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CFPB Takes Action Against Coding Boot Camp BloomTech and CEO Austen Allred

imzadi
42 replies
18h17m

I attended Lambda when it was first starting out. I think I was in the third or fourth cohort. At the time, the sell was that you didn't have to pay anything unless you got a job using the skills you learned from them. I was pretty naïve, I guess.

Things seemed fine in the beginning. The instructors were good, and I liked that there were actual live classes. Things degraded very quickly. They kept changing the format and the curriculum ("iterating"). They doubled the length of the program that I was in, which made it impossible for me to even finish it. I was working in a tech support job where we had to do shift bids and no shift was guaranteed. I enrolled in a plan that fit the shift I was working, and the expected end date, and when they changed the program length and format, I couldn't complete it.

They promised career guidance, including having a career councilor, but I never got one. They kept telling my cohort we would get our councilors after this or that milestone, but when we got there they would move the goalpost again. The closest we got was a resume course that was not relevant to tech at all and a resume review by another student.

When I had to drop out of the program, I tried to get them to cancel the ISA or reduce it, but they said I had completed "most" of the curriculum and thus was on the hook for all of the ISA.

They then started billing me for it because I was working in tech, in the job I had for 6 years before I ever even started their program.

I went to a lawyer and was told it wasn't worth suing, because they required arbitration in NYC, which would cost more than I would save.

abdullahkhalids
12 replies
16h21m

I am high level member of a volunteer based org that does online workshops in the tech space, and does dozens of workshops in dozens of countries every year. I fail to understand how you can mess up basic things like having a predecided curriculum, good teachers, a fixed schedule, or providing quality outside class support. We do all of this on a shoestring budget.

The stories I have heard about Lambda/BloomTech seem to show almost a willful attempt to not get the basics right. I understand the financial component might have been difficult, but the education is straightforward. To fail it with millions of dollars of funding is outstanding.

addicted
5 replies
15h47m

This is kind of true about all of Tech.

Much of the crowd here isn’t very smart.

They simply happened to be at the right place at the right time, ie a time where “software was eating the world” and also the iPhone/Android took over.

Finally, the success of the actual smart people in Tech (Google, Apple, Amazon, FB) who are largely pre-iPhone companies, meant that there was a lot of venture money flowing around, when the VCs discovered the Uber model. Spend a ton of money to establish monopolies (and break a bunch of laws along the way, which you could get away with because Tech still had a good reputation thanks again to the pre-iPhone pre Web 2.0 companies) and walk away with the money while exploiting customers, clients, governments and employees.

a_random_canuck
3 replies
15h14m

I wouldn’t call most of those Amazon, FB, YouTube etc, people the actual smart people either. They’re mostly just lucky. What made Facebook or YouTube successful over any other competitor? Just luck that their design turned out to be the one people like more?

They mistakenly think their success is due to how skilled or smart they are they think they’re hot shit and their thoughts are gold. But most of them are just like Elon Musk: average intelligence people who got lucky enough to climb to the top of the pile.

The same is true for most software people. We think we’re super smart because we have logical thinking and understand a complicated thing that most people don’t, but then you can always get a good laugh reading the HN crowd try to talk smart on other subjects like physics / quantum mechanics.

kortilla
1 replies
2h56m

The same is true for most software people. We think we’re super smart because we have logical thinking and understand a complicated thing that most people don’t, but then you can always get a good laugh reading the HN crowd try to talk smart on other subjects like physics / quantum mechanics.

Talking out your ass about subjects you don’t understand isn’t limit to software people. It’s funny you mentioned physics because really smart physicists would frequently spew all kinds of stupidity about software when I was in grad school.

dmoy
0 replies
1h23m

It’s funny you mentioned physics because really smart physicists would frequently spew all kinds of stupidity

Relevant xkcd: https://xkcd.com/793/

Not all physicists. Some are pretty chill. In fact a physicist I worked with was the one who clued me in to the whole "lots of physicists think they know everything" joke/not-a-joke thing, he thought the whole situation was very funny.

Enginerrrd
0 replies
15h3m

A ton of skill, talent, adaptability, and mountains of hard work are still prerequisites for "getting lucky" in that way though. Just because luck plays a big role doesn't make it the only factor.

CPLX
0 replies
12h48m

Shame that this is downvoted, it’s a fairly straightforward description of what happened.

__mharrison__
2 replies
15h37m

Not surprising. Was the founder technical? Have any insight about education?

abdullahkhalids
1 replies
14h18m

He didn't need insights about education. Just needed to hire 5-10 profs with significant industry experience and ask them to create a curriculum. But from the stories it seemed like a bunch of amateurs were playing the move-fast-break-things game.

__mharrison__
0 replies
12h56m

I think you made my point...

tbrownaw
0 replies
14h25m

I fail to understand how you can mess up basic things like

Hiring people who have experience and know what they're doing isn't very revolutionary or disruptive.

Plus it can be hard to evaluate competence in a field you don't know that well yourself.

kirso
0 replies
5h20m

Growth at all costs? Taking shortcuts? Sounds familiar...

japhyr
0 replies
15h53m

I think if your focus is on actually educating people, and you're willing to invest your resources in those people, you can do quite well. If your focus is on scaling and creating an appealing image to investors, the education part isn't so easy.

There's probably something to who you're attracting as well. If your pitch is "come work hard with us and we'll help you learn", you draw people who are ready to learn. If your pitch is "come take out a [loan we won't call a loan] with us and we'll make you a bunch of money", you draw a different set of people.

That's not even saying anything against the students of Lambda school. I believe one issue has been people joining to improve their economic outlook, while working a different job to continue paying bills. You have to be pretty thoughtful about how you work with people who have a tight schedule. You can't just throw your curriculum and your expectations up in the air any time you want, and expect all those people to "pivot" with you. But the focus always seemed to be more on the "success" of Lambda school than on the actual success of every student.

From all the stories that come out of Lambda school, it really feels like the classic predatory view of students. They're not so much learners as they are potential sources of money.

abnercoimbre
7 replies
16h53m

Please contact the CFPB, it is worth your trouble. Everyone's blood should be boiling reading TFA, such as:

Allred tweeted that the school achieved a 100 percent job-placement rate in one of its cohorts, and later acknowledged in a private message that the sample size was just one student.
aaronbrethorst
1 replies
12h44m

my dude Austen here cannot help but keep poasting through everything. Social media king.

spamizbad
0 replies
2h49m

Very online founders seems like a massive negative signal to me.

MattGaiser
1 replies
16h7m

That should just be criminal fraud.

teeray
0 replies
14h2m

Yep, jail time should be on the menu

schleck8
0 replies
10h40m

100 % job placement rate 1 % of the time

laserlight
0 replies
2h16m

Here is an HN thread I had with him [0]. He claimed that 90% of those who were job seeking got placed. The key point was the definition of “job seeking”, of course. I'm happy to hear that authorities took action.

[0] https://news.ycombinator.com/item?id=33827202

fossuser
3 replies
16h38m

This is pretty messed up - I liked the idea of incentive aligned ISAs (and actually teaching a skill that universities mostly don't), but it still requires someone of good character making decisions ultimately.

noufalibrahim
0 replies
13h23m

Yes. The ISA was a good idea. It aligned the incentives of the company with the vocational success of the students. There are several clones of this in India. I assumed that the rest of the details (like curriculum etc.) would fall into place and the thing would be atleast a moderate sustainable success.

I think that's it's the pressure to grow and become a "unicorn" that seems to encourage these kinds of ugly compromises and behaviour. That kind of thing can be just annoying if the company was some kind of social media thing but when you get involved in something as important as education which can have a huge impact on a persons life, you have to be responsible about it. But that doesn't really help the valuations.

imzadi
0 replies
43m

That's how it was sold to us. Literally, the recruiter's exact words were "we don't succeed unless you succeed." In reality, they just kept taking in more and more students. When you have your students doing peer reviews and self-reviews, there not a lot of added cost for having more students. So cohorts went from 8 - 10 students to 30+ students. They also bundled ISAs and sold them off without telling the students they were doing it. So "we don't succeed unless you succeed" was patently false. They were getting their money up front regardless.

bachmeier
0 replies
3h9m

I liked the idea of incentive aligned ISAs

The problem is that incentives are definitely not aligned. Once the student signs the ISA, they can put significant resources into helping the student get the best possible job, or they can put nothing into it and take a big share of the income the student would have otherwise earned. Incentives are only aligned if the ISA is based on the additional income from going through the program, and there's no way to measure that.

I think what we've learned is that this can only work if there's an outside regulator, such as an accreditation body, preventing bootcamps from taking the parasitic approach.

ornornor
2 replies
9h56m

This doesn’t seem limited to that particular boot camp, sadly.

I’ve instructed at two boot camps (one in North America and one in Europe). It seems to be standard practice in the industry: inflating placement numbers, very low quality material/curriculum and course material, a kind of omertà where students fear speaking up, admitting students who clearly don’t have the skills and will drown in the course, stringing you along “it’ll get better you’ll see” until you pass the number of days where you can’t drop out without losing a significant chunk of money, counting the graduates cum instructors towards your graduate placement rate…

From my experience, boot camps are mostly scams. Maybe they will be a reckoning, it really sucks that the business model basically revolves around deception and taking thousands from people who want a career change.

nyarlathotep_
0 replies
1h52m

I'm surprised bootcamps are still around; I hear so little about them today. I figured they'd mostly closed shop considering the glut of layoffs, LLM fears, end of ZIRP etc.

dghlsakjg
0 replies
4h32m

It’s really sad. My good experience at a boot camp seems the exception.

