Secret Tech Billionaire Is Betting $1B on This

AI, it's a double-edged sword. It can be used for bad, and we can Tik Tok brainwash everybody, or we can use it to transform education.

You became one of the most successful guys in the tech world by far. Bill Gates came down and said, "You're the only person now competing me for talent."

I went to Stanford for a few years, famously dropped out. The headline on the article was my dad telling me what a [expletive] I was. And that was the found trilogy.

We were the first AI product to sell a billion dollars. And then you're focusing now on K12. We have built a learning engine that teaches kids 10 times faster. And our students come in 2 hours a day. They're at an AI tutor. They learn over twice as much as kids who sit in class for six and do homework. We're the best performing academic school in the country. And I'm going to get this out to a billion kids. AI gives kids superpowers. Used correctly. It gives kids superpowers.

[Music] Selector Joe.

Joe Lamont is an American legend, one of the top 10 most successful technology entrepreneurs in the country. He's been living behind the scenes. Very few people know who he is because he has not done any press. He's just coming out in the media the last month. It's amazing what he's accomplished at huge scale in the technology world. He's also a wise man who is going to change the future of education in America. He's starting hundreds of schools. He's using the best in AI, the best in incentives, and a lot of other wisdom on how kids learn. You know, originally he built this for his children. But he stepped up and made it a mission in life to take advantage of what's going on in our country with school choice, with AI, and to really take our country back to the best education in the world. Really interesting ideas. A contrarian guy who thinks for himself. You're gonna want to hear what Joe Lamont's up to. Welcome to American Optimist. Really excited to have my friend and the legend Joe Lamont here with us today. Joe, thanks for joining us.

Thank you for having me.

Joe, you're uh one of the most successful people in the technology world, but you always laid low for like 30 years. You built Trilogy. I remember Bill Gates came down and said, "You're the only person now competing me for talent in the 1990s," and you and you just crushed it there. But now you're the principal of Alpha School very famously, which is going to change education in America. You are going to open hundreds, thousands of schools. Uh, let's start with your background first of all. Where'd you come from? Where were you born?

Sure. Uh, born in Minnesota, uh, Minneapolis, and moved around every couple years. My dad worked for General Electric, um, uh, Jack Welch's strategic planner, uh, places where they had a factory. I think I lived in those cities all over the place.

And and you were at Stanford after that?

And then I I went to Stanford for a few years. Um, but then, you know, famously dropped out. And uh, the headline on the article was my dad telling me what a [expletive] I was.

And uh, and that was the found trilogy.

And that was.

What were you working on early on at Trilogy? Is this what year was this?

Yeah. So I I would have been class of '90 if I'd graduated, but uh, I officially dropped out uh the summer of junior, between summer and junior year. Um, I'm sure my professors would have said he might not have been in, coming to class as much as he should have, even before then. But what what happened was, in the sort of the background, I got into it in high school. I literally wrote a paper on experts on AI.

Yeah.

And back then AI was expert systems. And there was, I did, I remember I had a paragraph in the paper that was like, neural nets, you know, they're decades away.

Yeah. And so uh, I then went to Stanford and, you know, Professor Fagenbomb is considered the father of expert systems. And so I was literally in his class when he talked about, if you build these things called configurators that are really hard to build, but if you build one, uh, these things are worth millions of dollars a day. And so I I ended up dropping out.

What's a configurator? How does it work?

So uh, configurators are, if you have uh, uh, lot, if you're building something, manufacturing something, and you have lots of different permutations of it. The easiest ones that are simple ones are if you go to a car website and you figure out, you know, what features and options you want, or a Dell, you know, what kind of Dell computer you want. We were doing ones at scale. So, you want a phone switch, you want a Boeing airplane, you want an X-ray scanner,

um, uh, big mainframes.

You're not just choosing things, though. It's automatically figuring it out for you.

What you're trying to do is you're trying to take the knowledge that's in manufacturing and engineering and put it out to the sales force. So the reason we took off and our claim to fame was we were the first AI product to sell a billion dollars was.

