Lambda School lays off 19 employees

https://lambdaschool.com/the-commons/a-note-from-our-ceo-company-update

by dsr12 • 6 years ago

135 78 6 years ago

lambdaschool.com

737min• 6 years ago

Prediction: Lambda will be out of business within 12 months.

sct202• 6 years ago

If they go bankrupt I wonder if they'll sell off the Income Share Agreements or if they expire or something.

troydavis2• 6 years ago

They’re already bundled and sold on the Edly ISA Marketplace: https://lambdaschool.com/the-commons/announcing-our-new-isa-..., https://edly.info/investors/

_2d30• 6 years ago

Willing to provide some background reasoning for this prediction?

olds• 6 years ago

Not the OP, nor am I a bear on Lambda School, but I'll articulate the bear case.

Lambda School is just another source of talent/human capital to a company. And companies suddenly aren't hiring and probably won't be for a while. And if they aren't hiring, Lambda School can't place students. And if they can't place students, then there are no ISAs, which is how Lambda makes its money. It's a straightforward funnel that's about to have a ton of supply and less demand, with Lambda bearing the financial burden to train/education the people. On top of that, if you have a bunch of people taking all this time to be trained under the pretense of getting a pretty good paying job and now that's not going to happen, well you're not going to be too thrilled with Lambda School (rightly or wrongly). So you've got, potentially, a double whammy: less revenue and your best marketing channel (word of mouth) going south. Not great.

tomhoward2• 6 years ago

It’s an empty, pointless prediction; easy and uncontroversial to make now when things look grim (for everyone), and zero cost to you if it turns out to be wrong.

I know little about the details of Lambda School’s business, but they seem like they’re in a good position to do well in an economic downturn and recovery, if they stay focused and prudent, which seems to be exactly what they’re trying to do now.

ac29• 6 years ago

12 months is a bit arbitrary if taken literally, but I think the writing was already on the wall for bootcamps as an industry before the current economic crisis. Bootcamps that only get paid when their graduates get jobs are even worse off - if hiring falls for software engineers, its going to the be the bottom tier candidates that get hit hardest. Folks coming out of a short program with little to no other experience are going to be greatly disadvantaged when experienced folks with better education are getting laid off and competing for a reduced pool of jobs.

keeptrying• 6 years ago

19 employees seems such a small number that you can’t but think they could have as easily not fired them and just cut everyone’s pay?

caseysoftware2• 6 years ago

Which is more demoralizing? Doing layoffs or cutting everyone's pay?

Doing a round of layoffs - especially done respectfully - can soften the blow a little while requiring only senior leadership's buy in and some input from managers. Convincing everyone to take a 15% pay cut takes a ton of coordination across the entire company and probably drives the rumor mill fast and furious. And imagine being one of the people who says "no"!?

Further, with layoffs, you can choose who to cut. If people get demoralized as you're negotiating pay cuts, the top people can pack up and leave.

I don't like any of it but it makes sense.

ruffrey• 6 years ago

Cutting everyone’s pay by 15% would likely lead to attrition of top performers, rather than bottom performers.

mandelbrotwurst• 6 years ago

On top of that, you have to cut gross salary by a much larger percentage than the percentage of the company that you have to layoff because fully loaded employee cost is much higher than salary alone.

commandar• 6 years ago

The company I currently work for made across the board 10% pay cuts this past pay cycle. It has absolutely demolished morale among the rank and file.

It's definitely contextual to some extent. We're in an industry that's going to take a revenue hit, but the sustainability of the company isn't in question. Doesn't help that the company could afford nearly a billion dollars in stock buybacks in the last year, either.

I think one of the big takeaways for me is that it's burned any good will the company had with a lot of its employees. I expect pretty heavy turnover once hiring starts to thaw again and I'll likely be part of it.

patrickthebold• 6 years ago

The thinking is, if you do that the top performers will leave. If you lay people off then you have control over who leaves.

teddyh• 6 years ago

But if you lay people off, then the people left will be worried about further layoffs, and will be applying elsewhere. The top performers will find new jobs most quickly, and since these are new jobs, those jobs will pay better.

tehjoker• 6 years ago

Studies have shown that cooperative enterprises (and probably capitalist ones with strong unions) choose the latter strategy while more typical capitalist enterprises tend to lay people off.