We had a curriculum designed by people with a background in education, externally audited placement rates, an exceptional alumni network, instructors and mentors with industry experience. Most importantly, it was a non profit.

It seems like there is something to be said for intensive vocational education. It’s a shame that there are so many people taking advantage of students.

JumpCrisscross
2 replies
12h17m

I went to a lawyer and was told it wasn't worth suing, because they required arbitration in NYC, which would cost more than I would save

Could you do me a favour and look if they had conflicts? (Also, who was the arbitrator, AAA or JAMS? Because it shouldn't be more than $5k, and that's an extreme. Also, in most arbitration agreements, the company drafting the agreement pays the filing fees, which could knock off $100 to $3,500.)

b800h
1 replies
11h38m

I really don't understand this. Surely you can't arbitrate away statutory rights like this? Sorry, I'm not from the US, and this legal feature baffles me a bit.

JumpCrisscross
0 replies
11h19m

Surely you can't arbitrate away statutory rights like this?

You can’t, but the cost of enforcement can vary. In this case, it sounds like there was a bad counsel-case fit. (OP needed cheaper or better counsel.)

neilv
1 replies
17h58m

Have you contacted the CFPB, to see whether they can help now (in light of this press release)?

imzadi
0 replies
17h45m

I'll have to look into it more now. I had contacted a non-profit that represents defrauded students, but they had stopped pursuing it after a judge threw out their case.

bagels
1 replies
18h5m

Did you pay? Did they sue?

imzadi
0 replies
17h48m

I paid

bachmeier
1 replies
8h19m

They promised career guidance, including having a career councilor, but I never got one. They kept telling my cohort we would get our councilors after this or that milestone, but when we got there they would move the goalpost again. The closest we got was a resume course that was not relevant to tech at all and a resume review by another student.

They then started billing me for it because I was working in tech, in the job I had for 6 years before I ever even started their program.

This is similar to the bootcamp I saw up close. They promised placement help, making it sound as if they had a strong incentive to help students succeed, but in the end all they did was have someone comment on their resume.

Eventually the student got a low-paying job based on their previous education and the company took a big chunk of the income. The job was unrelated to the useless and poorly executed instruction, yet they still got the money, because they had a signed contract.

This is no better than the guys that make money on phishing attacks. Just a different form of scam.

imzadi
0 replies
2h41m

We were constantly sold this idea "we don't succeed unless you succeed." It eventually became clear that they had no commitment to individual success at all. They went from having 8-10 people in a cohort to have 30+ people, and starting new cohorts every week. It also turned out that Lambda was bundling ISAs and selling them off, so they didn't have any specific investment in actual students.

p10_user
0 replies
3h25m

This is premeditated nefariousness! Horrible

metacritic12
0 replies
3h43m

Not a surprise. Allred was basically a marketing shill with no educational background before lambda / bloomtech. Not a surprise then, the claims they make will be borderline fraud.

krosaen
0 replies
4h40m

They then started billing me for it because I was working in tech, in the job I had for 6 years before I ever even started their program.

That's damning. While I get that ISAs are controversial, I didn't expect this kind of nonsense - I wonder how common it was that enrollees were charged for "landing" their old job?

In any case, sorry this happened to you, hopefully this recent ruling will give you some recourse.

blairanderson
0 replies
2h28m

where do you work now?

Aurornis
0 replies
3h25m

Thanks for being honest about your experience. All of the Lambda grads I’ve talked to in person have similar negative stories about how their experience felt like it was being made up on the fly.

It’s difficult to speak out about problems with your educational institutions because your own reputation is partially attached, at least in early career. I see a couple people in my Twitter and LinkedIn feeds defending BloomTech publicly today despite having previously complained about their experience in private. It must be difficult to see your educational experience being exposed as being poor, which probably prevents a lot of people from speaking out. The Lambda/BloomTech grads I know are actually smart people, but they had to self-teach their way there. Lambda lured a lot of smart people in by proximity to Paul Graham and all of the positive press they received online when they started out.

solardev
34 replies
20h10m

Are there any legit income-sharing schools of this type, tech or otherwise? Done fairly, it sounds like an interesting alternative to upfront tuition.

On the surface it doesn't seem like a bad model, but of course it could be twisted to evil ends. From the article:

The loans carry substantial risk, as a single missed payment triggers a default and the remainder of the $30,000 “cap” becomes due immediately.

Students were therefore deprived of rights they should have had when their “income share” loan was sold to an investor [without the required Holder Rule provisions transferring legal responsibilities to the new owners].
majormajor
18 replies
18h22m

The math ends up wildly unfavorable unless you are EXTREMELY confident in your teaching/transformation abilities.

If you look good on paper before the school then you don't need it and won't be motivated to share your income. So the applicant pool reduces itself to those who on-paper don't have great chances. So you need to cause a really big delta in the ability of those people to make good money in the industry for you to be able to get your cut.

And you're gonna pull that off in 6 to 9 months? I'm a big believer in a lot more people having potential to learn than currently have easy opportunities, but that's a hell of a timeline.

londons_explore
11 replies
16h24m

There was a time about 5 years ago where tech companies were desperate to fill various minority quotas. The idea was those people were very valuable, there were very few applicants who were hotly contested by other tech companies, and lack of skills wouldn't matter - they'd learn on the job.

In that world, the school only has to get the students to do a "hello world" in python and apply for the right jobs. Such a school is very cheap to run, and very lucrative as long as a decent proportion of students fit into the desirable categories.

The students themselves usually aren't aware how desirable their application is - and therefore believe the school is their route in rather than a few youtube tutorials and a direct application.

cool_dude85
10 replies
14h43m

What tech companies do you allege have/had "minority" quotas to fill?

davely
2 replies
14h5m

Not that you’re arguing for or against, but I thought I’d drop an interesting link to a 2020 McKinsey and Co study that shows more diverse companies generally outperform their peers. [1]

Is there any wonder that Google and other (not exclusive to tech) companies desire this?

[1] https://www.mckinsey.com/featured-insights/diversity-and-inc...

londons_explore
0 replies
2h12m

This is also self-fulling. Investors that see this invest into more diverse companies, who in turn do better because they get more investment.

Write a convincing report saying "Companies with a Z in the name do better", and you'd see the same result.

LunaSea
0 replies
8h28m

Is that the same McKinsey that helped start opioid epidemic?

srockets
0 replies
11h1m

There's quite a chasm between trying (and failing, but I digress) to increase diversity of the workforce and those imaginary quotas.

anonymoushn
3 replies
5h47m

Thoughtworks wrote in an email to me that they were only considering non-male candidates because of their quotas. The idea, I suppose, is that I should be willing to change my gender if I'm really interested in joining.

beej71
1 replies
4h23m

Is that legal?

cool_dude85
0 replies
3h59m

At least in the US, if this person received such an email they would be able to sue the company that sent it quite easily.

skywhopper
0 replies
2h36m

If they had quotas, they were made up internally. But more likely they were just lying to you, or the person who sent the email was twisting the truth. I don't think anyone but you thought of the "maybe you should change gender" bit. They just didn't want to hire you, personally.

londons_explore
0 replies
2h2m

Plenty of recruitment teams get given targets. Just one 1 memo saying "hires that don't bring the company towards our diversity goals won't count for your metrics"...

(I have worked with 2 such recruitment teams).

jimberlage
2 replies
16h44m

I remember the marketing for App Academy was that we all would be self-taught, but then the actual makeup of the cohort were people who had prior programming experience (CS all through high school and as a hobby, but studied linguistics in college and regretted it; a designer who had done some JS and couldn’t pass leetcode interviews despite having current frontend skills, etc.)

I think the problem they’ve run into is that there are only so many of those types to go around, and you have to stay small or really tackle the problem of transforming someone in 12 weeks eventually. That’s a different and much harder ask.

busterarm
0 replies
5h48m

Early a/A cohort attendee here.

They literally ensured their success by filtering for people who would already succeed no matter what. I don't have any misgivings about it because the curriculum did help me focus on some gaps in my understanding and build up a profile/portfolio that could land jobs.

It's still expensive and had that curriculum been open at the time I could have done the whole thing on my own and saved some money.

The social aspects of the program didn't end up really benefiting my career at all. The vast majority of my cohort had STEM degrees from prestigious places or were people who were programming since an early age like me. I had already had a long career in IT before I attended. 100% did get jobs, but 2 of the guys in our cohort struggled for a while -- though I think that was to get out of paying the ISA.

Taylor_OD
0 replies
2h57m

Yup. When the Bootcamp market flourished (early/mid devBootcamp days) and incredible results seemed common it was exactly for the reasons you mentioned. Many early attendees were folks who either had some previous technical experience or were very smart and proved in some other field but wanted to move into dev work.

Eventually the majority of those folks who were going to make the switch... Did. Then the average bootcamp graduate became someone who bought into the hype that anyone could learn to code. A lot of truck drivers, CS reps, and teachers applied. There nothing stopping those people from becoming great engineers. But they are going to have a more difficult time on average than the person who dabbled in coding for ten years while working as an engineer in another field and just needs a crash course to be proficient in web development.

Placement rates dropped significantly around that time.

manquer
1 replies
15h18m

Not necessarily, fresher or graduate trainee programs are this effectively.

Large companies especially conglomerates do this by hiring freshers and investing in their learning and benefit by paying a bit lesser than the market over the years .