You know, laptops were new back in these days, right? So the '90s, which was, if you sell it, the sales rep would be out there, and he would sell things that couldn't be built, just it's not manufacturable. And they'd only catch it way late on the manufacturing facility, and it would cost millions of dollars to be like, fix it, or free parts to the customer, or just delays, like go back to the customer and say, whatever we sold you just doesn't work.

I've worked mostly in software. We have trouble there sometimes with salespeople selling ahead, but I guess with with real-world stuff, it's even worse.

It's even worse. Like I I was walking down the manufacturing line at Boeing, and, you know, the president's like,

"That that misconfiguration cost us a million dollars. We're going to have to repunch that plane, you know." And and so that, so there was tons of business value. And it was, could you just build it? And so that's that's what we built uh back then. And that's how uh, so, and that was Trilogy's. And then, you know, back to what we were known for was we were also known for recruiting talent. You hired a lot of the best people. I think, you know, Austin, Austin, Texas here, there's really you and Michael Dell who brought in just like tons of people. And I'm I'm really glad you did because I live here now and I feel like you must have hired at least a couple thousand really top talent. Like like what what were the numbers?

So, how we got here is, you know, uh, we couldn't raise venture capital. No one thought our idea was good and would it ever work. And John Lynch, who was our co-founder, was like, "Look, Joe, if I'm going to be poor, I'm going to be poor in Austin because it's cheaper." Back back in the '90s.

Even now, it's still cheaper in the Bay Area, I think. You know.

But it was a lot cheaper back then. And so we, he moved down here. We're like, "Okay, we're all moving to Austin."

And uh, so we moved down to Austin, but the problem was there wasn't huge software talent. And so the way we solved it is we brought down 2,000 Ivy League grads or top talent and had them move to Austin.

You had a playbook, you gave them hard tasks, you had meet interesting people to bring them here.

Yeah. I mean, our recruiting um was really effective. And this is actually part, and it actually relates to how how we do school too, and some of our beliefs of it. We created a thing called Trilogy University. And, you know, Trilogy University in the '90s was the hardest boot camp that any company in the world had. Harvard Business Review wrote articles on it. And, you know, uh, it was the hardest one available, which was, they came down and they worked 100 hours a week, you know, for months. And people were like, "Why are you getting all this top talent if that's what you do to them? That seems crazy." I'm like, "The reason they're coming is because that's what what they do to them." Kids coming out of college want to show they're awesome. Yeah. They want to have an impact. They want to be challenged.

And I remember just having discussions with other companies. I'm like, "You're you're trying to babysit them and make it nice, and they don't want to, you know, do a gas cap." You know, you know, if a mech, they literally want to come down here, work hard, show they can have impact, and and do big things.

They want to go to a war to to change the world, right? You have to. People go really hard about right out of college if they're good.

Exactly. And so that was our that was our recruiting pitch, and it worked really effectively. And that's why we were able to get everybody down.

And you got all these people here, you guys crushed it, built a big company. There was an interesting pivot after 2000. I think you bought the company and then you started also buying eventually hundreds or thousands of other companies. Can you tell us a little bit about that too?

Yeah, so '90s was all organic build. We were just building stuff, sales, you know, in the sales world.

Uh, and then uh, after the dot-com meltdown, a huge percent of our customers went bankrupt during that. Uh, and what we realized in the aftermath was we were actually good operators. Like we actually knew how to run software companies well. And there was all these software companies that were really cheap. And so we bought a couple of them.

We made like 10 times our money, and we're like, "Oh, we should probably do more of this." I mean, it's not really that it wasn't it wasn't really more strategic than or complicated than that. And so uh, today, if you Trilogy still a private company, um, we sort of have Trilogy, which is organic build side, and ESW, which is our acquisition side. And they either we either go out and build things or uh acquire companies.

