Robert Hilmer interviews Austin Allfred
Robert Hilmer 00:03 Austin Allred, welcome to the show. So, tell me more about you. You're the first in a long sequence of these meet the founder interviews. Tell me more about yourself - Where did you grow up? How did you get into technology?
Austin Allred 00:23 Yeah, I'll give you the very short version. I grew up in a small-town in Utah, in a Mormon family, and served my mission in eastern Ukraine, and then came back and was studying at BYU - As a good Mormon boy should. I got really bored. I always knew that I wanted to be in tech. So I drove out to Silicon Valley, and lived in a Honda Civic and taught myself how to code and got my first job that way. The rest is history, I suppose.
Robert Hilmer 00:56 So how long did you live out of a car?
Austin Allred 01:05 It was about four and a half months all in.
Robert Hilmer 01:08 And, what created that situation? Why were you not able to work a job that paid the rent?
Austin Allred 01:18 Yeah, it's funny - I didn't understand the notion of getting a job - It hadn't even crossed my mind. If I'm being totally honest, I wanted to spend my time learning and getting involved in Silicon Valley, eventually starting a company. That was the end goal and for that I need to know how to code. So I saved on costs by living out of a car while learning, instead of working a traditional job.
So I already had a two-door Honda Civic that I bought for college. And I had $1,000 in my bank account, so I thought how can I make this $1,000 stretch for long enough that I can get out and become involved in Silicon Valley in the tech scene, and then work my way to starting a company from there. I found a blog of a guy that had done something similar and I was very inspired by hyper minimalism. And I'd actually lived in China for a little bit with just a backpack so I was used to thinking that way and optimizing for not spending much money.
Robert Hilmer 02:37 And were you hustling meetings, to either raise money for a company or get experience at a startup? What was the plan?
Austin Allred 02:49 Yeah, I didn't have a coherent plan. I just knew that I needed to be there and then when I showed up, I realised it's not like you just walk into Silicon Valley and there’s stuff happening. I would go to meet-ups at night, and randomly email people to go grab lunch or coffee with them. But that was really it. I didn't have a coherent plan.
When I was a kid, I interviewed a NASA astronaut for an assignment once and when I was asking him how he became an astronaut, he basically said, my theory is just find the most interesting thing that is the most compelling to you and get in the middle of it and that was my way of doing that, I suppose.
Robert Hilmer 03:48 Interesting. So, when was that moment for you? Do you remember a moment when you said, this is interesting? I've got something started here. This meeting is going to change things. When you look back on it, was there a meeting or a moment that was the catalyst for change?
Austin Allred 04:08 Yeah, I've been working on what became a startup, it was just a little project, at the time, I was interested in social media and the news and all that stuff. So I was trying to figure out how, without reporters, individuals could come together and figure out what's happening in a more curated way [rather] than searching Twitter. So I've been building a little platform for that and I ended up grabbing lunch with a guy who had heard my story and said he used to live out of a bedroom closet when he was my age, kind of did the same thing and I want to meet you. When I was telling him about what I was working on, he said that it seemed really interesting. I'd love to fund that.
I thought the way you raise money at the time was you go to a big VC and you have a bunch of traction, and you have a detailed pitch - I didn't realize there was an angel investing ecosystem and so I had been working with another guy on the project, so I went back to him and said let's do this, let's start a company. But in the end he said that's too risky, so that ended up not happening. But that was my first foray into being taken seriously, I suppose.
Robert Hilmer 05:46 Do you think more people should follow that type of path of throwing caution to the wind to find something interesting, with no plan in mind?
Austin Allred 06:00 I think it depends on your circumstances and what your personality is. That's just kind of the way that I tick - I figure out where I want to go, and then go full steam ahead. But, I couldn't do that today - With the family that I've got, and with the expense structure that I've got, there's a limited period of time when that’s an option. So if I were to do something like that today, it would have to be more strategic, more thought out, I'd have more money to put towards it. But I think it's unique to your time and circumstances and personality.
