Video Game Veto

Several family members wanted to get Zak a Nintendo Switch when he turned 7 a few weeks ago. I shot it down. I’m the bad guy. Sorry, not sorry. I’ll defend my stance and do you one better. I’ll explain why my stance even needs to be defended. Somehow in this battle over video games, I found myself on the low ground.

First, my defense is simple. Opportunity cost. Here’s an example. My 4-year-old Max recently lost his iPad for 10 days. For those of you who follow Yinh’s Insta (feel free to follow, her ‘stories’ are more amusing than anything I write), there was a period of this kid creating his own Marvel paper costumes and pumping out artwork like he was getting paid commission. Less screentime meant more creativity.

When the iPad resurfaced, it crowded out much of his ingenuity. It’s worse than that too. The iPad summons the devil. Every time Max is asked to turn off the screen we suffer a hell tantrum. All the phases of opiate withdrawal unfolding several times a day.

Zak, being 7 and having better emotional control, is not as dramatic but the video games are still crowding out his creativity.

You would think my no-Switch policy would be unanimously embraced. You’d be wrong. Here are the arguments and pro-video game propaganda I push back against.

  • “You played video games and look how you turned out”

    If you grew up in the era of “blowing dust” out of your NES cartridges and have managed to simply not blow your life to smithereens, people will say this to you. We have all seen the amusing correlation/causation pictures. Well, this fallacy is a specific strain of those spurious conclusions. The post-hoc fallacy. If Y came after X, then Y caused X.

    This fallacy is everywhere. Kid has hives. Sleeps in parents’ bed. Hives go away. Therefore, his bed caused the hives. (This just happened in our house). You have a cold so you drink soup. Cold goes away. Must have been the soup. These interventions are given credit for mean reversion’s work.

    The video game example is even worse in my mind because of opportunity cost. I might have a good job today in spite of, not because of, video games. How much didn’t I do because of video games? Maybe I would have been a better athlete, musician, or programmer. All activities that competed for time with video games. Hobbies that if cultivated would have been unambiguously more rewarding considering, today, I wish I was better in all 3 domains and could care less about my video game skills.

  • Video games have benefits

    When I was a kid, I was told video games “rot your brain”. Today, everything from critical thinking to reflexes are attributed to playing games. Scholarships, profits, and Ninja all lend games a legitimacy they didn’t enjoy in 1987. Nothing will make you seem stodgier, techno-fearing, and possibly stupid than being anti-video game.

    Consider Shopify founder Tobi Lutke. He is outspoken in his claims of games like Factorio and Starcraft contributing to his business savvy. Well, if you have ever heard Tobi speak, he’s really smart. A mind like his is going to deconstruct strategy and actively pull the insights from the game. Being analytical in the first place is what’s most important. If it wasn’t video games, he would have cracked something else.

    It’s not the game, it’s the approach to the game. Just like TV or movies or reading. Any passive activity can be intellectually enriching if your approach is active. When you read are you asking what the themes are? Why is the author framing things a certain way? How does it relate to other knowledge? Critically reading or watching can turn “brain-rotting” behaviors into brain-building ones.

Pushing Back Against The Modern Halo Around Gaming

You’d be forgiven for thinking I contribute to the gaming halo. The gaming section of my site is anchored by Let Your Kids Play Boardgames. Some nuance is in order. Our kids play some video games. Playing them is not especially bad or good. I put it in the same category as passively watching TV and it would count against that attention budget. (I reserve the right to modify my stance for games especially strategic or competitive).

Gaming, video or tabletop, can be an amazing way to learn. Fun is a renewable form of fuel to burn. Yet in the wrong personality, it can be horribly inefficient. Like learning about basketball from watching the Kardashians. How many people playing poker on their phones mindlessly are internalizing probability lessons? And parents, you know zombie-mode when you see it.

The halo of gaming stems from its strategic and competitive aspects. Still, strategy and planning can be acquired in many ways. Just this week I was thinking about how much Zak could learn if I asked him to break down the steps to catch a trout. He’d need to find out where to go when to go, what bait to use, and what technique to employ. Taking a big problem and breaking it into smaller steps.