They've gotten really big at acquiring a lot of things. They even reach out to all my guys, you know, and stuff. We're like, "No, because I think they buy things when things aren't doing as well." So, it's bad if they reach out to.

Yeah. Well, someone has, you know, venture capital returns, right? Are.

Yeah. We're focused on the things going into the sky.

You're going to sky. So, what do you do with all the rest of them, right? And if you're a growth CEO, right, who started something to go, you know, build a, you know, the unicorn and billionaire, a lot of them don't make it. So, what do you do with what's left?

Yeah. How to run something is very different in that way.

Yeah. And just you just focus, you you're not trying to growth, and you're trying to babysit the customers, and it's a lower return play than your hyper growth, but somebody has to deal with that, and that's what we do.

And you've had to focus on talent all over the world for this. You've scaled it up massively. Obviously, if you're thinking about talent at that kind of scale, you're kind of thinking about education too, a little bit. Are some of the ideas coming from your business and that as well?

Well, I mean, Trilogy University as the concept, you know, started that way. But yes, that a lot of what you're doing, I mean, in any business, right? How do you upskill the the your talent base? And right now, every company has to say, well, how am I going to educate my my entire employee base about AI? And so, education is everywhere. Um, I have, you know, and sort of three years ago decided to focus on K12, um, which is sort of my new phase two of my career.

So, okay. So, let's talk about phase two. So you you became one of the most successful guys in the tech world by far with a couple acts with this thing. Before I jump right into K12, so you clearly been thinking about this a long time. You sponsored some of Roland Fryer's work, someone I really admire, Harvard economist. You guys went into the inner cities and you tried to test like what interventions would work or not. Tell us what you guys learned from that.

Sure. So um, one of the things back to incentives, right? He's an economist, folks. And he's like, what are the incentives that will help kids learn better? And so uh, he worked, we I think he did a lot of it. We sponsored the stuff at Houston School District where it was, what would happen if you pay teachers, right? Sort of performance pay for teachers. What happens if you pay parents to show up for PTA meetings or check the homework? What happens if you pay kids?

Will we do this? And it was, and I mean, he he was awesome. And, you know, I was completely clueless because I remember I was like, "Why don't we just give everybody, you know, $1,000 if they get straight A's?" And he's like, "Joe, I don't I don't I I don't understand. Wimbledon is next week. Why don't you just go win Wimbledon? You get like $5 million." You know, it's just. And I was like, "Oh, I guess you got to do all this work and not just."

Subtract.

No. And it's what you're you're teaching kids daily habits is actually what you're trying to incent, not just outstanding outcomes, because that's part of education.

Daily habits, but you're also incenting the results as well.

Correct. But you have to, the whole path. You have to do both. You have to incent, you have to teach them what are the daily habits. It's sort of like.

Yeah. You can't just go win all of a sudden. They have to actually be taken along the right way.

You got to, you got to scaffold your way into it, which also affects how we do education today.

Do you guys figure it out? And that was, I mean, the the result, you tried paying the teachers, tried paying the parents, the result was paying the kids the right way was actually by far the most effective, right?

Yeah. No, paying the kids is by far the most effective way um to do it. And you can get, you know, big effect size on on doing this. It it really works. And when we talk about, we've, you know, we we did not have the budget even for his research back then versus what we use today. And you can sort of think of some of our incentive stuff as like taking his stuff and just jacking it, you know.

So incentives are very important for kids education along with other stuff you're doing. How many children do you have?

So I have uh, two daughters. Um, so one is uh, a college student, and one is a senior in high school. So.

And you helped build the school for them originally, right? As well.