Robert Hilmer 06:46 Yeah, I agree. And my next question touches on what you're doing now, and what you've been building for a few years, which I think is amazing. A lot of the time, people waste the age bracket where they should be doing what you're talking about because you don't have forever. If you take 18 to 22, you spend that just learning a couple of things here and there, but really wasting most of the time. I think what people don't appreciate is how much they're giving up. What's the opportunity cost of those four years - It's probably one of the most undervalued assets that every person has, that time from 18 to 22, it’s just so miss-priced, systematically in society now, and I think your business now touches on that in that maybe, you can defer education until later in life, maybe you could do it more flexibly, is that something that drives you today?
Austin Allred 07:52 Yeah, I think one of the things that drove me to drop out of college was for me, and for my time and my money, I felt like it was moving very slowly. I think you're right, people don't weigh the opportunity cost of four years is a long time. We can train someone to be a software engineer in six years and by the time that four years rolled around you could have three and a half years of work experience and have made a quarter of a million dollars and that's a totally different trajectory than walking out the door with $100,000 in student loans, and no work experience, different paths for different folks.
But I definitely think that the notion that everybody should spend four years within the walls of the university from 18 to 22 and walk out with a bunch of debt, in my mind, just doesn't process. I couldn't think that way at all, I get that culturally it's so embedded, that's the thing to do.
I was reading Michael Dell's book last night, his Jewish parents couldn't fathom that he was dropping out of college to start what became Dell, even though they were doing half a million dollars a year in revenue, it wasn't even that, you're going to end up on the street homeless kind of thing. It was like this is what you do, you go to school, you go to school for 10 years, you become a doctor. So I think that is far more ingrained culturally than a market would suggest.
Robert Hilmer 09:41 My next question was going to be what do you think changes that? But I think the better question to ask is, is there something happening now, that's changing it? Is it changing now? In your opinion, and if not, why not? And also, if not, when will it?
Austin Allred 10:00 Yeah, that's a really good question. So definitely already has for some number of people. I mean, when I got out to Silicon Valley, when I decided to drop out of college, my family basically staged an intervention and my brothers, my sisters will joke about it now as we’re around the table, I have a big family and with extended family, they're probably 30 or 40 people, it was full-on, Austin don't do this.
But I think the two things that helped me make the decision were I just felt like it was the right path for me. And, at the end of the day, you have to go with what you think is right.
The other thing that I think is underrated is how people will talk about type one and type two decisions, or is it a one-way door or a two-way door? It's really easy to say I'm going to take a semester off, and then we'll see what happens.
The semester can be long enough to set yourself up for the next move. So we're definitely seeing that we see a pretty big cohort of 18 to 22 year olds. Our biggest cohort of students from an age standpoint is folks who they their four years in college, got their first job, and a couple of years after that, they realize they're not moving up the ladder as quickly as they would have hoped or they studied the wrong thing. Career prospects are not what they had imagined when everybody said, just go to college and study what you love and it'll all work out. I think we're certainly being aided in folks making that decision by the cost of college tripling, adjusted for inflation over the past 20 or 30 years, the outcomes adjusted for inflation is down. When you at look at the $1.7 trillion in outstanding student loan debt, you start to see that there's something from a financial perspective, not even thinking about the opportunity costs and time perspective, things are shifting for sure. It's still slow, it's still small, but it's much bigger than it was when I dropped out of college and I think it will just be a trend that continues to grow.
Robert Hilmer 12:33 Yeah, I agree. So why don't you give us a summary of your business? How you started it, I think it's clear why but how you got it started, maybe any stories around the early days, with the founding of the business, and then just where things are today?
Austin Allred 12:51 So when I would go back to a small town in Utah, people would know I was doing well in my career, working in growth and engineering, and I was making what in Silicon Valley was “okay, money”. But in a small town in Utah, that was incredible money. To be frank, when I would go back, people would say, how can I do this? What was your path, and I would say, look at my path and realize, that's not something you can recommend to most people. Code boot camps were starting, they were a thing, I thought most of them did a really bad job. So my initial goal was just to take a really good code boot camp and put it online. And then it would be able to reach people in rural areas, like where I moved to San Francisco from. And so we were working on that for a while, it was going well, we would have been a profitable, sustainable, small business. But then we realized that the upfront tuition was the biggest barrier for folks. You can help people take out loans, but what if it doesn't work out, this was the thing that was going through everybody's mind that we talked to.