Gaming has fast feedback cycles. Great for learning. But also convenient to get a mouse to push a dopamine lever. Then there’s the whole issue of transference. Does becoming a grandmaster make you better at other strategic endeavors or does it just make you good at chess? And here’s the diabolical question — if the grandmaster excelled in other domains how much credit should we give to chess? Again the fallacy rears its head, post hoc ergo propter hoc. Our minds are so easily tricked. The literature on transference is mixed, but it’s such a believable grift that most people won’t bother to check.

Overall I think the benefits of games are conveniently oversold. Just like TV, if accompanied by parental prompts and guidance they can be an enriching tool to practice critical thinking. Some kids, like young Tobi Lutke, will be inclined that way on their own. Many will just stare with dead eyes, unfazed if the house was burning down. Maybe I’m just an old crank who wishes he had that time back. I’d rather see what kids come up with when they aren’t sitting in front of a screen.

Kathleen Mercury on Board Gaming With Education Podcast


About Kathleen: Educator with a special focus on teaching gifted students game design (Link)

Transcription: Otter.AI

I incorporated Kathleen’s presentation to these notes for the sake of consolidation.


Kathleen believes:

“Happiness comes from being able to choose the life you want to live.”

To empower students there are 2 anchor ideas:

Be Producers Not Consumers

…what I want more than anything for my students is for them to be creators, not consumers…The only thing I care about is what ideas they have, and giving them the tools where they feel empowered to take on big complex challenges where they have no idea of what the final product will be, but that they can build in and learn the skills and confidence that they can hopefully get themselves there. That’s what I care about because if I can get them to accept that and do that, then they can pretty much take on whatever challenges come their way for the rest of their lives.

Bias Towards Action

For those familiar with the Silicon Valley ethos of “Move fast and break things” this will be familiar. Despite, her midwest roots and home Kathleen’s thinking has been heavily influenced by the Stanford D-School.

…probably the biggest thing that’s helped me is the Stanford design school’s method of prototype development. I went to a design-thinking boot camp, and the design mindsets that were presented as far as when you’re wanting to design something for someone else, and how you should think about it. Here’s how you should approach it. And it was so different from what I was doing, but it was just one of those things where it’s like, oh my god this is 100%, what I should be doing and it completely pivoted everything that I was doing. For example “bias towards action”. Instead of just thinking about something just start doing it. Rapid iteration making prototypes fast and cheap so you can get them on the table so that you can fail quickly see what works, see what doesn’t work quickly and so you can make more versions of something even faster.

It’s designed to keep them moving quickly so that nothing becomes precious and nothing becomes so sacred that they won’t get rid of it. And I think for me as a teacher, that’s really helped me and also helped me as a game designer in terms of trying something getting it out there, seeing what happens getting feedback on it and making improvements to it as well.

Lessons From Teaching

On using games in learning

  • I think for a lot of gaming experiences in the classroom, having everybody involved at the same time, really, really matters for success.” (Party games are a good tool for this)
  • A good teacher can make a lot of things fun. Sparks a love of learning.
  • Bridging the abstract to concrete
  • Critical Thinking
  • Information more sticky/accessible. Increases connections.
  • Boosts engagement & connections (made me think of how a local teacher used Pokemon cards to bring the boys and girls in 1st grade together)

On kids having different abilities

  • Everyone deserves to learn at their level every single day that’s just one of those tenets that I just hold. If you’re doing something where their disabilities or inabilities become apparent to others. I think you have to be really careful about how you handle that. As far as you know what you’re willing to do to, you know, protect them to take care of them because if they’re stressed out and embarrassed.

  • Approach to gifted kids:

    1. If you don’t give gifted kids problems to solve, they will create their own.
    2. They need to learn how to struggle and work through it.
  • Heterogeneous groupings can protect kids by partnering up.

  • But homogenous groupings have advantages too.

For my gifted kids, a lot of times when that happens, they’re always like the ones that are like spread out amongst the other groups, and then they put all the spread out all the middle kids and then they spread out all this sort of low kids and pardon me for speaking in broad brushstrokes but I am. And so a lot of times they never get chances to work with each other. And one thing that research shows is that when you let kids have similar abilities work with each other. Everyone gains, because the kids on the middle step it up, and the kids on the lower end also step it up, even if it’s like one notch higher, you know, that’s okay for them, you know they’re using their abilities and what they know and trying to push themselves up to be more competitive as well

  • Why the emphasis on points in winning is redundant.