Apprenticeship has also been successful economically at even a scale of one master/sole proprietor for centuries.

The key is to derive value while they learn, not split the learning and earning parts completely

sarchertech
0 replies
7h55m

Apprenticeships also take 3-4 years on average.

solardev
0 replies
18h8m

Well, presumably there's some people who wouldn't be able to afford the upfront tuition?

But you're right, $30k (in the worst case) is a lot of money to pay for less than a year of bootcamp.

jswartz
4 replies
18h56m

I attended Launch School and found the founder and the program to be of high quality and integrity and the success of the capstone graduates speaks for itself.
solardev
3 replies
18h10m

Is this a quote from somewhere? (Or maybe just an errant > symbol?) Just wondering if it's your own experience or I missed something

jswartz
2 replies
16h32m

Sorry errant >. It was based on my own experience. Launch School has a unique model where it's $200/month for the core curriculum which you complete at your own pace, and then can complete an optional capstone curriculum/project which comes with an ISA (18K or 18% of first year salary). Their outcomes are great, the curriculum is top-notch, and the founder always conducted himself with integrity and transparency. I had a great experience.

solardev
0 replies
14h4m

Cool, thanks for sharing! Another commenter also liked them.

beej71
0 replies
4h18m

Thanks for sharing an ISA success story. Lots of us who used to teach at Lambda back in the day only did it because we wanted the ISA to succeed widely as a tuition payment mechanism.

That dream hasn't been realized, and certainly wasn't by Lambda, but I still hold out hope.

not_wyoming
2 replies
3h49m

Yes. Most states have a system where students attend school, receive an education, and pay the school back using a portion of their income after graduation.

They're often referred to as "public schools", and ISAs are often called "taxes".

peripitea
1 replies
1h2m

Those schools still charge you $50k and take 4 years of your time, so I'm not sure how that comparison makes sense, particularly for working folks looking to uplevel their skills.

not_wyoming
0 replies
40m

Those schools have not always charged $50k - that's a recent political choice. I'd point to student loan policy as the main driver [0].

Many bootcamps require full-time attendance, and many universities have part-time options. Further, community colleges are an option if the only goal is skill acquisition. Those programs take less time and are cheaper.

0 - John Oliver is not the primary driver of my thinking, but he did an interesting and engaging segment if you're interested: https://www.youtube.com/watch?v=zN2_0WC7UfU

LamaOfRuin
1 replies
19h44m

The income based repayment plans for federal student loans are not that different (but without most of the sketchy practices).

The fact that those are an option for accredited schools means I think it would be hard to make it work in a program like this. Especially if there is any sort of venture interest expecting actual returns. Actually educating people well is not cheap and I have not seen any of these programs that actually do anything innovative either.

solardev
0 replies
18h10m

income based repayment plans for federal student loans

Ah, I didn't realize that was a thing. That makes sense, thank you!

zharknado
0 replies
4h7m

This isn’t the same type of school, but Purdue was an early experimenter with ISAs. Sounds like as of 2022 they’d paused new enrollments. [0]

As I recall, some critiques were that it was only deemed viable for a small range of STEM majors, and narrows the mission of the institution toward building earning power vs. providing a well-rounded education, being an intellectual/research hub for the community, etc.

[0] https://www.insidehighered.com/news/2022/06/23/purdue-pauses...

mushufasa
0 replies
17h5m

Are there any legit income-sharing schools of this type, tech or otherwise? Done fairly, it sounds like an interesting alternative to upfront tuition.

investing in startups is kindof like betting on the future potential of founders, though it's tied to a business idea.

Upstart started as a personal loan for students and expanded to other financial services, it went public recently. They innovated by doing the regular thing (student loans) better than the competition, rather than trying to be both the lender and the school https://en.wikipedia.org/wiki/Upstart_Holdings

but of course it could be twisted to evil ends.

My speculation is that this was a 'road to {} paved with good intentions.' Just like most startup products face challenges in the real world, it sounds like the Lambda School tried everything they could to get high job placement rates, but weren't able to deliver at scale.

Then, as their early placement % dropped, they just didn't change the numbers in their marketing materials. After a certain point their early hopes and reality diverged enough to constitute fraud in the eyes of the CFPB

Anecdotally, we get a lot of applications for any software job posting, and I discard most of the resumes of recent bootcamp graduates. It's nothing against bootcamps, it's just a signal that the person is a junior engineer. And in the cases we have hired people with less work experience for junior roles, we've had a much higher signal-to-noise ratio in our interview process talking to people who completed traditional education (even if it was not directly a CS program) and have enough of those applicants as-is.

jimberlage
0 replies
20h3m

App Academy (in a much hotter 2013 job market) honored its 10% of my first year’s salary ISA when I attended. Anecdotally from my cohort, they worked with people on missed payments without triggering a balloon repayment.

adamisom
0 replies
14h27m

Yes, the one I did. Launch School (their Capstone program) is 1 year 18%ish ISA. Since, when I did it, 100% of my cohort got real-Dev jobs averaging 120k+, the school still got 20k+/student. They're the anti-lambda school in my book. If anything too modest in their marketing. Best decision of my life.

sandofsky
10 replies
16h56m

In January 2020, as news broke about Lambda School's scummy behavior, Graham gave Austen a pep talk which he later expanded into the essay, "Haters." It has aged like a fine milk. https://paulgraham.com/fh.html

debo_
4 replies
14h42m

From the footnotes:

There are of course some people who are genuine frauds. How can you distinguish between x calling y a fraud because x is a hater, and because y is a fraud? Look at neutral opinion. Actual frauds are usually pretty conspicuous. Thoughtful people are rarely taken in by them. So if there are some thoughtful people who like y, you can usually assume y is not a fraud.

I guess all those folks calling these guys "frauds" weren't "thoughtful" enough.

pge
0 replies
6h15m

I wish PG was right about this, but there are plenty of examples of frauds that were not conspicuous and took in lots of thoughtful people (Bernie Madoff being one of the most obvious and public examples).

choppaface
0 replies
12h9m

Same with FTX, VCs projected themselves as thought leaders buying into FTX and then it turned out they had never even thought

beej71
0 replies
14m

As someone who was a low-ranking insider at Lambda some years back, it was my perception that the people calling Lambda out presented a mixed bag in terms of veracity.

Someone here commenting on this story said that Lambda counted their student TAs in their employment stats, for example, but to the best of my knowledge this never happened. There were a handful (like three or four that I know of) that we did hire as full-time staff doing real jobs, and I'm pretty sure we counted them as employed, but not the student TAs.

With respect to this ruling, it says that students were subjected to up to $4,000 finance charges. I hadn't heard of that at all. Reading the details, it turns out that's the difference between the published upfront cost of paying Lambda versus using an ISA. The upfront cost wasn't hidden; it was published right next to the ISA cost. But because they weren't the same value, and it was probably more expensive to use the ISA, they called the difference a finance charge. Which is fine, but if Lambda had simply not allowed people to pay upfront, there wouldn't have been a "finance charge" to complain about. In other words the finance charge was already published in the rules for how the ISA would be repaid. So, factually accurate, but a strange thing to complain about, like complaining that the upfront cost of a house is lower than the mortgage cost.

Still others complain about the selling of the ISAs to investors, and say that that means that Lambda would still make money no matter how well their students performed. However, this would be a very short-sighted strategy as no investors would buy the ISAs if the students weren't performing. So selling them didn't really remove any of Lambda's impetus to place students in jobs. (It did improve the cash flow situation, however, which is why it happened.) From what I saw, the goal of placing students was ever-present regardless of whether or not Lambda was currently selling ISAs.

My point is, there's a lot of information out there by a lot of people who aren't sure about what they're talking about. And it can be tough to know what's real and what's not.

One thing I can say with certainty is that all the instructors who worked there back in the day were absolutely fucking passionate about getting students into jobs and changing the world, in that naive startup way. Some of the success stories from those early cohorts are the things I'm most proud of in my entire tech and teaching career.

As part of my layoff agreement, I had to sign a non-disparagement clause to get my severance.

amadeuspagel
0 replies
8h14m

Graham also wrote Crazy New Ideas[1] in response to criticism of Mighty, in which he claimed that if "reasonable domain experts" propose an idea it can't be crazy.

[1]: https://paulgraham.com/newideas.html

CPLX
3 replies
16h36m

The more we see the legacy of PG’s various protégés and “thought leadership” out in the world the more I start to think Jessica Livingston might have been responsible for much more of YC’s successful trajectory than people realized at the time.

uhohspaghetti
1 replies
3h42m

Candidly, that was pretty clear even decades ago when this was an obscure little place.

PG, for example, didn’t realize that discriminating against people who have children might not be great until he himself had kids.

He’s a mid dude with gross feet who came up with a wildly profitable business model (6% equity in as many promising founders as possible).

leosanchez
0 replies
2h33m

He’s a mid dude with gross feet

Does he sell feet pics :) ?

robocat
0 replies
13h36m

PG writes about her influence here, and why she avoids the spotlight:

https://www.paulgraham.com/jessica.html

He also seems to give some credit to Jessica for choosing to back the Reddit founders:

  we thought that we were funding ideas rather than founders, we rejected them. But we felt bad about it. Jessica was sad that we'd rejected [them].
Edit: she gets mentioned here too: https://www.paulgraham.com/ycstart.html

ipqk
0 replies
46m

Thanks to Austen Allred, Trevor Blackwell, Patrick Collison, Christine Ford, Daniel Gackle, Jessica Livingston, Robert Morris, Elon Musk, Harj Taggar, and Peter Thiel for reading drafts of this.

