u/sheriffderek wrote (the comment Michael replied to):
Yikes! What could they possibly need more money for? Lambda started with **50 million** dollars and eventually had to change its name to avoid the bad press surrounding its student outcome numbers. Coding Dojo has been happily taking people's money for a very long time. What coul
u/michaelnovati replied · ★ FEATURED
Lambda changed it's name because of a trademark lawsuit. They were fighting it for 2 years or so (another company has a Lambda trademark and was being negatively impacted by bad press and reviews around Lambda School - which didn't have a trademark). They even bought this company in Florida called Red Lambda (which has a trademark) to try to fight back. They settled the suit after depositions and changed their name.
I'm surprised no one talks about this story! A chunk of thir $120M of finding probably went to this.
Regarding fundraising. So two things in general.
1. Even though Lambda had so much funding, they were losing a ton of money. We call this the "VC funded discount". Uber was similar, where they were losing money on every ride so that they could grow by giving people cheap rides. The investors were basically paying for thoss cheap rides. Lambda's case was different. They had ISAs that pay out in the far future and need cash to operate. Unfortunately their founder is an incredible marketer and they grew like crazy, while their outcomes have not be super great (around 50% of people who start, get jobs within 6 months of graduating) so they needed a lot of money to keep going.
2. Investing in product and technology that costs a lot in engineering salaries now, but doesn't produce revenue until later. This is why Formation needs funding. We have some crazy engineers who are highly paid on the market and the work they do won't pay back their salaries for a while. If we were to run a school that lacked all this technology, I don't think we would fundraise.