So we started just kind of experimenting and saying, what if we said it's $1,000 upfront, and then you pay as the rest after you get a job. Eventually, what if it was nothing upfront, and then if you got a job, you'd pay us a little bit more, people love that idea.
It didn’t make any sense to us that Schools weren’t willing to invest in their students future by taking risk, alongside the student, in future incomes. So today, we have a variety of tuition options, but the key point is that we are a school with skin in the game where we are aligned with students (we get paid from their future income, after graduating).
We train people to be software engineers and data scientists, and then our incentives are aligned.
Now with our outcomes-based loan, you pay nothing up front, you pay nothing while you look for a job. And if you don't find a job after graduation, then we fully refund the loan, you owe nothing, and then we write you a check. That's the Bloom Institute of Technology.
Robert Hilmer 15:34 That’s amazing. And so what are the biggest challenges? For you either running the business personally, or with life generally? What, what do you find most challenging at the moment?
Austin Allred 15:48 The biggest problem we've had over the past several years has been how do you know that you have what it takes for a student to be successful? How do you encourage them to do that? And oftentimes, it takes some level of intrinsic motivation from the student. I guess what we found more recently is that extrinsic motivation works perfectly well. So if you're willing to do an even minimal job search after graduation, almost all of those students get hired. But it was surprisingly difficult to encourage people to look for a job even just simply submitting applications or networking.
It's just not natural for people.
So I think we've solved that now. We've just baked that into the tuition plan from the get-go. Then after that, it's a matter of how do you keep quality really high as you scale? How do you enter new markets, kind of classic business challenges at that point, for a long time, the challenge was, how do you encourage people to do what will make them successful?
Robert Hilmer 17:04 Yeah, and talk to me about the worker/skills shortage? Are you engaging with larger corporates and helping them fill that gap?
Austin Allred 17:15 Yeah, we have a team that works with that we call enterprise partnerships for companies that want to hire at some level of scale. It's always easy for us to help you find one or two students. But the more interesting thing for us and for our students is the folks who want to hire, a dozen at a time or a hundred at a time, or even thousands. Most recently, we built out a course, with Amazon, where we built the curriculum together, designed everything to basically create the perfect back-end engineer that Amazon would want to hire and accordingly hundreds of other companies want to hire. So we're now working backward from the company and asking what they you need, and let's go get you that, as opposed to training people for skills that are useful in theory
- We can own the whole pipeline from beginning to end and that's been pretty exciting.
Robert Hilmer 18:20 Awesome. You're clearly a well-read individual. So just broadly, how are you viewing society today? And what do you see as some challenges? And what worries you about the future?
Austin Allred 18:35 There are obviously a large number of ways to answer that question. I think what we're seeing is increasing levels of independence, increasing, or I guess, decreasing levels have what I would call corporatism. As the number of options in front of somebody increases, the importance of being able to navigate and take those options matters more. Whereas in my parents’ generation, everything was very tracked, there was one way to do things, if you did those things, it was a zero-sum game of who can do those things the best. So I think that's the biggest trend that I think it's probably the most important from what I see is just fragmentation of everything, infinite numbers of paths, infinite numbers of options, and varying abilities to take and pursue those different paths.
Robert Hilmer 19:47 Interesting, and what makes you most optimistic about the future?
Austin Allred 19:54 I see people who have lived in poverty whose families have lived in poverty or close to poverty since the beginning of time moving in less than a year to upper-middle-class or upper class. I think where the ability for somebody to enter the right path to enter the right industry with the right skill set is greater than it's ever been. The need for credentials is lower than it has ever been, and I think will continue to decline. So, for me, it's really encouraging that people can carve their own way in life. Unfortunately, in some instances, you can do that for better or worse, but I think it's I think we'll see even more disparate outcomes now than we've seen in the past. Mostly in the good, sometimes in the bad, but less of more freedom, I guess, is the simplest way to describe what makes me excited.
Robert Hilmer 21:01 Well, thank you very much for your time. That was great. And best of luck with the business.
Austin Allred 21:10 Awesome chatting.