Yeah. Well, actually, how it started. So how how we got into the, how I got into education really in in a big way was a decade ago. A Stanford grad, Mackenzie Price, was a co-founder of Alpha School. And, you know, one of the things I've learned as a principal now, and I've been principal for three years, is parents want their kids to be educated the way they were. And, you know, I went to Catholic school, and I didn't like a lot, but my kids are at Catholic school. And Mackenzie's like, "Oh, come to my new school." And I'm like, "I'm not going to your weird school. This is so weird. This is so different." Like, no. And it took her 2 years, right, of convincing me and selling me and all these things to get me to move my kids over. But the other problem with education is education's not scalable. There's all these pockets of education where you get really good results, but they don't scale. And I very much viewed Alpha and Mackenzie's school is that way, which is great for my kids, great for the other kids in Austin who do it,

but didn't work at scale.

How do you do at scale? And that's where sort of I ended up coming in and sort of was three years ago when Gen AI came out. I was like, "Oo, neural nets are here finally after decades. They're finally, you know," and with these, I was like, "We can take what you're doing, McKenzie, and get this out to a billion kids,"

right? And so it was that realization that sort of did phase two. And so, you know, the transition for me was, I went to my team, and my team have have been there for, you know, 25 years at Trilogy. And for 25 years, they tell me how great they are and how they're better than me. And I'm like, "We'll see. You're just going to run the company. You're going to run the software company. I'm going to go be a principal. I love it."

Um, and so I also made it a little harder for him because I said, "Well, I'm taking a billion dollars of cash out of the company so I can fund." And why a billion dollars? And this is awesome. You're taking money you've made. You're going to put a billion dollars into education. Why? Why is it a billion? Why is it needed?

Um, we need it at scale. You got you need full stack reinvention here in education. You're not going to do it with small money, right? You need full stack, which is, you know, for 20 years, people have funded edtech. Lots of VCs have funded lots of edtech. None of it works, right? There's our edtech investment goes like this. Test scores keep going down. And so, you have to go revisit from the ground up and build it. You got to build campuses. You got to build schools. You need physical plans.

And this seems like a big important part to me. Edtech is not usually the school itself. The problem is that if the school itself is broken, you can't just like put stuff on top of it. You got to make the core work.

You need you have to go back to first principles and reinvent everything. And when we talk about like how we looked at the school to reinvent it, it is it's a lot. It's a lot. And you need a lot of investment to do it. And just to be clear, like my billion is a drop in the bucket of what is required. Hundreds of billions of dollars are, it's a $7 trillion industry globally. We're going to need hundreds of billions to fix.

Hundreds of billions to fix this, right? And, you know, capitalism is going to have to provide capital if we're fixing education, which is hopefully something school choice could do. We're going to get to that as well. Hopefully, you can give a few more billion if you need. I guess good.

So, so the schools themselves, like I like to think, I know this is not probably right, but I So, there's this there's this advancement with Acton Academy that was made here where the students themselves were kind of given more I like like it was like more libertarian school. They're given more authority. They learn how to learn. They have their own rules and stuff. And I like to think you guys kind of took Acton with this new model and you put things on top of it. You put in more incentives and accountability and gamification and AI. Is that like a okay way to describe it or how you got it?

I mean, absolutely on on what they've done. And the founder, the co-founder with Mackenzie came from Acton. He worked with Sanderford there. And, you know, the that is a sort of our roots is definitely comes from there. But we we added definitely more tech. You know, today if you look back, there's definitely more tech involved. There's definitely more rigor involved. We definitely are much more expensive. So, we've added a lot of cost structure.

Why is it more expensive? What what cost money?

So, back to, you know, we're we spend, we have uh, a much lower guide-teacher ratio than what actually, you have more guides.

So, we have more guides. We have more teachers, more adults in the building.

Why did you guys end up needing that?

Um, uh, kids, when you start in kindergarten, right, they need more structure to get them through.

Well, especially the young kids, but like does like a seventh and eighth and nth grader?

No. So, actually, we we change that. So, where are if you look at where money goes, you know, in in an Alpha school, the how much you pay your guides, we pay our guides more.

Number two, at kindergarten, we have a uh much uh many more guides per student. Y.