Points are used to ultimately communicate your position in the game to other people. And if we’re playing a game that is just to be, you know, a review or something like that I don’t care about the points at all. And so, what I will often do is even if they get points, or if one team starts to get a blow out. I will, you know, do something like say “this is a 20 point question”, and then somehow I manage to make it so that kids on the other team get those points, or I start awarding ridiculous points my cool you just got a puppy. So drop puppy up there on the scoreboard.  

Why teach game design?

  • Develop analytical, practical, and creative thinking skills

  • Autonomy and collaboration
  • Teaching game design is teaching to orient towards an internal scorecard not an external one

That quantitative checkmark feeds into a lot of the programming that we’ve already done with kids as far as you know letter grades and standardized tests and success is 100% and success is, you know, an A plus is, you know, and I think for a lot of my students especially having to sort of break that mentality. A lot of what I do in teaching game design is here is this problem that cannot be solved, or notions like that. Here is this problem that you will have to you have to define the problem. You have to figure out how you’re going to solve this problem, you’re going to design your tests with these resources in terms of you know how close are you to solving this problem and you’re gonna do this again and again and again, you’re going to make a prototype you’re going to put it in front of other people, they’re going to play it, you’re going to get their feedback, and then you’re going to take those ideas, and that, you know, good, bad, the ugly. Incorporate that into your next design so that when that hits the table hopefully it’s better. Thinking of it as an unfinished unending hopefully upwardly ascending sort of cascade. See that process as a real process reflective of what life will be, I think is really important, because for a lot of my kids, you know they’ve learned what successes is and it’s an A+. I’m trying to show them that if you want to do anything cool, there will never be A+. You will never be finished. You will always just have to try to do your best to put out your best possible effort, listen to other people, and hopefully make that idea better and so that’s why I teach game design.

The reason why I teach game design is a teaches them this process of thinking design, thinking hands-on, trying to create solutions and learning how to see successes incremental progress, not as I finished I’m done.

We do talk about how it can be finished and not perfect and that’s really important for a lot of them. That you can have something that is unfinished. And you can see it as successful because you did try to make it better, even if you don’t think it’s better. And that’s really really hard for them to accept because it goes against everything they’ve always done

  • An antidote to results-based thinking

I honestly try to minimize any type of objective points in any kind of game situation as much as possible, because no one should ever be blamed for losing for their team, and I honestly don’t want anybody to be, you know, the fourth batter to just hit the Grand Slam home run and they get all the credit, not the people who also got on first, second and third.

  • Be thoughtful about when points matter

It does make sense to have kids have scoring that matters, but I think you have to really ask yourself, is this that time.

  • Not having grades at all doesn’t really work

And if I had my choice I wouldn’t do grades at all, but this is the world we live in and I have to actually try tried one year to not give out grades and our gifted class. There’s some unintended consequences there but there you go. We tried it once. As much as we wanted it to work it didn’t really work.

Projects Kathleen and Dustin Are Pushing Forward

  • Game Database To Aid Teachers looking to use games to augment material

    I think that something you touched on and I’ve been kind of thrown around in my head is creating some sort of database where teachers are teaching a unit on something and they can go on there and see what kind of games they can use in their class to either tackle review or tackle preview and concepts of the whatever material they’re learning. It would be really good for teachers to find like a resource where they can just go to, and save time and kind of have this lesson plan that they can use.

  •  Formalizing standards

Look at the curriculum that I have and formalize it a little bit in terms of standards that it’s meeting. That’s something that people ask me about that I haven’t really ever have had to do. And I think it’s something that I’m interested in one because it will make it even easier for people to use these resources in their classroom but it also. I’m really like thinking about the idea of what are the things that people could do to get their kids to think like game designers to use design thinking, using games, what would be appropriate, you know the early elementary level, the later elementary level, the middle school level, the high school level. So that if somebody wants to do something with game design in the classroom, they’ve got a better chance of success. That they’re not over-shooting or under-shooting what their kids are able to do but also in terms of tying this, you know, more specifically to actual curriculum. Then it can be easier for their administrators to use.