Such great company he keeps.

martythemaniak
10 replies
16h41m

VCs would improve their public image if they took the occasional L.

fossuser
9 replies
16h35m

I thought the idea behind lambda was good I was a lot more surprised by PG's strong support for Mighty which seemed a lot more bizarre. Though his recent tweets wrt Israel have been the most disappointing for me.

reducesuffering
2 replies
14h25m

Lambda School and Mighty having the biggest PG cheerleading support of anything else kind of seals the deal. You can be great at something for awhile but youll always lose the zeitgeist eventually.

ignoramous
1 replies
7h40m

Pinpointing two duds among a sea of hits to smear Paul is... berserk.

busterarm
0 replies
5h55m

Not when he's still doubling down on that support in the wake of everything.

ryanSrich
1 replies
12h28m

Yeah the Mighty situation is when I started to question PG's decision making. Obviously he's super successful and has helped companies worth hundreds of billions of dollars succeed and grow. But even Steph Curry has off nights.

Mighty always sounded like a bad idea. But when I saw PG really making a big deal about it I followed Suhail on twitter because I just had to see what PG was going on about. From what was posted online it sounded like the company was super successful and growing, and I still didn't get it. And then it went under, without any fanfare. Just poof.

ineedaj0b
0 replies
9h26m

Suhail was lying to himself constantly on his Twitter. He believed reality different. PG talked with Suhail and thought, well Suhail is posting publicly and telling those he knows and I know things are going well, so things are likely going well. Because who would lie that hard?

But that was Suhail, totally sure in his lie, smart enough to change the future, but dumb enough to not see his business sucked.

I don’t think it’s right to be hard on PG or Suhail. People fail and Suhail was very smart, smart enough to hold a fracturing vision together much longer than anyone thought. He looked like a guy trying really hard and probably was.

CPLX
1 replies
16h25m

Thanks for reminding me of that.

That was one of the dumbest fucking startup ideas most people had seen in awhile. Many just sort of said the obvious out loud, which is that it made no fucking sense as a business, and then all these rich supposed geniuses tried to shout them down.

Even by the usual standards of the genre that one was a head scratcher.

eonwe
0 replies
4h33m

Interesting.

What do you see being disappointing about tweets on Israel? I've mostly seen him care about Palestine civilian deaths but I can't say I've read and remember 100% of his tweets.

spxneo
3 replies
17h34m

now do coinbase!

vvpan
2 replies
16h30m

What's wrong with coinbase?

datadrivenangel
1 replies
14h39m

Core concept and the economic prospect?

AlchemistCamp
0 replies
12h15m

Coinbase is a winner on both dimensions.

chimeracoder
1 replies
4h36m

What's the parent post? People who aren't logged in with a Twitter account just see the words "Lambda School", because Twitter no longer shows any replies or parents.

brentm
0 replies
4h24m

@tommycollison: What’s going to be very important in 5 years’ time that we’re not thinking enough about now?

smt88
2 replies
12h31m

Pg is a clown and a grifter, like most VCs in Silicon Valley. Almost nothing he says (outside of his comments on programming) ages well.

wk_end
0 replies
2h51m

Even his comments on programming are…questionable. He spent years hyping up Arc, his “hundred-year language”, and in the end it arrived as…Scheme with some shorthands?

mistrial9
0 replies
43m

speaking of age - raise a glass to the few thousand over-forty people who were categorically rejected from the rank and file of so many Y-companies

vvpan
0 replies
15h52m

Peter Gregory.

mvdtnz
0 replies
8h10m

It makes perfect sense when you remember pg is actually a dumb guy.

dylan604
21 replies
19h58m

This is one of those situations lending support to the corporate death penalty. Allowing name changes like Worldcom, Spectrum, and so on to write off some liabilities while operating as if nothing happened.

adrr
8 replies
19h29m

Or you could just toss people in jail. This case is clearly wire fraud if the company knowing provided fraudulent hiring rates to get people to pay money for a service.

shkkmo
7 replies
19h7m

Why not both?

natpalmer1776
6 replies
18h37m

Because of diffusion of responsibility, wherein the person taking the fall was only one of perhaps three dozen individuals who collaborated to make the relevant business decisions.

If you to set the precedent of consolidating the consequences and doling them out to the relevant executive officer you’ll end up with c-suite executives around the country throwing their personal and corporate influence into getting that precedent neutralized.

shkkmo
5 replies
17h29m

How doed charging executives in addition to fining a company an amount that puts the card company into unresolvable bankruptcy lead to "diffusion of responsibility"?

Yeah, rich CEOs and investors are opposed to taking any responsibility for their actions, but that doesn't we shouldn't try to hold them responsible.

natpalmer1776
4 replies
15h22m

It doesn’t lead to a diffusion of responsibility, the diffusion exists independently by nature of how a business operates.

A CEO will green light high level strategic direction, but the crimes described here could easily emerge from the implementation of that directive at lower levels of the company. “Plausible deniability”

ImPostingOnHN
3 replies
13h57m

The CEO in that case would be culpable for culturing a culture of criminality.

The buck stops at the top.

natpalmer1776
2 replies
13h52m

I mean, I agree with the sentiment but good luck codifying that in a law that won’t be abused to convict innocent people who were convenient patsies while letting guilty ones walk free due to the “subjective” nature.

ImPostingOnHN
1 replies
13h32m

Sarbanes Oxley already codifies corporate officer responsibility into law, so there's a pretty clear precedent.

natpalmer1776
0 replies
13h10m

Does Sarbanes Oxley codify culturing a culture?

As far as my cursory glance at wikipedia has informed me, the act itself works around the “plausible deniability” by requiring certain disclosures containing factual information be signed off by key executive staff rendering it impossible for them to say “I didn’t know!” with regards to specific material information.

The blanket concept of holding executive staff accountable for the wrongdoings of the company would mean a lot more disclosures, forms, sign offs, etc. for “any” eventuality that would render the position pointless as they wouldn’t have any time to actually do anything useful.

Because at the end of the day how do you prove that joe schmoe CEO actually fostered a culture that resulted in criminal acts? This isn’t even mentioning the individuals who were actually involved and directly culpable.

JumpCrisscross
7 replies
19h35m

the corporate death penalty

This is a silly idea lobbyists love because it sidesteps the actual corporate-destruction mechanism: liquidation to pay massive fines, license revocation and/or personal liability for senior management.

Consider even the penalties here, which effectively ban Allred and Lambda from doing business. If you corporate death’d them, the contracts and assets would still exist. Allred would be unpunished. Everything would go back to shareholders who were presumably fine with the status quo, and would be fine putting them into a new entity that Allred could manage. Okay, so you cancel the contracts. Now the janitor who hasn’t been paid in two months is screwed. Okay, so you exempt employees. Allred’s an employee! Exempt him? What do you even pay the janitor with? Okay, exempt some assets. How many? How do you choose who must keep paying versus who is let off? Maybe pro rata? Who will administer all this? Et cetera, et cetera.

Contrast that to a massive fine. Company goes Chapter 7 and into a deep body of law that has experience dealing with the above. (Ideally paired with a license revocation from any lending for Allred and the entity, in case they try to Chapter 11.) Shareholders are wiped and free to pursue Allred. Allred and Lambda are neutralised.

dragonwriter
4 replies
15h48m

If you corporate death’d them, the contracts and assets would still exist. Allred would be unpunished. Everything would go back to shareholders who were presumably fine with the status quo, and would be fine putting them into a new entity that Allred could manage.

This is wrong for a variety of reasons:

(1) The corporate death penalty is proposed as an additional remedy, not an alternative remedy, to personal liability for officers, etc. (in fact, many corporate death penalty proposals would make additional personal penalties for corporate officers available as a part of that on top of any that would be available independently of the corporate death penalty for their actions, e.g., in one proposal for a federal charter revocation law, “The statute should specify that, for a period of five to ten years, the directors of the condemned corporation could serve on the same corporate board together only when they are a minority, ensuring that that set of directors would not form a majority of the board of another corporation. Similarly, key senior officers should be prohibited from working together for five to ten years. In addition, no director or officer could serve on the board or work for any corporation affiliated with the parent corporation of the convicted corporation. Courts must be empowered to issue injunctions to enforce these rules, preventing reconstitution of substantially the same corporation under another name.” [0])

(2) Corporate death penalty proposals tend to include proposals for how dissolved corporations are to be wound down that address the concerns you address (like a bankruptcy, these would be generally be administered by courts, probably most normally the court issuing the penalty.) From the same proposal, “The dissolution of the corporation should impose the harshest penalty on the corporate entity itself, directors, and officers, while only damaging shareholders-who have less control over corporate misconduct-to the extent necessary to incentivize them to take an interest in the corporation’s criminal misconduct. […] the penalty should dissolve the corporation with as little impact on innocent parties–employees, consumers, suppliers, and the larger economy-as possible.” [1] The proposal goes on to propose that an corporation subject to the corporate death penalty should have a court appointed “czar” take over management of its assets (similar, in a way, to a bankruptcy trustee), operating them and preparing and organizing them for sale (by default, by auction, but by other means where appropriate), with a specified distribution of the proceeds: “The statute should specify that revenues from the sale of the corporation’s assets first pay court costs and the costs of the czar’s operation during dissolution. Next, nonmanagement employees of the corporation that have clearly suffered harm due to the dissolution, such as being rendered unemployed, should be compensated through a one-time stipend. Finally, the balance should be distributed among the shareholders. In this way, the affairs of the corporation could be wrapped up in an orderly and just way that would protect innocent parties while only causing minimal harm to shareholders.” [2]

(3) As with personal sanctions, the corporate death penalty is proposed in addition to, not in replacement for, criminal fines and restitution, and civil damages that may be available. The key difference between corporate death penalty and bankruptcy is that the corporate death penalty can punish directors and officers, and it de-institutionalizes the firm in much the same way as bankruptcy, but it does so even if the amount of the monetary penalties would not render the corporation insolvent.

