⚡️ the power of aligned incentives.
hi & welcome to sam’s brain drain, a weekly collection of thumb-stopping things to tap, read, & watch.
|sam mcallister||Jul 15, 2019|| 2|
estimated reading time: 5m, 09s.
hi, it’s me again. it’s week 4 already. nuts.
this week: student loan debt in america, life above the clouds, & the curious link between dinner jackets & technology.
📄 a note on aligned incentives:
i wanted to briefly touch on one of the most powerful tools that entrepreneurs have at their disposal. if you are looking to create the next world-impacting business, one must consider the power of aligned incentives. you can think about this model in the context of two companies that i greatly admire: lambda school and stripe. both are companies that can only truly succeed when their respective customers succeed too.
disclaimer: i work at stripe & they have also invested in lambda school.
if you know me, you’ll know that i am a fan of companies that make money ethically. i’m really happy to work for one of them. i sometimes refer to this operational style as conscious capitalism, which to many is an impermissible oxymoron.
while i built an e-commerce business at university, i attempted to integrate this ‘conscious capitalism’ model from the beginning.
yes, i turned a profit.
yes, i donated a portion of that to the ngo that i had partnered with.
we, as humans, have an innate potential to have a positive impact on the world. i argue that it’s easier to have a net positive impact than a negative one. be that the way by which you choose which company you’d like to join or whether you decide to create your own - we all share this ability.
ultimately, conscious businesses create lasting value as the world evolves to even greater levels of prosperity, helping billions of people flourish and lead lives infused with passion, purpose, love and creativity - a world of freedom, harmony, prosperity and compassion.
lambda school at its core is a technology company. their value proposition? learn to code, while paying nothing upfront. lambda offers an income share agreement (isa) to make their version of education available to anyone. under their isa you agree to pay 17% of your post-lambda school income in monthly payments over two years, but only when you're making more than $4,166 per month (that is, ~$50k per year). the isa is also capped at a maximum of $30k, so “you'll never pay more than $30k under any circumstances”.
this financial instrument (isa) attempts to directly align educational incentives with student employment.
it’s quite groundbreaking.
with student-loan debt now hitting heights of $1.5tn, over-taking credit card debt & auto-loans, the time is ripe for innovation.
it’s not just about a new cost structure for students, it’s about a fundamental aligning of incentives across the entire education stack. a school that does everything it possibly can to get its students hired.
- austen allred, cofounder & ceo of lambda school
think about it in the context of the current third-level model.
universities collect all of their fees upfront. they have no incentive to create long term value for their customers, the students. the incentives of universities are to increase their wealth, prestige & status.
the education system is a path-dependent outcome from the need for daycare, from the need for prisons for college age males who would otherwise overrun society and cause a lot of havoc. the original medieval universities had guard towers that faced inwards for example.
it’s difficult to imagine the provost of any university being so directly invested in the outcomes of their students as austen is:
what other industries can you think of that would benefit from a business with more aligned incentives?
think about it. then build it.
🧠 brain candy:
bernie sanders published a list of “anti-endorsements” with quotes from jpmorgan chase ceo jamie dimon, former goldman sachs ceo lloyd blankfein, and other luminaries of wall street:
we can propose all the ideas and plans we want, but nothing will fundamentally change until we have the guts to take on the most powerful corporate interests in america.
that is why i am proud to announce the modern-day oligarchs who oppose our movement. in the words of president franklin delano roosevelt: “they are unanimous in their hate for me–and i welcome their hatred.” we will overcome their greed and create an economy and a government that works for all, not just the 1 percent.
gulls don’t come near him. this spring, he had the ratcheting call of magpies, who made a nest on his crane. he stepped over it every day to reach his cab. two chicks hatched from the clutch of five eggs. then one day they had all disappeared. he doesn’t know if they made it.
brian is one of more than 100 men – and they are all men – who work in the clouds above dublin, registered with the union unite. they operate dozens of tower cranes on the city skyline, one or two to a cab. they are called ‘rope jockeys’ or ‘eyes in the sky’ by building site colleagues. they have other nicknames too, but brian says these are unprintable.
this is a spectacular read from the inimitable paul graham, co-founder of y combinator:
great cities attract ambitious people. you can sense it when you walk around one. in a hundred subtle ways, the city sends you a message: you could do more; you should try harder.
the surprising thing is how different these messages can be. new york tells you, above all: you should make more money. there are other messages too, of course. you should be hipper. you should be better looking. but the clearest message is that you should be richer.
one sign of a city's potential as a technology center is the number of restaurants that still require jackets for men. according to zagat there are none in san francisco, los angeles, boston, or seattle, 4 in d.c., 6 in chicago, 8 in london, 13 in new york, and 20 in paris.
📚word of the week:
the part of the back (or backbone) between the shoulder blades and the loins which an animal cannot reach to scratch.
etymology: originally from greek κνῆστις (knestis) meaning spine.
🤪 mildly humorous:
this blows my mind somewhat. as i was compiling this week’s brain drain, i came across three distinct videos of animals ‘talking’. i swear that they all have irish accents.
a kerry kitten:
a dublin taxi-driver:
an irish porcupine :
that’s all for this week. i hope you keep me accountable to keep this interesting 😝.
this takes a reasonable chunk of my after-work hours to curate, so please let me know if you do or don’t like certain parts. this is very much a work-in-progress.
😌 see you next monday!
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