Teaching My 6-Year-Old A 21st Century Lesson

If reading boardgame rules is fun, you have a promising law career in your future. For the rest of us, it’s far less painful to YouTube tutorials. This applies to nearly every 21st-century question. How to fix a drain, do a muscle-up, change a tire, troubleshoot Apple Airplay.

Since we are all “homeschoolers” now, I’m trying to be more cognizant of teaching moments in our normal routines. This week as we sheltered-at-home it’s been a boardgame bonanza. Even more than it normally is around our house. Boardgames are filled with teaching moments.  But this week we spotted an opportunity for meta-learning as well as the 21st-century skill of “googling it”. We broke out the boardgame Pandemic for the first time with our 6-year-old. Instead of teaching him how to play, we turned the tables.

The assignment

We asked him to learn how to play by finding a video on Youtube then teach us. I supervised his progress and interjected suggestions as he approached the problem.

How it unfolded

  • Finding the video

The first step required typing “how to play pandemic” into the search bar.  We use YouTube through a smart tv. That means painfully typing with a remote control. But there was a silver lining…as he added a letter the auto-complete options would narrow. Once I pointed this out to him, every new letter he typed came with fun feedback. Seeing the autocomplete list change. By the time he got to “how to pl”, all of the the suggestions began “how to play…”. When I asked him what would happen when he added an “a” to his query, I was delighted that he recognized the autocomplete list would not change. There was some thinking going on. Cool. By the time he got to “how to play p”, the suggestion “how to play pandemic” appeared. He reacted like he won the lotto.

The video I wanted to use was one of the first search results (I myself had learned to play from this video), so I prompted him to select it.

  • Learning how to setup and play

Just as an adult would need to he quickly learned he needed to pause the video every few moments to follow-along. A methodical, painstaking process. He had to maintain attention and be persistent. Worthy lessons of course. The actual rulebook can be used as a reference. In our case, we had a different edition of Pandemic than the video which was a slight but welcome complication since it provided another teaching moment.

  • Teaching us how to play

This was the step where I had to play my largest supporting role. Filling in gaps as he explained to mom. Teaching games to people is an art in itself. Requiring empathy and patience and strategy. Knowing what you need to explain upfront vs what will become trivially clear once you start playing. There’s a balance between how much a person should be asked to retain to get started and actually getting started. Our kid probably tilts more towards lawyer…overexplainer, so I have to cut him off (he gets excited, its actually pretty cool) in the spirit of expediency and momentum.

Next time you crack open a new game, see if you can have your child learn the rules and teach you. It’s a great way to get more out of the game than its embedded lesson. And when your kid gets good enough at this you can pass the torch of household rule explainer. It’s a thankless role. Another idea kids should learn early.

Happy gaming and homeschooling!

Here’s the video we used. I highly recommend Rodney Smith’s Watch It Played tutorial series.

The Distance Learning Links You Need

Resources for parents with kids at home

Start Here

  • Outstanding tips and resources for kids both offline and online (Link)
  • Shane Parrish’s crowdsourced thread of learning resources (Link)
  • List of all education companies now offering free subscriptions (Link)


  • Outschool: Live online learning for all grades and subjects (Link)
  • A Guide to Using Khan Academy Kids for Remote Learning (Link)
  • Beanstalk: Distance learning made free for the duration of the COVID threat (Link)

Focused Resources

  • Mystery Science: elementary science videos (Link)
  • Kurzgesagt: animated science videos  (Link)
  • 3Blue1Brown: animated math concepts (Link)
  • Moontower list of resources to teach kids about money & business (Link)

Game Focus

  • Moontower guide to game-based learning (Link)
  • Moontower reader Erik Berg’s favorite board games and why (Link)


  • Nicky Case has the best explorable games to learn about complex phenomena (Link)
  • Nicky is building an explorable COVID game to understand how infections spread (Link).
  • Science Buddies: A great site for finding science projects by interest and age level. We want to do the one about germ spread. (Link)


  • Khan Academy’s Recommended Schedules (Link)
  • That schedule floating around social media:

Let Your Kids Play Boardgames

I have 7 and 4-year-old sons. I had kids to have gaming companions. Go ahead and judge me. Luckily they like games like their old man. Well just like amoxicillin tastes like Bubble Yum, it turns out gaming is a stealth way to teach your kids how to think. They learn faster when they have a goal in front of them.