One reason might be that economic recessions are an excuse for a manager to, from their perspective, permanently "increase efficiency", i.e. make remaining employees do more work, while for cooperative and strong union organizations, the focus is to preserve their social bonds and help each other.

benatkin• 6 years ago

For an idea of what percent of employees this is: https://lambdaschool.com/the-commons/2019-a-year-of-incredib...

They added 125 in 2019, and there were 40 at some unknown time during 2018. That would mean at least 165. There's a photo which was taken sometime in 2019 while the 125 were being added, which may not include everyone. They may have also hired more in the first couple months of 2020. It seems they had somewhere between 165 and 250 employees. This would mean the 19 employees are between 7.5% and 11.5% of their workforce.

lwb• 6 years ago

Why is education affected negatively by COVID? It is the last sector I would expect. I'm sure many are doing fine but IIRC Ryan Florence had to lay off his React teachers as well.

blihp3• 6 years ago

Because many schools aren't teaching via the web, they're closing for the year. Many (but not all) kids, without the threat of a failing grade, just aren't that interested in furthering their education.

matthewcford• 6 years ago

but lambda is an online-only platform:?

Loughla• 6 years ago

I need any amount of citation for that. For K-12, the 30-40 districts I'm affiliated with have gone to paper packets or online for those with access. The 40-50 colleges I work with regularly have gone all online for at least this semester and summer.

I'm going to need you to cite something to back that up. It is opposite of everything I've seen so far.

stanleydrew• 6 years ago

Because this type of education is more about job prep and placement. It's not education that people pay for just to have.

If hiring slows down, which it has, then these schools don't have anywhere to place students.

tempsy2• 6 years ago

New grads are now competing with a bunch of laid off engineers with experience for open roles. I would imagine it would be much harder now to find a role than before, and Lambda doesn’t get paid since it runs off the ISA model.

If Lambda tries to sell their ISAs, which they admit they sometimes do, the buyer is going to request a much steeper discount now than before if they are willing to buy the loans at all.

johnnyfaehell• 6 years ago

I suspect there will still be more developer jobs than developers. While it would be harder it shouldn't be impossible.

dataminded• 6 years ago

I remember interviewing candidates in 2008. Experience can be bad, experience can be irrelevant and employers can tell the difference between interest and desperation. I talked to more than one ex-Director/VP/CXO for entry level help desk roles. Some experienced candidates will do well but a non-trivial number of them will find themselves unemployed now and unemployed later.

juskrey4• 6 years ago

They are not in education business, they are in % from HR business.

chrisseaton7• 6 years ago

Lambda School is in the education business - they run private computer skills courses.

baddox• 6 years ago

As far as I know, reeacttraining.com primarily does on-site corporate training and in-person workshops.

tempsy2• 6 years ago

The bootcamp model doesn’t seem like it would work well in a recession since new grads end up competing for any open positions with laid off people with more experience. I can’t imagine that Lambda would be able to place as many students now as they did before all else being equal and if they tried to sell their ISAs to a financing firm of course they are going to account for the new reality and request a much steeper discount than they did before.

If you’re thinking of Lambda as a student then even if you don’t have to pay tuition you still have all your living costs to think about. Probably does not make sense do Lambda if you would otherwise be leaving a job and dig into savings and then enter a questionable job market.

PopeDotNinja2• 6 years ago

The conventional wisdom used to be that many people would go back to school during a recession. I certainly did that in after getting laid off in the tail end of the dotcom bust. The timing of getting a degree during a normal recession cycle might work out simply because 1 or 2 years after you start school, you might be graduating when there's no longer a recession and hiring has picked up again. If you go to a 3 month bootcamp during a recession, you're likely to face a recession when finishing the program.

thaumasiotes2• 6 years ago

An interesting implication of this line of thought is that a lot of the value of getting a degree during a recession is not so much the degree as having something respectable to say you were doing with your time.

alexhutcheson• 6 years ago

Lambda’s programs are 9+ months.

gnicholas• 6 years ago

In some ways, the ISA bootcamps would be in the most demand during a recession. Because you don't pay for tuition outright, you're only paying with your time/opportunity cost. For someone who's laid off, that just became free. And if you don't get hired for a year because the economy is frozen/thawing, then you don't have to pay anything during that period.