Uh, when you move out to middle school, the kids are like, "Dude, I I don't need all these guides. Like I'm an adolescent, like, you know." But we take the money and we put them into life skill workshops. And part part of the thing is we'll we'll talk about different schools that we've started. But Alpha, which is sort of our high-end, is a high-end private school where in our design goal when we were doing the product management around it, we said, "What can kids do if money's no object? If you just can you turn a kid up to 11, give them everything? What can you really get out of it?" So that we can set sort of an exemplar around that. Now, we're coming out with schools at half the price, and we're hitting we're.

Even at half the price, you're getting kids to like the very top results.

Academically, it's actually funny because school's a bundle, and actually the easiest and cheapest things to fix is actually the academics, right? Because that's tech-driven, versus the rest of the day is all very human-driven.

Tell us about the life skill workshops. What are those?

Sure. Actually, let me spin back and just say, when we reinvented the school, sort of the five, the five categories to look at. The most important thing that we did, and this is um uh Brian McKenzie's co-founder. When I I asked him, I said, "What are the two things I don't believe about school that I should believe?" This is a decade ago. He's like, "Your kids must love school." And I didn't really like school and dropped out and stuff. I'm like, "It's sort of like spinach, right?" And he's like, "Nope, they need to love school." And today, when we reinvent that, is the core value of every school we start, whether it's an Alpha or any other type. And I believe anybody who's going into education, and our standard is actually, they love kids must love school more than going on vacation.

That's high.

And I believe that is a standard that if we're going to put kids for a decade, right, a dozen years into this stuff, as a parent, right, we should expect that out of the school because it's totally doable. It's a totally doable thing. We should set that as our standard. At Alpha, we're up to 96% of kids say they love school. 40 to 60% say, "I'd rather go to school than go on vacation." Like my highlight as principal in the last 3 years was a few months ago, my two-thirds of my high school students sent a note and said, "Can we keep the school open over the summer? We don't want to take summer break."

And I thought that was the most crazy email I've ever gotten, you know, and we did. So now I guess we're year-round at Alpha High because the kids love it. And the key is they're working on things that matter, that they care about, right? And you have to have that. And you can start that really young. Kids love it. They're excited about it. Wow.

And so that's number one is they have to love school to that level. The n the second one, if you're reinventing school, you know, for the next 20 years in our AI world coming, kids need to learn 10 times faster. We cannot have this 200-year-old model where it's six hours a day, you know, teacher in front of a classroom plus homework, right? AI and learning science, right? uh allow you to teach kids 10 times faster. And for 40 years, right, the you know, Dean Schwarz at Stanford and the schools of education all have written 10,000 papers on how kids could learn two, five, or 10 times faster. Now, they all start with, this doesn't work in a teacher in front of a classroom model. And no one's been willing to break that model, right? Because that is the most sacred model in education.

Dan, they don't want to do what's better.

No one's going to change it. And everybody's scared because no one wants their kid to be a guinea pig, right? You have all those issues.

And so in our model,

right, we have built a learning engine that teaches kids 10 times faster. And so how that reacts or how you see it in our school is our kids come in, our students come in two hours a day. They're at an AI tutor. It's not teacher in front of a classroom. And in that two hours, they learn over twice as much as kids who sit in class for six and do homework. And so our academic performance, we're the best performing academic school in the country. We're, you know, all our classes now, you know, are top 1%. Um, we crush it. And it it's for everybody. We have a gifted talented school where those kids are off the charts.

Yeah. Those are even more ahead. The gift.

They're even more a charge. I mean, and when you see with those kids, we take kids who are years behind. Years behind. And we can take kids from the bottom 25% and get them to the top 25% in two years.

I'm very jealous of this. My friends and I were allowed to go like a grade or two ahead in math and that was it. And that was considered to be like we're very lucky. And if we had this school, I feel like especially a couple of my friends who are smarter than me, they would have just been done by the fourth grade or something.

You totally would have been. We Well, just to uh, to give you some data points, we have third and fourth graders who outscore 50% of the high school graduates in this country. Yeah.