This post is intended to be a living document for resources to get your family gaming in gear.

General Tips

  • Normal people don’t like reading rule books. Learning rules is best done via Youtube videos. Just search for a tutorial of the game you are interested in and use the rulebook as a reference. If you need even deeper rule clarifications I’m 99% confident any question you can think of is covered in relevant BGG forum.

  • Find Moontower on BoardgameGeek. This is the best game reference site in the world. It’s an amazing compendium of user-generated content. One of the most engaged, enthusiastic niche communities on the web. I am stunned out how much you can customize your menus and widgets on the site. I don’t fully understand why more communities aren’t copying its features. It does have a learning curve but the ability to catalog games and log plays is superb.

Games for Kids Under 10

  • Evolution: The Beginning (Link)

It’s a card game where you must manage populations of carnivores and herbivores as you try to eat the most food. The punch-counterpunch dynamic of the game maps faithfully to how predator-prey games in nature balance themselves. Concentrate too much on defensive traits and competing populations grow quickly. Modify a species to be an aggressive carnivore and more scavengers appear in the ecosystem. React and adapt. It imparts a beautiful sense of how evolution favors adaptation to the prevailing competitive landscape as opposed towards some march towards a higher form. An organism’s fitness is a purely relative concept. The game’s elegance mirrors nature well.

  • Forbidden Island (Link)

Simple and fun coop game by the same game designer who brought you Pandemic. The game gets kids to work together and while the replayability for adults is limited there is enough variation in board layout and characters to keep kids engaged. Take about 30 minutes to play and requires no more reading than identifying the names of regions. I hear the follow-up Forbidden Desert may be even better.

This was the gateway game that got us into European boardgames 11 years ago. Unless you are used to playing games for hours it might be a reach for age 6 but I’d feel very comfortable teaching it to an 8-year-old. While its conflict is economic like Monopoly, it feels less punitive and the entire design is one of the most elegant I’ve seen. I’ve never met anyone who didn’t enjoy playing this game. Lessons in negotiation, market dynamics, odds, and planning. I highly recommend the Seafarers expansion. We almost never play it without “the sea”. I do not recommend the Cities & Knights expansion which feels likes it changes the essence of the game a bit much.

  • The Magic Labyrinth (Link)

By far the best version of a memory game our household has ever played, No reading required and adults and kids are on equal footing since the game is about trying to remember you and others’ footsteps through a maze with invisible walls. This game was a big hit around here and is one of our favorites to gift since its fun and has few rules to learn.

  • Quacks of Quedlinburg (Link)

Quacks is a bit like a deck builder. It’s known as a bag builder but with a don’t-bust-press-your-luck mechanic. To most of you, that means nothing but for the remaining, you should know this an outstanding game. It’s fun, and while seasoned gamers won’t like this necessarily, it has enough luck to allow a first grader to compete with an adult. I found myself thinking quite a bit about the value of the “options” (they’re actually chips representing ingredients in a potion recipe) in the game and their respective costs. The concepts of theta, volatility, and vega would be visible to someone with a finance background if they looked past the game skin.  An engineer would see this game as a very pure simulation (most likely AI) based problem especially since the game has no trading interactions. Avi tells me the designer is coming out with a much heavier follow-up catering to a less casual crowd.

This game is a centurd old commodity futures trading game. No reading required and is a pure trading game. Open outcry style. It’s a frantic free for all where kids will offer to deal sets of grains (think rice, wheat, corn, barley, etc) to corner the market on a single commodity. The action unfolds in a way that gives a very organic sense for what is getting cheap (offered) vs expensive (what is scarce and in demand). The feeling of market pricing is intuitive and turns over quickly. Rounds take no more than 10 minutes. If your kid can count to 8 they can play although I suspect age 6 or 7 is the floor at which they can think more strategically.