[0] https://www.gwlr.org/wp-content/uploads/2018/04/80-Geo.-Wash..., pp. 621-622

[1] id., pp. 628-629

[2] id., p. 630

teeray
1 replies
13h38m

I’d go so far as to say that the officers should be barred from working in the same industry for a couple of years. Long enough that whatever edge they had is eroded by time. It might be extreme, but adding a “curse” aspect to officers’ careers would act as an additional deterrent.

JumpCrisscross
0 replies
12h28m

officers should be barred from working in the same industry for a couple of years

"The Bureau’s order permanently bans BloomTech from all consumer-lending activities and bans Allred from any student-lending activities for ten years" [1].

[1] https://www.consumerfinance.gov/enforcement/actions/bloomtec...

JumpCrisscross
0 replies
12h38m

corporate death penalty is proposed as an additional remedy, not an alternative remedy

Corporal death penalties aren't an additional remedy--they're the ultimate remedy. The branding sucks.

to personal liability for officers

Just do this. Why the extra steps?

Corporate death penalty proposals tend to include proposals for how dissolved corporations are to be wound down that address the concerns you address

So does bankruptcy, a precedented mechanism.

the penalty should dissolve the corporation with as little impact on innocent parties–employees, consumers, suppliers, and the larger economy-as possible

How? You're putting their employer, vendor, customer and taxpayer out of business. (If not, what are we talking about?)

but it does so even if the amount of the monetary penalties would not render the corporation insolvent

Increase the fine.

More pointedly: if you can't justify a fine or penalty more than the company is worth, maybe--on the net--they shouldn't be poofed?

Criminal companies should take every opportunity to shift debate around fines, penalties, license revocation and personal responsibility to one about a corproate death penalties. You get the baggage of the corporal death penalty for free with a heaping spoonful of ambiguity. While everyone debates what common punishments this Rude Goldberg replaces, you can slink away. Worst case: if they do enact it, it's so novel and convoluted you can probably buy a decade of appeals before you have to give up the assets.

Fines are money. Charters paperwork. We're currently seeing a charter revocation example in the Trump fraud trials [1]. It is by far the least meaningful part of the penalty. Could Trump trade the fine for the revocation, he would take it--anyone would.

[1] https://www.businessinsider.com/trump-fraud-ruling-corporate...

tedivm
1 replies
18h8m

Everyone I know who speaks about a corporate death penalty includes liquidation to pay pack victims. I've never heard someone argue for the corporate death penalty without "liquidation" and "license revocation and/or personal liability for senior management."

The difference between this and a big fine:

* Lots of big fines aren't big enough to actually kill companies that deserve it,

* Fines tend to go to the government, while companies that deserve a "death penalty" often have victims who could use that money,

* Bankruptcy doesn't prevent people from starting another company, or board members who failed at oversight to join another board.

JumpCrisscross
0 replies
13h50m

includes liquidation to pay pack victims

Just do damages.

Lots of big fines aren't big enough to actually kill companies that deserve it

Neither is a corporate death penalty. You’re just shuffling around assets and making work for lawyers.

companies that deserve a "death penalty" often have victims who could use that money

Why the extra steps?

The closest we have to a death penalty is license revocation, e.g. Arthur Anderson [1]. Victims got screwed. Taking it further and the death penalty analogy seems appropriate--death penalties aren't about restitution. They’re an instrument of retribution.

Bankruptcy doesn't prevent people from starting another company, or board members who failed at oversight to join another board

Neither does a corporate death penalty. That’s what bans are for.

Corporate death penalty is a gift to corporate America. It sets activists running in circles over a stupid idea that represents simpler, precedents punishments with the ambiguous baggage of extra steps.

[1] https://en.wikipedia.org/wiki/Arthur_Andersen_LLP_v._United_...

avarun
2 replies
19h38m

Their name change was unrelated to this. Somebody else owned a trademark for Lambda and sued them over it, so they were forced to change their name.

bee_rider
1 replies
13h55m

It should be impossible to own the trademark to a letter.

pbhjpbhj
0 replies
9h50m

Letters in foreign languages seem capable of enough distinctiveness to be registered trademarks to me, like Alpha Security, Delta Airlines, Kappa clothing.

What's the problem you see here?

Taylor_OD
0 replies
3h10m

I worked for a recruiting firm in the past (first job out of college) that changed its name every 5-8 years. After I'd been there 2ish years I finally got an answer WHY they did that. Basically, they would build up a bad reputation and the easiest way to get rid of it was to just change names. Most companies that disliked them wouldnt associated the old name with the new name.

Shockingly it worked. Some companies that would have never worked with "oldCompanyName" were happy clients of "newCompanyName".

wredue
0 replies
18h48m

This is the school to coordinated with /r/learnprogramming to advertise and trick people in to registering, and when called on their bad practices, worked with the sub to ban users.

The sub continued to deny a connection to the school, but I still don’t believe it.

petsormeat
17 replies
20h0m

It's disappointing that California's Bureau for Private and Post-Secondary Education (BPPE) continued to approve this boot camp. I thought the rationale for creating the bureau was to discourage scams in job training.

sandofsky
14 replies
19h40m

At first I found it weird that the BPPE can't discipline a company until it's registered and operating legally. So for the first few years, it couldn't do anything. The twist is that until the BPPE approves a school to operate, any student debt obligations up to that point are not valid. In theory, anyone in California who enrolled before August 2020 owes them nothing.

The problem is that Lambda School still tries to service those debts. The victims are usually low-income, so they lack the resources to lawyer up. If they do lawyer up, they end up being forced into arbitration due to an arbitration clause in their student agreements.

So in the end, it does feel like the BPPE is a half-measure that doesn't fully tackle predatory companies.

JumpCrisscross
13 replies
19h22m

If they do lawyer up, they end up being forced into arbitration due to an arbitration clause in their student agreements

You’re literally describing why arbitration works. Someone low income can just file for arbitration with minimal work by a lawyer. Contrast that with the tens of thousands they’d need to pay a litigator.

sandofsky
6 replies
19h20m

That true, but this ends up being a game of whack-a-mole, and even a few thousand dollars is too much for a lot of victims. Recently there was an attempt to mount a class action lawsuit, which would have settled things for everyone in one fell swoop, and it was rejected due to the arbitration clause.

JumpCrisscross
5 replies
19h18m

even a few thousand dollars is too much for a lot of victims

Someone angling to go into coding should be able to do the research to draft an arbitration claim on their own. In most cases that isn’t a fair assumption to make, but given the cohort, they should be able to collaborate on a draft.

The gating part isn’t doing the work. It’s knowing you have the option to.

sandofsky
4 replies
19h13m

Do you think they should have listed “draft an arbitration claim,” on their enrollment prerequisites?

JumpCrisscross
3 replies
19h0m

Do you think they should have listed “draft an arbitration claim,” on their enrollment prerequisites?

Unless you’re a total numpty, you can learn online how to draft an arb claim. And even if you are a numpty, you should be be to find—in a half-decent cohort—someone who can do this.

The issue is rarely ability. It’s learned helplessness in the face of the legal system. The anxiety, not ability, is the limiting factor.

sandofsky
1 replies
17h32m

The company targeted the poor, single mothers, reformed convicts, and other disadvantaged groups. They tend to lack the free time or guidance to navigate these situations. If this work is trivial to you, I am happy to connect you with them to provide your services.

JumpCrisscross
0 replies
12h16m

If this work is trivial to you, I am happy to connect you with them to provide your services

It is. I won't because this isn't something I care deeply about. The question is whether they would have been better off without arbitration, and the answer is no.

lazyasciiart
0 replies
16h26m

And fuck people with anxiety, right?

reaperman
4 replies
16h25m

https://news.ycombinator.com/item?id=40071539

I went to a lawyer and was told it wasn't worth suing, because they required arbitration in NYC, which would cost more than I would save.

It sounds like arbitration does not work, according to people who had their lawyer look into it for this exact case. What are your thoughts on it given this new information available to you?

JumpCrisscross
3 replies
14h30m

What are your thoughts on it given this new information available to you?

Curious who that lawyer is. Because for financial arbitration, the win rates are ridiculously skewed in favour of borrowers and retail investors.

JumpCrisscross
1 replies
12h12m

That looks like a biased source, concluding in the first sentence of its introduction that "pre-Dispute Arbitration agreements force people into a form of ‘Rustic Justice’ whose primary purpose to evade meaningful accountability for violations of contract or statutory rights" [1].

That said, I do know bank lobbying group who want to outlaw arbitration for unaccredited investors. Will pass this along.

[1] https://arbitrationinformation.org/docs/problems/

eadler
0 replies
6h47m

I wrote that page after reading every one of those sources. In full. Including all cited supreme court cases. I actually initially felt that mandatory arbitration was fine and somewhat pro consumer. I changed my mind as a direct result of the research.

