BloomTech

In 2017, Austen Allred and Ben Nelson founded Lambda School (legal entity Lambda, Inc.) to provide online coding training; the school was incubated at Y Combinator. The company began fundraising in August of that year. The school’s hallmark was the income share agreement (ISA): students did not pay tuition out of pocket up front, and after graduating, those earning more than $50,000 in a related field paid 17% of their pre-tax income each month until they had made 24 payments or reached a cap of $30,000 in total.⁠[1][2][2][3][3][4]

The company’s slogan, “We don’t get paid until you do,” was meant to show that the school’s interests were aligned with its students’. From 2017 to 2022, most students paid their tuition with an ISA.⁠[4][1]

In July 2018, the Bureau for Private Postsecondary Education (BPPE), part of the California Department of Consumer Affairs, received a complaint that Lambda School was operating in California without approval. After investigating, BPPE fined the school $75,000 in March 2019 and ordered it to cease operations in California; under California rules, institutions charging more than $2,500 in tuition must register. Lambda immediately applied for registration and appealed the citation to the state attorney general’s office while continuing to operate. In July 2019, BPPE again affirmed the fine and the order to cease operations; as of January 2020, Lambda had not paid the fine while its appeal was pending.⁠[5][5][5][5][5][5][5][5][5]

A BPPE official wrote in an internal email that because the school had not been approved when students enrolled, student complaints to the bureau fell outside its jurisdiction.⁠[5]

In January 2019, Lambda School raised a $30 million Series B round at a $150 million valuation. As of January 2020, it had raised at least $48 million in total from investors including GV and actor Ashton Kutcher’s Sound Ventures.⁠[2][5]

On February 19, 2020, the contents of a May 2019 investor memo from Lambda to Y Combinator came to light: placement for cohorts six months after graduation was about 50%, while Lambda’s website at the time advertised that “86% of Lambda School graduates are hired within 6 months and make over $50k a year.” The 86% figure came only from the first 71 graduates the school had reported to the industry group CIRR. The school had about 2,500 students at the time.⁠[3][3][3][3]

On June 24, 2020, Allred acknowledged in a post that the school’s latest submission to BPPE had not been accepted for reasons related to ISAs, and said instruction for California students would not be affected. In August of that year, the school was approved by BPPE, on the condition, among others, that it stop offering ISAs for the time being. The school does not grant formal degrees; students receive certificates upon completing their courses.⁠[6][6][6][2][2][2]

On August 21, 2020, Lambda School announced a $74 million Series C equity round, mainly from Gigafund, a firm founded by former Founders Fund partners, with Tandem Fund and Y Combinator also participating; the valuation was not disclosed, though Allred confirmed it was higher than the $150 million of the Series B. The school then had about 3,000 students and offered data science and full-stack web development courses, lasting nine months full time or 18 months part time, with tuition of $30,000.⁠[2][2][2][2][2][2][2]

On April 29, 2021, Lambda School announced that it was laying off 65 employees across product, engineering, design, community management, and instructional roles, and pausing new enrollment in its part-time programs; that same month, it launched a nine-month full-time back-end engineering program in partnership with Amazon. Allred tweeted that the company had been working for years on making “incentive-aligned education” work, and that it was harder than initially thought.⁠[7][7][7][7][7][7]

On May 13, 2021, the nonprofit National Student Legal Defense Network filed separate lawsuits against Lambda School on behalf of three former students, alleging that it misrepresented job placement rates, misled students about its financial interest in ISAs, concealed a regulatory dispute in California requiring it to cease operations, and continued to enroll students and sign ISAs while that order was in effect. Alex Elson, the organization’s co-founder, said that because the arbitration clauses in the ISA contracts barred students from arbitrating as a group, they chose to bring three nearly identical individual cases simultaneously.⁠[8][8][8][8][8][8][8][8]