This is another gateway classic. It has the feel of trying to occupy area in an evergrowing modular puzzle. With younger children, I recommend not playing with the “farmers” because the scoring can confuse them unnecessarily.

Games for 10 and Up

A party game like Codenames. Both games are great for teams and so many ages. As word games go Codenames and Balderdash are hall of famers.  Decrypto is an instant classic and honestly, you can play it without buying the game. You just need paper and pen.

A several generations old classic. A game of M&A and stock ownership using the hotel industry as the theme. It’s in a sweet spot of complexity and has clever market-driven dynamics.

  • Power Grid (Link)

A bit higher on the complexity scale. Auctions, networks, optimization, opportunity costs, replacement costs, and cutthroat market dynamics.

A friend argues that you can learn 80% of what you need to know about trading from a few dozen plays.

Games and Investing

I would credit a lot of my reasoning about business and money from playing games. While actually investing is the ultimate game to learn from here are some of my recommendations to get kids and teens starting to think about investing.

  • Incomplete information games: Poker, Bridge, and Magic the Gathering

As a trader trainee, our curriculum included lots of poker. There is no better controlled environment for learning to make decisions under uncertainty. Many fellow trainees had extensive Magic the Gathering backgrounds for similar reasons.

  • Fantasy sports and sports betting

Point spreads and draft positions are valuable early lessons in market efficiency

  • Trading firm Susquehanna’s posts about boardgames

Boardgames: More Than Monopoly and Poker (Link)

On Trading Games (Link)


  • Designer Nick Bentley on how to get your kids into games and speed their progress (Link)

  • Gameschooling Teaches “Successful Intelligence” (Link)

Top Youtube Channels for Instructions and Reviews

  • Shut Up and Sit Down (Link)

Matt and Quinns are exceptionally bright. And even more hilarious. They are amazing guides to the gaming world. My favorite board game channel.

  • Jamey Stegmaier (Link)

A top game designer reviews and breaks down games expertly

  • The Dice Tower (Link)

Tom Vasel is prolific and has a sense of humor befitting of a game zealot.

Podcast Series Devoted to Games and Learning

  • Games in Schools and Libraries (Link)

Kathleen Mercury is the queen of teaching game design to youngsters. Her passion for turning kids into “producers not consumers” is unrelenting. With an open-source attitude, she is spreading the lessons of her innovative and fun approach to parents and teachers everywhere. She interviews the top practitioners in the game-based learning world.

  • Boardgaming with Education (Link)

Ian Zang covers game-based learning and gamification practices with experts, enthusiasts, and teachers. Get in the weeds of using games to improve education.

Lists By Experts

  • Kathleen Mercury’s recommended games for the classroom sorted by age group (Link)
  • Kathleen Mercury’s “best-of” list if games used in her day camp. (Link)
  • A thread of lists by game camp organizers. (Link)

Lists by Friends

  • Erik Berg’s Favorite Games and Why (Link)

My reaction to Lambda School

I took a free 4 week intro course at Lambda on full-stack web development. I’ve taken a number of online courses on different platforms including Udacity, Khan Academy, and Datacamp. I was especially impressed with Lambda but I was drawn into looking at their income share agreements (ISA) since they resemble option contracts, a furry little construct that I’m pretty familiar with. Lambda’s ISA charges the student 17% of their gross income after they graduate so long as the student is making more than $50,000 per year and the total payments are capped at $30,000. If 5 years passes after graduating, any remaining balance is forgiven.

Lambda is buying a call option on their students (technically it looks more like a call spread since it has a cap) by fronting the cost, ie the option premium, to educate its students. Ever wonder what the most efficient way to give a wide swath of people a chance to improve their careers is? Try aligning your next paycheck with theirs. While all schools have a vested interest in their students succeeding, Lambda’s interest depends on it far more directly and its vision hacks the power of incentives.


