Course Payment Misalignment

Shaan Puri shares his perspective on course business models and incentive alignment in education, particularly comparing traditional courses to Lambda School's approach.

• Traditional Course Model Problems:

  • Instructors get paid regardless of student outcomes
  • No financial incentive to ensure student success
  • Disconnect between payment and results

• Lambda School's Aligned Model:

  • Only makes money when students succeed
  • Must carefully select students who can succeed
  • Gets paid when students achieve their goal (high-paying job)
  • This alignment is both their strength and scaling challenge

• Personal Course Experience (Shaan's Writing Course):

  • Generated $127,000 in top-line sales
  • Costs included:
    • $7,500-10,000 for custom illustrations
    • 10% Maven platform fee (~$12,000)
    • $3-4,000 in payment processing
  • Net revenue around $105,000
  • 320 students enrolled
  • Initial pricing at $400-450 (half price for first batch)

• Alternative Course Business Model Idea:

  • "ClassPass for online courses" concept
  • Monthly subscription ($100/month) for access to multiple courses
  • Course creators would offer 50% discount for volume
  • Benefits both creators and students through bundling
  • Similar to cable package model for educational content

The core insight is that education business models work best when there's alignment between educator success and student outcomes, though this can make scaling more challenging.