In 2022, the company changed its name from Lambda, Inc. to BloomTech Inc., operating as Bloom Institute of Technology (BloomTech), with its business unchanged. Alongside the rename, the school introduced an outcomes-based loan: students could borrow with nothing down and receive a refund of 110% of their tuition (including fees and interest from an approved lender) if they could not find a job in web development or computer science within the following year; ISAs continued to be offered as an option.⁠[1][1][1][9][9][9][9]

On December 1, 2022, BloomTech laid off about half of its staff, around 88 employees, across content, product, data, and engineering teams, the company’s third known round of layoffs since the COVID-19 pandemic began. Allred responded that the company had to cut costs to become profitable.⁠[9][9][9][9]

In March 2023, four students, supported by the advocacy group National Student Legal Defense Network, sued BloomTech, alleging that it misrepresented its job placement rates and engaged in unlicensed lending before receiving California approval in 2020, and seeking cancellation of their ISAs or refunds; it was the first time students had sought a class action against the school.⁠[10][10][10][10][10]

On April 17, 2024, the CFPB issued a consent order against BloomTech and its CEO, Allred; the parties consented to the order without admitting or denying its findings of fact or conclusions of law. The CFPB found that BloomTech claimed its ISAs were not loans, carried no finance charge, and were “risk free,” when in fact the agreements were loans with an average finance charge of about $4,000, and a single missed payment triggered a default making the remainder of the $30,000 cap due immediately; that the school advertised on its website that 71% to 86% of graduates were placed in jobs within six months, while its non-public reporting to investors consistently showed rates closer to 50%, in some cases as low as 30%; that Allred had tweeted that one cohort achieved a 100% job placement rate and later privately acknowledged that the sample was just one student; and that the school sold many ISAs to investors, often getting paid before students graduated and found jobs.⁠[4][1][4][4][4][4][4][4][4]

The CFPB found that the company violated the Consumer Financial Protection Act’s prohibition of deceptive and abusive acts or practices, as well as the Truth in Lending Act (by failing to disclose the amount financed, finance charge, and annual percentage rate) and the federal consumer protection known as the Holder Rule. The order permanently bans BloomTech from all consumer lending and bans Allred from student lending for ten years; it requires the company to stop collecting payments from graduates who did not have a qualifying job in the past year, to eliminate the finance charge for those who graduated more than 18 months earlier and obtained a qualifying job paying $70,000 or less, and to allow current students to withdraw and cancel their ISAs; the company and Allred are to pay civil penalties of over $64,000 and $100,000 respectively into the CFPB’s victims relief fund. BloomTech originated at least 11,000 ISAs from 2017 onward and stopped offering ISAs in 2024.⁠[11][11][4][4][4][4][4][4][4][1]

As of October 2026, BloomTech’s website still listed a full-stack web development course, said it had had more than 4,000 graduates since 2017, and listed leadership including co-founder and CEO Austen Allred and Chief Operating Officer Zoran Martinovic; the site’s “AI for Developer Productivity” course link pointed to the Gauntlet AI website. In California the school is regulated by BPPE, and it holds a Certificate of Approval from the Texas Workforce Commission.⁠[12][12][13][13][12][14][14]

BloomTech: Official website: https://www.bloomtech.com/ (opens in a new window).⁠[12]

X: Public account: https://x.com/bloomtech (opens in a new window)⁠[12]

LinkedInLinkedInLinkedIn is a social networking platform for professionals. It was founded in 2002 by Reid Hoffman and others, launched in 2003, and listed on the New York Stock Exchange in 2011; after Microsoft acquired it for approximately $26.2 billion in 2016, it became a wholly owned Microsoft subsidiary. Its revenue comes from membership subscriptions, advertising, and recruitment solutions.Open the full entry: Public profile: https://www.linkedin.com/school/bloominstituteoftechnology/ (opens in a new window)⁠[12]

GitHub: Public organization: https://github.com/bloominstituteoftechnology (opens in a new window)⁠[12]