My daughter, my older daughter, who is, you know, 1600 SAT, math, English, double major at Stanford, who went through the old system, you know, and she was at Alpha for 10 years with no teacher. She is looking at our latest version, and she was looking at the kids, and she went down and saw the third and fourth graders, and she's like, "They're getting what I got in eighth grade and seventh grade, and they're doing it in third grade." So, this this acceleration of what these kids can do, I mean, it's getting better and it just keeps accelerating.

We got to get to more of the US faster to make sure we dominate.

Exactly. We absolutely do. We need. And, you know, we have one Alpha, one GT school here in Austin. We need, you know, if any of your listeners are literally like, "I'm a builder and I want to go change the world," come open 500, right? We need great entrepreneurs who want to come and be able to open 500 GT schools.

Or open a GT school just for their kids, maybe too. Even just one's probably.

Open one. Open one. Open 500. Like, let's go do this at scale because there's nothing more important for a society than how it raises its kids, right? It's the single most important thing. It determines whether society continues. And so let's go work on that.

I'm actually curious on this point because because I think there's like a U. We're a society, there's dialectic. We need our best and brightest to get way ahead because they're going to fix everything for us. You also from an ethical perspective want, let's make sure the bottom are taken care of, and that you have classes for the least well-off. Alpha is probably more about the average and the top, or is it also doing things for the bottom?

Everything. We're we're going to get this out. Back to my thing is I took a billion dollars and I'm going to get this out to a billion kids. So, I'm going to have the whole range.

And so, and we do. We have ones where academically, right, the the the the way to solve kids who are behind, right? In a time-based system, it once you fall behind that, you never get to catch up. And for me, it was back to being new in the job. I went to one of the worst performing, you know, academically performing schools, and I sat down and I watched the sixth grade teacher, and the sixth grade teacher is handing out sixth grade material, but I'd seen the test score, which is if you're bottom 10% in this country, you can't read. You don't know 7 * 8. And she's handing out sixth grade material. I'm like, "They can't read." I'm like, "That's like giving giving me an MCAT. Like there's this is you. I don't even know the words on the page. Like this is and you can tell me to have grit and hard work. It doesn't matter. You can give any it doesn't work." Instead, what they need, what that class needed was first grade phonics, right? Second grade phonics. And a teacher who's a sixth grade teacher needs to hand out sixth grade material, right? They're teaching sixth grade. And this is where the why the AI tutors do so much better.

They can actually figure out the ontology of everything where you need to know and don't know and go back and teach it.

Just go back and this kid, you know, and each kid gets the lesson that's personalized to them. And you need first grade, great. You need second grade math, whatever. And that's that is why you get these 10x learning because you put material kids need. To every educator will tell you the two things you need to educate a kid. You need a motivated student, and we'll talk about when we get to motivation. The second is you have to put them in material of the correct difficulty. And AI tutors and edtech, not even ours, just edtech, does that second really well. And that's 10% of the solution is get them into the right answers. 90% is how do you have a motivated student? Let's go back. You said there's I think there's there five. I think there are five key things. Let's make sure we know we're all five.

Great. So that too. Now we're getting to your original with life skills. So once you learn 10 times faster, only takes two hours a day, then you're like, "Well, what should we do the rest of the day?" Right? What is it? Because I can promise you as a principal, the one thing you don't, parents do not want you to do after two hours is send the kids home, right? And so what do you do for the four hours, right? And this is where you teach them life skills. Right? What are the skills that we think make you successful in life, especially as you look in the forward, you know, when AI is going to transform the world, pure academics is not enough anymore. And so in ours, we have a life skills curriculum where we teach leadership and teamwork, storytelling and public speaking, entrepreneurship and financial literacy, socialization and relationship building, grit and hard work, right? And so they're doing these project-based workshops run by adults, right? That's our we call them guides and and coaches. And they're doing these super fun afternoon workshops, right, which drives love of school way up and teaches them these life skills.

How do you do grit plus loving it? Because isn't doesn't grit imply there has to be something difficult going on.