Stratechery’s Ben Thompson on Shane Parrish’s podcast discusses how technology enabled “unbundling” dimensions of hospitality and retail noting how Ebay and AirBnb “digitized trust”. Consider how hotel brands achieved dominance by exploiting scale to standardize in markets that heavily indexed on a single dimension such as safety. By creating a system of reviews and standardizing the process but not the product, AirBnB was able to unlock a plurality of accommodations giving consumers a practical choice in ranking a wider array of preferences than what could previously be served.

Lambda performs the same function in education. It unbundles skill from pedigree while selecting for persistence. Many employers tolerate paying for some averaged indicator of skill and pedigree but an employer looking at a Lambda student pays an unbundled price which acquires more of what they want for less. And this is a better outcome for both employer and crucially the student who might not have otherwise had been hired if they didn’t have a more direct path to both acquire and advertise their skills.

While the ISAs de-risk the student’s well founded concerns of the price of education Lambda must de-risk the employers’ concerns since ultimately, the employers are going to be the ones who effectively pay Lambda back. There is a relentless focus on what the market demands ultimately tightening the correlation between what employers want and what the candidate can deliver.


Conventional college paths compel students to gamble on a system which loads them with debt tied to murky promises of future employment.

  • Skills are financed at a price which is not economically linked to potential return.
  • Return is increasingly not captured, risk is held by student and taxpayer.
  • No mechanism for ensuring the price of the risk is commensurate with potential

Lambda is an imaginative inversion which better allocates the price and owners of the fundamental risk of investing in training.

  • Skills are financed by marketplace (Lambda’s stakeholders)
  • Return is recovered by value students bring to market

A familiar, time tested business recipe lies under the hood allowing for the Lambda model to earn a profit and be self-sustaining.

  • Vertical integration: Source raw material, refine, pre-sell to end user
  • Quality control: Obsessively attend to the need of the student and the end client
  • Scale: Port process geographically, into adjacent studies, and eventually to any market where significant headcounts are being offered premium wages.

My take

I have been an option market maker and portfolio manager for the better part of 20 years. If I can competently price, assume, and manage the risks that the market wants to transfer I get paid.

It is not a stretch to argue that Lambda is a market making business that warehouses a risk that both the suppliers and consumers of talent prefer to transfer. In this case Lambda is positive sum, especially for those who need its path the most. There will
always be well-pedigreed teens who can gather a conventional education with little or manageable debt and have real choices that do not impair his/her future. But it’s the student confronted with a Hobson’s choice about taking on no education or an
overpriced one who has the most to gain from Lambda delivering on its mission.

I am a big fan of their multi-angle approach to providing employers and students a win-win proposition by underwriting then mitigating the unpooled risks that individual learners own.

  • I dig their initiative to teach students personal finance now that they will be on
    their way towards actually saving. That’s a proper career services office!
  • I dig the ambition to extend beyond coding in the future.
  • I dig the commitment to creating the best product — “Build Weeks”,
    collaboration with employers, simulating actual production environments (Slack, team based learning), relevant capstone projects

While a properly structured ISA is very elegant, I can imagine it being perceived as too radical. But I say paying hundreds of thousands dollars for an education that is untethered to any reasonable expectation of a return is radical. Lambda is a long overdue experiment. The incrementalism in changing the status quo is a response to legacy institutions’ self-preserving instinct and doesn’t reflect the degree to which its customers (ie the students) are under-served. Lambda is seizing this gap in the market between what students need to thrive in a skills based marketplace and the outmoded value proposition in conventional higher ed.

Being educated is a key to a free society and should be the default option but its price should not be an indenture. If Lambda can de-risk the alternative path for students by providing employers with effective hires then it will validate a real choice for future learners.

The implications of its success have far-reaching effects. A market based alternative which does not rely on uneconomical subsidized loans offers a sustainable equilibrium for all stakeholders. Employers will have reduced risk in their hires, students will be less indebted, taxpayers can stop underwriting poorly performing debt, and alas the policy makers who may be fully aware of the system’s unsuitability but are beholden to incremental measures can go work on something else.

Lambda’s laser focused commitment to listening to and serving the needs of both students and employers is the key to value and abundance for all stakeholders. I am not surprised the last couple years has proved the concept and it’s now ramping.

As Y Combinator founder Paul Graham said of Lambda’s founder Austen Allred:

Its future appears unbounded and we should all hope it is.