If I were looking at bootcamps, I would put ISA-based ones at the top of my list. But I'd expect them to get more selective since they'll need to adjust their payback calculus given the economic uncertainty.

MatthiasP• 6 years ago

Will be interesting to see if bootcamp grads are more affected by the recession than your average CS college grad.

instagary• 6 years ago

I would come down to who has more experience in their resume. A lot of boot camp grads, unfortunately, cannot participate in internships because it's a continuation of classes (no breaks), but I don't think CS grads have a significant advantage assuming both prepared well and could get interviews.

maximilianroos2• 6 years ago

Today is a sad day, and people will react in different ways. However you react, those emotions are real, and they matter. This was one of the hardest decisions I’ve ever made in my life.

It's unfortunate when CEOs neglect to mention the difficulties of those they fired — instead focusing on the the difficulties they faced in doing the firing

joeberon• 6 years ago

Yeah honestly very gross and distasteful to shift the difficulties away from the employees laid off to the person who still has the job. I don't care how guilty they might feel, they still have a job and the people who are laid off don't, and at a very scary time of their lives. No way I will pity this CEO in any capacity

adampk• 6 years ago

What language do you believe should be used?

ddebernardy• 6 years ago

That, and the fact that they're still advertising 12 job openings...

https://lambdaschool.com/careers#jobs

earthtobishop• 6 years ago

However you react, those emotions are real, and they matter. This was one of the hardest decisions I’ve ever made in my life.
I want to publicly say thank you to everyone who has worked at Lambda for what you’ve contributed. I know you’ve given parts of who you are to Lambda, and to our students. You are part of our journey. You are the reason we are here. Thank you.

He mentioned the difficulties of those who were fired by acknowledging that their emotions are real, and that they matter. And that this was an unfortunate decision he had to make. He also thanked them for all they have contributed .

What else should he have said ?

woofie112• 6 years ago

His quote was rather crass: "Today is a sad day, and people will react in different ways. However you react, those emotions are real, and they matter"

There's a difference between "you feel sad you're fired" and "you'll miss your mortgage next month, because no one is hiring, and your kids may be kicked out of their school district as a result."

maximilianroos2• 6 years ago

How about:

This decision will cause many of those we lay off to endure hardship. I apologize and accept responsibility for that. While I've struggled making this decision, that doesn't compare to the struggle of suddenly being out of work.

To recognize these difficulties, we've offered a month of severance pay for every year people have worked here, and extended the expiry of their vested options to three years.

jamestimmins• 6 years ago

I have a slightly different perspective. If I've bought into the team and believe in the mission, only to be let go by the team at some point, I want to know that it was a hard choice.

Maybe it's just ego or maybe it's the desire for meaningful human connection, but the idea of losing my job and it meaning nothing to the person in charge just adds insult to injury.

I like that he briefly addressed how hard the choice was, because it reinforces the message that each of these people matter.

tonyedgecombe• 6 years ago

I've been laid of twice in my career. In both cases I was rather happy about it and felt sorry for the person delivering the message.

ChefboyOG• 6 years ago

I wonder how these mass layoffs are going to affect junior level hiring. Obviously, they're going to have an effect across all hiring, but the particular dynamic is interesting to me.

I have friends who worked in investment banking in 2008, and several of them have talked about how the industry (or at least their perception of it) became more "diamond-shaped." By this they meant that past the initial hiring freezes, entry-level hiring eventually picked up as normal, but that senior level promotions took a while to pick back up. There was a glut of experienced VPs (more of a mid-level role in IB than in engineering) who were making lateral moves between banks—not competing for entry level roles—but none of them were moving up to higher positions.

alextheparrot• 6 years ago

Ive already heard personally about internships getting cancelled from multiple sources, so there might be second-order effects as well where the junior engineers coming right out of college are less prepared.

moneywoes• 6 years ago

Little off topic but do you reckon that IB offers high compensation and better job stability on aggregate vs tech? Especially longevity wise. I'm sure not every associate becomes a MD but neither does every L3 a L8.

Lambda School lays off 19 employees

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