Well, and so I I'll give you one one other thing that you have to believe to think Alpha's model is going to work. And this is probably the most controversial thing I'll say today, which is the key to your child's happiness is high standards. And many parents are very worried. They they think low standards is the key to my child's happiness. But for the same reason people came to Trilogy University, because it was going to be the hardest thing they ever did.

They do that. Kids want to do hard things. They want to do awesome things. And it starts in kindergarten. Now, parents naturally are like, "I don't want to see my kids struggle and fail. I don't." But every development expert in the world will say the key to your child's development is that they struggle and fail on their road to success, supported by a caring, loving adult. Right? That loop is what you just want. That drives self-confidence. It drives resilience. All those good things. It also, and this is the most controversial thing, I can't make a school that kids love so much they'd rather go on it than vacation if I don't have high standards. If kids are scrolling Tik Tok and playing video games all day and just doing stuff, they're not going to they're not going to say they'll just do it on summer break. They have to be working in a team with other people on awesome challenging things. And my best analogy outside of schools and parents just think that's so crazy. Yet 50% of America thinks the place I teach those life skills is after school sports. And if you take the athletic ethos that almost everybody, you know, half the people in America totally believe, they want it because it's high standards. That coach like Westlake football down the street, right? State champions. Every parent is like, "I want my kid on the Westlake football team because A, it's the hardest thing that kid's ever going to do and he'll remember it the rest of his life."

But you should make the everything else like that, too.

Correct. And everybody else is like it. And they already do. Like if you're on the West football team, right, you come during the summer, you practice, right? All these things where I say, "Oh, when I apply to academics, they're like, that's crazy." But sports, everybody expects it's normal because they love it.

This is interesting. I think my friends and I had to create this for ourselves outside of school when we were young. Otherwise, it would have been miserable. So, we had all these things we were doing that were very, very hard, and you'd fail and then you succeed. Did you have that in your life too, where you pushed yourself outside of it?

This is back to changes of my life and back to re this might also affect my views of school. You know, after I dropped out of school at Stanford, my dad had the famous quote of, "You're a [expletive] and you're an idiot and all that." 18 months later, we were talking, and he's like, "You know, I'm so glad you dropped out." I I changed my mind. And uh, he's like, "You know, before you dropped out, I thought you were a lazy little always shirking the work. You never really engaged. You were always trying to do the minimum to sort of get through." He's like, "Since you dropped out and found what you love, I've never seen you work harder. You're working, you know, we were working, sleeping on the desk, 100 hours a week, the classic startup stuff."

And he's like, "Oh, thank God that you're like that and not just this what he was worried about."

And um, and I believe back to this whole thing of like where you go through that transition. Our job, like when we look at Alpha, our job is to find what ignites the kid, right? We started middle school, like don't give them the opport. Kids don't want to be consumers. They don't want to scroll Tik Tok and play video games all day. They only do it because our current system basically doesn't give them options. Like your after school stuff had to be, you know, self-driven. Ours is like, let's just make our schools where we find, help the kids find their passion and make sure the standards are really high, and they will so impress you with what they do because they want to be awesome. Kids want to be awesome. I love it. Let's talk a little more about like incentives and accountability. Like I think one point I heard like the kids are ranked in different ways, which some people don't like, but obviously it's part of the holding them accountable. Like how do you how do you how do you engineer these incentives? How do you do it?

Yeah. So motivation's 90% of the solution. So we spend a lot of time on the motivation part. And the thing about motivations, you have to understand is uh, every kid is motivated a different way. And, you know, understanding that motivation and sort of the hierarchy and framework and changing them over time is critical to to building it. And our guides, when we think of our what our guides do all day. So um, that is their number one job, which is, you know, they're not teaching seventh grade science because the AI tutors doing that. So what do our adults in the building do all day? What they do is motivational and emotional support, right? They are either motivating this kid, they are getting to know this kid so well so that they know what does matter, and then second, how do I support them through that struggle loop we we talked about earlier. And so when we talk about motivation, let's let's let's sort of give you a stack rank of the ones that really matter. Um, there's an Astro Codex article that is out there that talks that's from an Alpha parent who's like, "I think the money is the most important." And we actually, we'll we'll get into it, but I actually don't think that's true, which is.