To the extent possible id like to strongman arbitration but need to find sources.

vitalurk
0 replies
18h17m

They split the students to take away their power. They kicked people off Slack, wiping the incriminating message history, and then re-adding students (woopsie), they allowed rampant racism to be posted in the channels. They did so many shady things with arbitration, it was absolutely harmful.

cscurmudgeon
1 replies
17h35m

Reminder: California passed a minimum wage law for fast food workers that exempts places that make their own bread (ahem, totally unrelated coincidence: Panera which bakes their own bread is a big donor to CA's governor).

https://www.reviewjournal.com/opinion/editorials/editorial-c...

__float
0 replies
14h24m

How is that related to coding bootcamps? Is it just a general dig in the direction of anything Caliornian?

saadatq
11 replies
20h15m

Unreal:

Allred tweeted that the school achieved a 100 percent job-placement rate in one of its cohorts, and later acknowledged in a private message that the sample size was just one student.
sandofsky
3 replies
19h48m

When confronted about this on Hacker News, Austen defended himself with:

I did say the hiring rate of a cohort of one student was 100%. And in the same tweet I said, in all caps BUT VERY SMALL SAMPLE SIZE. Odd how that doesn’t make the article, don’t you think?

https://news.ycombinator.com/item?id=26813371

Incidentally, it did make it into the article he's referring to, twice.

shkkmo
0 replies
18h40m

Incidentally, comments like the one you made back in 2021 are part of what make HN so great, thanks.

sensanaty
0 replies
9h24m

I could almost respect the hilarity of this defense if it weren't about him having scammed people for (in aggregates) millions

kevinmchugh
0 replies
18h27m

I've been in a lot of from arguments but never had one where I was later proven right by the federal government. That's quite the feather in your cap.

g42gregory
3 replies
19h51m

Technically, the statement is still valid. It's just that the confidence interval will be wide. :-)

threeseed
2 replies
19h31m

He seems to be the king of technically.

"For a few months in 2013, Allred camped out of his car while in Silicon Valley, and frequently describes this period as having been homeless. However, a deleted post on his blog titled 'Voluntarily Homeless in Silicon Valley' explains that he lived out of a car by choice."

ultrarunner
1 replies
19h14m

I have a friend who is adamant that he lives out of his truck by choice, but it's hard to call it a choice when there's only one option. I wouldn't hold his feet to the fire if he later admitted he was in a rough spot (our friend group is all very clear on this situation). I had put Allred entirely out of my mind for a while, but I seem to recall his "homelessness" was characterized more by image than by practicality. Since we're being technical, it seems worth making the distinction.

FireBeyond
0 replies
1h41m

I had this same debate here a few months ago, about people living out of their truck/van in Seattle, and the "choice" of it. There was more than one person that could (or would) not see the distinction. "I've seen plenty of social media and YT videos talking about how much they enjoy the experience".

Uhh, when people talk of living out of a vehicle in the context of homelessness, they're talking about people parked in the back corner of a Walmart lot with their laundry and many earthly possessions beside them, not social media creators making YouTube videos for "#vanlife".

syntaxing
1 replies
19h56m

Aha that’s a gem, it’s like that crypto company listed “audited by <some famous reliable auditor >”. They do not mention they failed the audit, but they “did” get audited.

FireBeyond
0 replies
1h45m

Or Tether. "We realize - but hope you don't - that 'financial attestations' do not remotely resemble 'audits', but we're going to call this financial attestation an audit". And "If you don't fall for the first, we're going to tell you that we have had audits done but we won't release them because they're in Mandarin Chinese."

I wish I was kidding.

tempsy
0 replies
19h43m

From what I’ve read about his career before this he was basically a growth marketer/hacker

Like the only thing he knows how to do is fudge things with dark patterns to achieve growth at any cost

wtf92345923
8 replies
19h56m

Am I crazy, or do fines never come close to matching damages? Or jailtime? I'm constantly seeing rulings or indictments where an article says "defendant faces $1500 in fines or two years jail time", as if those are in any way equivalent. Were all the fine quantities written up in 1875 and just never got updated?

In this case, defendants are accused of conning "at least 11,000 income share loans" "carrying an average finance charge of around $4,000", but their fine is $164,000? A fraud of $44M just for the financing charges produces a fine of $164K? As I missing something?

mushufasa
2 replies
17h10m

Generally, yes fines are a fraction of damages; fines are meant to deter, and are paid to a regulator not the damaged party. Payout from a lawsuit is meant to capture damages, and pay to the damaged party directly.

In this case, the 'stick' is that CFPB is preventing the company from issuing new loans, de facto forcing them to cease operation. (Or I guess charge regular tuition, like a normal school?) That's a pretty big deal.

abnercoimbre
0 replies
16h36m

According to The Verge [0] "None of this puts BloomTech out of business, by the way — it can keep operating with third-party loans instead."

And to make matters even more depressing the CEO just tweeted [1] that it's no biggie for him:

BloomTech continues to focus on its core mission: improving the lives of students and enabling them to fulfill their economic potential. While it’s been frustrating, we’re glad to put this behind us.

[0] https://www.theverge.com/2024/4/17/24133577/lambda-school-bl...

[1] https://twitter.com/Austen/status/1780770303406403701

SuperNinKenDo
0 replies
16h37m

Forcing somebody to cease committing a specific form of fraud is a "big deal"?

ryandrake
1 replies
18h56m

The US justice system and regulatory agencies treat corporations with kid gloves. They often get many strongly worded letters and many chances to correct their bad behavior before regulatory action happens, and then when it does happen, it's slow and the corporation usually continues to operate, and then when penalty comes, it's some ridiculously small fraction of the gains that came from the bad behavior, which the corporation usually appeals and gets reduced or thrown out.

There are almost never company-killing fines. There are almost never consent decrees with stipulations that change the company's behavior. There are almost never instances of piercing the corporate veil and going after executives or shareholders. It's a total joke.

wslack
0 replies
14h7m

There's an incentive problem here because litigation is so expensive. If the fine is large enough, it becomes more and more worth it for the company to fight it in court - and therefore more expensive to the regulatory agency's legal budget. The only folks who benefit from it going to court are private lawyers.

Whereas, settling meets the company's incentives (eliminating uncertainty), meets the regulator's incentives (bad behavior is stopped locally). The moral hazard created by making fraud seem less risky (because the punishments aren't that bad) is born by the public.

The solution here would be to limit the possible legal shenanigans that companies can use to increase the cost of taking a case to trial.

openasocket
0 replies
19h48m

Those articles you are reading are just poorly worded. For any criminal case, it is a matter of fines AND jail time. You could be sentenced to jail time and no fines, or fines and no jail time (though this is rare), but the majority of the time you get fines and jail time. Generally, for criminal issues, the punishment is really in the jail time, the fine is just extra.

jcryzu
0 replies
13h36m

It was a hell of a con!

dragonwriter
0 replies
15h36m

Am I crazy, or do fines never come close to matching damages?

Fines aren’t intended to replace damages. If they are criminal fines, criminal restitution is also available through the same process. Even where criminal restitution isn’t available or, for whatever reason, pursued, or where the fines are civil, civil damages for those harmed are not precluded by the fines, they are on top of the fines. Fines are punishment, not compensation.

etaioinshrdlu
6 replies
20h3m

These fines seem incredibly low to me - they're slaps on the wrist!

next_xibalba
4 replies
19h47m

Putting these together:

"permanently bans BloomTech from all consumer-lending activities and bans Allred from any student-lending activities for ten years"

"ordering BloomTech and Allred to cease collecting payments on income share loans for graduates who did not have a qualifying job, eliminate finance changes for certain agreements, and allow students the option to withdraw without penalty"

This order seems like a death sentence. If ISAs are defined as consumer-lending, which the CFPB clearly says they are, BloomTech cannot recruit new customers. And they cannot collect on 50% of their outstanding loans (if the quoted internal placement rate is true).

janalsncm
3 replies
15h46m

This order seems like a death sentence.

Corporations aren’t people. Ordering a scammer to knock it off isn’t even close to being a serious penalty. Allred should be in prison.

dragonwriter
1 replies
15h29m

Allred should be in prison.

The CFPB, like every federal regulatory agency, has only direct civil enforcement powers.

They refer criminal matters to the Department of Justice, which usually takes significantly longer before handing down charges, and does not usually disclose the existence of an open investigation until and unless it issues an indictment.

bikemore
0 replies
3h50m

I think that was more of a wishful "should" instead of a prescriptive one.

next_xibalba
0 replies
3h16m

Allred should be in prison.

Absurd.

ilaksh
0 replies
18h4m

The CEO should go to prison. Obviously. This is what's wrong with our society -- too much upside to being dishonest, very little downside. People with integrity are practically punished for it.

magicmicah85
4 replies
19h10m

BloomTech about to get a name change.

Honestly wonder what the true placement rate was. There seem to be some success stories I’m seeing on Twitter but this could have all been avoided had they just been up front.

That $164,000 victim fund sounds pitiful but I do wonder how it is calculated.

kklisura
3 replies
19h8m

...with inflated promises of job-placement rates as high as 86 percent, when the company’s internal metrics showed placement rates closer to 50 percent and in some cases as low as 30 percent.

BloomTech advertised on its website that 71 to 86 percent of students were placed in jobs within six months of graduation, when its non-public reporting to investors consistently showed placement rates closer to 50 percent. Allred tweeted that the school achieved a 100 percent job-placement rate in one of its cohorts, and later acknowledged in a private message that the sample size was just one student.
wredue
1 replies
18h38m

For the record, it’s actually far worse than this even, as many of your “teachers” are just people from the previous cohort.

