Lambda School Cuts Staff and Salaries Amid ‘Uncertainty in Hiring and Financial Markets’

By Tony Wan     Apr 21, 2020

Lambda School Cuts Staff and Salaries Amid ‘Uncertainty in Hiring and Financial Markets’

Lambda School, the San Francisco-based operator of online coding bootcamps, has laid off 19 employees. The executive team, including CEO and co-founder Austen Allred, will also be taking a 15 percent pay cut, he wrote in a blog post announcing the moves. The layoffs affected staff “across the company,” he noted, including instructors.

In the post, Allred said that “uncertainty in hiring and financial markets may affect our business.”

Lambda School has been one of the most high-profile and vocal proponents of its income-share agreement (ISA) tuition model. The company does not charge students upfront tuition for its computer science courses, which cover data science, web development and other programming skills. Instead, after getting a job that pays them at least $50,000 a year, students pay 17 percent of their salary for two years. Payments are capped at $30,000.

More than 22 million Americans filed for unemployment over the past month. The tech industry has not been spared, with large-scale layoffs impacting the likes of Carta, Opendoor and Yelp.

In January, Lambda School turned down a $100 million investment offer from one of its investors, according to The Information (paywalled), which reported that Allred wanted to grow the company without having to raise additional capital. It has raised a total of $48 million, most of which came through a $30 million Series B round in January 2019. At the time, Lambda publicly discussed plans to expand its online programs to cover cybersecurity and nursing.

In his post, Allred acknowledged that even before the pandemic, the company was trying to pull back the reins on its aggressive growth mentality. “Late last year, we realized that trying to do too much was actually holding Lambda School back—that we weren’t good enough at saying ‘no,’” he wrote. News stories emerged featuring unhappy students who said they were frustrated by what they felt were rushed, disorganized changes to the curriculum. Some requested to be released from their ISA agreements.

Among the changes Allred said the company has been pursuing are lowering admissions targets and ending new enrollments for its UX program, as well as plans to create dedicated cohorts of international students.

In an email, Allred said 162 staff remain after the cuts. On Mar. 20, the company shared in a blog post that it had served about 2,900 students since it was founded in 2016.

According to a self-published report about student outcomes for its H1 2019 cohort, 71 percent of the 448 students in that group graduated from the program. Of those who graduated, 71 percent found a job, with a median salary of $70,000.

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