After a slew of negative reviews came from a few people that verifiably took the early courses, lambda decided not to improve their course, but instead to do two things:

1) they gave students financial credit for posting positive reviews on social media

2) they paid review shops out of India and China to bombard the internet with fake positive experiences.

This school are scumbags. Frankly I am shocked that it still exists and people still go there.

reaperman
0 replies
16h28m

#2 is a clear FTC violation if I'm not mistaken.

magicmicah85
0 replies
19h5m

I’m such a derp, I literally read right past that, thanks.

g-w1
4 replies
15h49m

The Recurse Center[1] is the opposite of this. They don't take any of your income, they just help you find jobs and companies pay them to find cool people. And there is no curriculum. They believe that if people work on cool things they will learn a lot. I can't recommend it enough!

[1]: https://www.recurse.com/

BlackjackCF
0 replies
10h53m

Yeah I always thought RC was like a writer’s retreat… but for software.

noufalibrahim
0 replies
13h19m

The "no curriculum" style automatically filters for a certain kind of self learning high achieving student. This is a reasonably guarantee of success and also limits the scale of the operation.

Lambda School is more of an attempt to train the average guy who wants to increase his earning ability. He doesn't have the time or patience to "work on cool things" in the hope of "learning a lot" which is loosely correlated to finding a good job.

They cater to different crowds and solve somewhat different problems.

not_wyoming
0 replies
3h58m

+1 to this. I attended RC in winter of '18. It wasn't the best fit for my personal learning style, but it's an incredible program for the right person.

I highly, highly recommend it to anyone considering going there. Some of the kindest and smartest people you'll meet.

adubashi
4 replies
20h2m

There's probably a good argument to ignore rule breaking and little deceptive marketing if the student outcomes are good but it looks like in-aggregate that they weren't and that students were better off taking a loan and attending Oregon State's Post Bac in CS or Hack Reactor.

hocuspocus
1 replies
19h18m

And if you really believe you can succeed as an autodidact with minimal mentorship from previous batches of students, 42 schools[1] offer that for free.

It's shameful YC was still shilling Lambda one year ago[2] even though there's been a mountain of evidence about its deceptive practices for many years.

1. https://www.42network.org

2. https://www.ycombinator.com/library/5N-on-starting-and-scali...

michaelbrave
0 replies
11h17m

I'm still sad about 42 in Fremont closing, but if you live near one, it was quite worthwhile.

maxerickson
0 replies
18h55m

There's no reasonable argument in favor of deceptive marketing. This idea that we should tolerate bullshit from people trying to make money needs to go away.

If the outcomes are good for the students, there won't be an issue with making them be straightforward about it.

dragonwriter
0 replies
15h32m

There’s probably a good argument to ignore rule breaking and little deceptive marketing if the student outcomes are good

A big thing that rule breaking and deceptive marketing due is cover up that the student outcomes are not good.

ChrisArchitect
3 replies
16h17m

Shoulda posted that if you knew there was a link

anamexis
0 replies
15h14m

You're not replying to the OP.

Jimmc414
0 replies
14h51m

That is the same link as the original post.

ChrisArchitect
0 replies
13h1m

(merged in comments from a dupe post)

ji_zai
3 replies
14h35m

I believe the underlying cause is that the pay-to-learn model itself is not feasible because the value of a good teacher's time cannot be compensated without charging students and ridiculously high fee, and a student can't justify a high fee when the outcomes aren't guaranteed.

Colleges have worked in the past because the outcomes were more or less guaranteed (i.e. if you got good grades and graduated, you would very likely land a job), but even that is no longer valid (outside of regulated domains like medicine, law, etc.).

I predict we will see many, many more pay-to-learn companies, institutions fall in the coming years. ("fall" could also mean become irrelevant, and catering only to those that don't understand how the world has changed and still incorrectly think that such programs will prepare them well).

BloomTech, in order to survive, had no choice but to try and play the games they did, and mislead. It's a byproduct of not having a business that is viable.

paulddraper
2 replies
14h12m

That, plus there is an extremely strong negative select for coding bootcamps.

Your local community college could have the best program ever, but they won't beat Ivy League grads, purely because of the inputs.

ji_zai
1 replies
12h22m

Absolutely. Higher quality inputs actually reduces the forcing function for the education to be high quality - since you'll get good outcomes anyway.

fuzzfactor
0 replies
3h57m

reduces the forcing function for the education to be high quality

Not just the education, but the selection process too.

If the higher-quality inputs are abundant, then the overly-exclusive selection process is somewhat deleveraging of overall potential.

If the higher-quality inputs are scarce, they are outnumbered by others having average-to-below-average potential, who often seek the exclusive membership more so than any actual high-quality performance.

Once again a large percentage of the highest-quality inputs can be systematically excluded in a disadvantageous way.

With good fortune at least a good number of high-quality inputs do gain entrance and it can set a good example, sometimes realistic, sometimes not.

Either way the higher-quality inputs are best identified beforehand, not the result of an overly exclusive selection process.

But it's this type selection process that contributes so much to some institutions' perceptions of quality, when they could be doing so much more.

From the least-prestigious programs all the way up to the most-prestigious, it seems like there is always going to be some temptation to blur the distinction among peers and tiers in a way that's confusing to students, and it's just a matter of integrity whether that is taken a bit too far.

jdp23
3 replies
15h29m

Paul Graham, 2020: "Lambda School will teach you programming faster than most colleges. And it not only works well remotely, but was designed to from the start." [1]

Paul Graham, 2022: "Of 1277 students who graduated from Lambda School in 2020 and sought jobs, 950 got them, for a placement rate of 74.8%.

(Lambda's weirdly dedicated haters will be happy to hear that these numbers were audited by an accounting firm.)" [2]

[1] https://twitter.com/paulg/status/1254809755681525762

[2] https://twitter.com/paulg/status/1254809755681525762

zakary
0 replies
14h53m

Having something audited by an accounting firm doesn’t make me trust the numbers much more. It’s well known that many accounting firms will give you whatever result you want as long as you pay enough

ec109685
0 replies
14h26m

The “who sought jobs” is doing a lot of work in that sentence.

Need to know number of people who started program and number of people who got jobs at the end.

Atotalnoob
0 replies
14h47m

I’m sure the CFPB is taking action based on haters….

bshanks
3 replies
10h6m

I don't understand why an Income Sharing Agreement would be classified as loans. They seem more like equity than debt; the amount that students would pay depends on their future income, and can be arbitrarily small or large (right? or maybe I am misunderstanding the terms of these agreements).

I had thought that debt is when you have to pay back at least the "principal" no matter what, and equity is when the financier shares the risk of you failing. Maybe that's not correct, though?

Does the definition of a "loan" include any sort of financing, even if the amount that needs to be "paid back" to the "lender" can be arbitrarily small or large? That would make equity financing a special case of debt.

nusl
0 replies
10h0m

You'd probably need to read the contract they make folk sign to get a real idea of why. It could be that the contract structures it like a loan.

inopinatus
0 replies
5h53m

You can’t hold equity in a person, because that is slavery. All consumer liabilities are thus a form of debt. The characteristics that matter most are whether it is secured, the schedule of repayment, and the schedule of fees (interest being amongst the fees). Everything else is window dressing after those three parameters, and the label you stick on the box matters the least of all. Consequently, undischarged debt is indistinguishable from a loan, which is rather the CFPB’s point.

When push comes to shove, the substance of a thing matters much more than the attempt to relabel the thing.

beej71
0 replies
4h11m

(There was a cap on the ISA, so it wasn't arbitrarily large, but your points still stand.)

I was thinking the same thing. "Can you have a loan without principal?"

But reading through the documentation on this case, it seems like the legal answer is that you can.

sensanaty
2 replies
9h32m

If my math is correct, they scammed roughly $44M from ~11000 people... And the fine is somewhere around $150k? In what universe is that an acceptable punishment? Whoever is running the show here should be thrown to rot in jail for the next few years, not this love-tap they're getting.

ack_inc
0 replies
9h22m

I'd say your math is wrong. Only a small % of the 11,000 people are going to agree they were scammed.

Kalium
0 replies
3h36m

The fine is not the punishment. The bans are the punishment. They gut the business model, likely shutting down the business entirely in short order.

Making people whole is what civil lawsuits are for. Which, if I understand correctly, will be much easier with this order and findings in place. That will be some serious financial punishment on top of the ban.

londons_explore
2 replies
16h35m

Allred tweeted that the school achieved a 100 percent job-placement rate in one of its cohorts, and later acknowledged in a private message that the sample size was just one student.

A master of deception with statistics!

tamimio
1 replies
16h17m

Isn’t this the case with a lot of these science studies? Keep tweaking the stats and inputs to achieve the funders’ agenda..

anamexis
0 replies
15h17m

This wasn't a science study.

tempsy
1 replies
19h54m

Biggest red flag for me is Austen has basically become a full time right wing reactionary on X/Twitter

beau_g
0 replies
13h9m

I don't know anything about this guy or his beliefs, but the biggest red flag for me is he has a normal name with weird spelling. I don't trust anyone with this naming configuration.

normal name - normal spelling - ok weird name - normal spelling - ok weird name - weird spelling - ok normal name - weird spelling - no go

I don't want to hear some Jane Austen excuse either.

ron22
1 replies
15h1m

Vincent Woo in 2020: "Lambda has claimed a 86% student placement rate for years. The real number is probably about 50%." [1]

From the announcement: "BloomTech and Allred lured prospective enrollees with inflated promises of job-placement rates as high as 86 percent, when the company’s internal metrics showed placement rates closer to 50 percent and in some cases as low as 30 percent."

Bravo Vincent!

[1] https://twitter.com/fulligin/status/1230152732809392133

[2] https://nymag.com/intelligencer/2020/02/lambda-schools-job-p...

akanet
0 replies
12h22m

Thanks

not_wyoming
1 replies
4h8m

/Years/ ago, I tweeted something about how companies like Uber and Lambda were privatizing public services. ISAs specifically seem like a privatization of taxes.

Austen Allred quote-tweeted me to his gazillion followers and caused a big pile-on about how awful and wrong and anti-progress I was.

Couldn't happen to a nicer guy.

chamomeal
0 replies
3h39m

I’d be interested to read a post/article about the privatization of public services

m3kw9
1 replies
17h45m

It was almost an open scam, how are they fined 200gs, they made like 100 mill

gigatexal
0 replies
16h5m

Exactly this. If the CFPB claims are true and the settlement seems to suggest that BloomTech and Austen agree … then the penalty should include clawing back at least half of that 100M no?

justin66
1 replies
5h49m

Unrepentant as always.

We decided to settle the matter because it was clear that ongoing litigation would be extremely time consuming, incredibly expensive, and distract us from our core mission.

We do so without agreeing to or denying any of the allegations in the consent order.

https://twitter.com/Austen/status/1780770303406403701

Weird to read further down the thread, where he acknowledges the wording of the press release is legal bullshit, and then employs an entirely different set of weasel words. I can't even sum this up.

diyftw
0 replies
3h22m

I can't even sum this up.

As is the intent with most serial liars, no? Twist you up so bad that it quite literally jams up your reasoning ability, making you more susceptible to the con.

benced
1 replies
1h58m

I don’t think the core model was crazy, you just have to actually deliver value. They didn’t and I’m glad they’re being punished for it.

So many people like to do fake work instead of real work, including people who scoff at fake work.

peripitea
0 replies
47m

Yeah it's really hard in both this article and the comments to tell what was actually problematic and what wasn't. A lot of people seem to think ISAs are fundamentally problematic but none of their arguments seem compelling to me. It's not even really clear to me that they did/didn't deliver value. I'm assuming some of this is true, but hard to tell how much -- the CFPB isn't really giving sufficient details to know how much of what they're saying is true in spirit vs legally true political posturing. Regardless, I'll be cautioning anyone who asks me for bootcamp recommendations and is considering BloomTech.

adubashi
1 replies
16h32m

https://twitter.com/Austen/status/1573859253797810176

Honestly, there’s nothing really that screams dishonesty than this tweet. Saying that your outcomes are stronger than ever when every tech company was laying off and headcount was frozen just doesn’t pass the smell test.

Terr_
0 replies
15h41m

Honestly, there’s nothing really that screams dishonesty [more] than this tweet.

I was puzzled for bit, but I think you may have accidentally a word.

ec109685
0 replies
14h28m

Well, to be fair, their base is probably pretty small right now.

vitalurk
0 replies
18h54m

Good to see some justice

thenerdhead
0 replies
18h27m

Dang I knew this guy from the Utah startup scene and always got weird vibes. Doesn’t surprise me one bit.

tech-jabroni
0 replies
17h23m

Allred is a huge scumbag and PG was a big shill for Lambda. Don't see any mention of this from either of them Twitter, how curious

nickzelei
0 replies
13h13m

When do the enforcements go into effect? My wife went through Lambda in 2020 and still is being hounded by them even though she does not work in a related field. Has to prove salary, show statements, etc. Does this mean she no longer will need to do this?

mathattack
0 replies
14h19m

He seems like someone who fell in love with the persona of being an entrepreneur rather than someone committed to their students and the work.

I’m surprised they survived their first brush with the law. Can they possibly survive this? Looks like the persona is still active and in denial.

jcryzu
0 replies
13h38m

The cash penalty, $164K is an insult to justice

janalsncm
0 replies
15h53m

Didn’t know who this guy was but I followed him recently because he tweets a lot about Silicon Valley stuff. (He was suggested by Twitter.) Some of his tweets were a little, let’s say, not grounded in reality, but I’m not on Twitter to pick fights in my legal name. But I am not surprised he turned out to be a scammer.

highwayman47
0 replies
16h19m

at least before Silicon Valley scoundrels didn't pretend to be virtuous too

hackerlight
0 replies
13h19m

  > Allred tweeted that the school achieved a 100 percent job-placement rate in one of its cohorts, and later acknowledged in a private message that the sample size was just one student.
This is shameful behavior. And to think prominent people were propping him up after so many stories had already come out, all in the name of not cowing to the mob. They all have figurative blood on their hands, and I already know they won't be apologizing to the affected people.

gorkemcetin
0 replies
18h8m

That is probably the end of income share agreements (ISA). If any companies are doing ISA like that, most probably they would have to collect money upfront just like other bootcamps as well.

gigatexal
0 replies
16h12m

Total fines are only 164k? Seems low if there are many more students with ISAs worth tens of thousands no? but didn’t get placed?

generativeai
0 replies
2h39m

austen was one of paul g's favourite ceo

foobarqux
0 replies
20h8m

Remember that the initial reporting of these crimes many years ago was called a "hit piece".

effingwewt
0 replies
12h18m

Oh yay! Is Allred in the comments lying as per usual?

Bout damn time.

dukeyukey
0 replies
3h38m

If you look at the founder's backgrounds it makes this seem all the more likely.

Before BloomTech, Austen was a develop for a payday loans company. His cofounder, Ben Nelson, worked as a software instructor, and left BloomTech in 2021. So maybe it's less surprising that the innovation here was in the financing, not the teaching.

dogman144
0 replies
1h55m

Good!

I was involved deeply in tech career volunteering several years back when this was called Lambda school.

Writing was on the wall about Lambda even then based on student feedback from a 100+ student multi year sample size in the orgs I helped.

Consistently students raised: ISAs coming to much larger payments than advertised. Constantly changing curriculum. The classic one for bootcamps - blind leading the blind with former students teaching the always changing curriculum, and juicing graduation employment stats. If I recall I even broke out the ol’ discounted cash flow math with students to actually sort out what the rate lambda was getting on these ISAs, and ya it was payday loans basically.

But, we saw justification after illogical justification about this setup. Former students employed by lambda getting aggressive. otherwise pretty well-meaning groups who had vendorized tech career support partnering with Lambda, despite seeing the same feedback as I did bc the company leads were in the same groups as I was.

Takeaways from all this if you or people you care about are trying to use these conduits to build a tech career and are evaluating options like Lambda vs a degree and so on:

- market can stay illogical, and same with its supporters, longer than when good, clear as day data about fraudulent (or more politely “very obscure and novel pedagogy approaches”) practices surfaces to counteract that narrative.

- people and orgs who have staked their future on that illogical/fraudulent market will roast their reputations in face of that evidence for much longer than you think or respect

- the feedback that matters should be the primary sources: the students that since 2019 or so started pointing out all these practices in bulk.

It is now 5 years later and who knows how many students who shredded their career goals by depending on schools like this.

afavour
0 replies
19h19m

Honestly this ought to be an indictment against the Silicon Valley set as a whole but oh well:

The investment is largely coming from Gigafund, the VC started by ex-Founders Fund partners in 2017 originally to put more money into SpaceX, with Tandem Fund and Y Combinator (where Lambda School was incubated) also participating. Its list of other backers include GV, GGV, and Stripe. (Tommy Collison, the head of business development at Lambda, is the younger brother of the two Collison brothers who co-founded Stripe.)

https://techcrunch.com/2020/08/21/lambda-school-raises-74m-f...

VirusNewbie
0 replies
13h2m

Do they investigate public schools that engage in similar behavior???

TheMagicHorsey
0 replies
19h37m

This is great. But I hope they do the same thing to so called "legitimate" universities who have long deceived students as to the value of the degrees they grant.

I recently met a liberal arts student from an Ivy League university who has been under-employed for twenty years. She still has unpaid student loans and she graduated in 2007! She has had to work in retail positions from time to time. And she's considering retraining via a vocational school to be an electrician because that's what her father and brothers do and they make 300K+ a year via the family business.

Taylor_OD
0 replies
2h46m

Bootcamp outcomes reports are always bullshit. I used to work at a bootcamp and spent a few days digging into popular bootcamp outcome reports. Basically they all wittle down the qualifying students per graduating cohort until they have a good number.

Reasons to eliminate a student from your outcomes report: 1. Didnt finish the program 2. Didnt complete "career commitments" aka xx number of applications per week, x number of meetings with career counselors per week, responding to all emails from bootcamp within x days - for 6 months to 1+ year 3. Didnt pay tuition or missed a tuition payment 4. Had too many absences during the bootcamp 5. Received a job offer but turned it down 6. Accepted a job offer that wasnt tech related 7. Graduate just doesnt respond to outreach from bootcamp

The 30%-50% actual placement rate is pretty realistic. I later went through the same bootcamp I worked for and my graduating cohort was probably 30% to 40%.

KnuthIsGod
0 replies
9h39m

". The CFPB found that BloomTech and Allred falsely told students the school’s “income share” agreement contracts were not loans, when in fact the agreements were loans carrying an average finance charge of around $4,000. BloomTech and Allred lured prospective enrollees with inflated promises of job-placement rates as high as 86 percent, when the company’s internal metrics showed placement rates closer to 50 percent and in some cases as low as 30 percent. "