Uh, the name of our product is called Time Back.

Time Back.

Give kids their time back. That's cool.

And that is by far the most motivation.

I need that.

And Exactly. And it's. And so for kids, we waste.

Most of their kids, their first 12 years in school. We're wasting it. We're wasting their day. And so, and this is how it, and this sort of the product management side that came out of this was my first day, three years ago, first week, you know, I'm now principal because I was like, Mackenzie, I need to go be a product manager and figure out, you know, how to do this. So, I'm talking to these new fifth graders who had just started, you know, and I'm I'm new. I'm like, "Do you guys love school?" Because I have to deliver, you know, the first commitment. You love school. And they're like, "No."

And I'm like, "What would make you love school?" And they're like, "Less school." And I'm like, "How much less?" And they're like, "None."

And I'm all like, "Okay, that's that seems a little light here." And we literally negotiated two hours. And I was like, "Look, how about this? If I would you engage in the apps, right? If I built some apps, and would you engage them in two hours, if we made the other four hours awesome and fun and stuff you loved and all that?"

And the kids are like, "That sounds fair."

And so I went to my engineering team. I'm like, "We got two hours. We have to fill this kid's head with awesome knowledge, and we got to do it in two hours." Luckily, because of learning science and AI tutors and Gen AI, you can build this engine, which is what we did. But that motivation, the kids will tell you, which is, you know, and the counter on the money is if you're back once down in Westlake's honors program, it's 6 hours a day and 4 hours of homework. You can't pay those kids enough money, right, to be happy.

So, but once you give kids their time back and free it up to do all the awesome stuff they want to do, plus we think is really valuable, hard things, all these cool things, then that's the that's the primary motivator. Then second, though, let's talk about we use, you know, sometimes in kindergarten, it's a sticker. You know, all our guides have these. You know, we can we can talk forever about all the individualized motivation that each of our guides.

Because there are, because there are different ones, you classify there different types of motivation.

Different different types of motiv, you know, a guide, there's our middle school girls love the Taylor Swift dance-off. So after they finish their lessons each day, they take 15 seconds to do the Taylor Swift dance-off. I'm like, "Okay, that's I guess that's what does it, you know." Just every kid, you know, has different things. Let's talk about the big controversial ones, though. Let's talk about money and going back to Roland Fryer and stuff. So, uh, where to use money? Parents' natural reaction is, "I hate this. I don't ever want to use it. It's evil. It's bad."

And so, I'm.

We we have a range, and I'll I'll go through some examples to sort of challenge you on that.

Mhm.

Um, a lot of us had parents who like, you know, "Get straight A's, you get $25," or something like that. So.

Yeah, my dad paid me for my A's, I think.

Right. So, there was always a little bit of this, but like we just amp it, right? And we sort of took it as a, "How would you do this ground up?" So let me take examples what parents will agree with. Okay. So first off, in middle school, right? Let's say I pay your kid to do grade-level academics, and then they use that money. It funds their passion project account where they get to do an afternoon workshop. That's their passion project. So I have a I have a high schooler actually who um, she's an arts theater girl. Let's call her Arts Theater Girl.

Um, 790 math SAT.

Wow.

Okay.

It's pretty good for Arts Theater Girl. When she came in, she was not thinking 790. We had to use money and motivation to get her there, right? To break through things, and we could talk about that.

But she used it to fund. She is launching the all um, the first all-teen produced, acted, shown Broadway musical.

Amazing.

Right? Sourced everything off TikTok. She needed the money to go talk to a producer up in New York City. Every parent's like, "Okay, that seems okay, too." Um, uh, or how about, and middle schoolers, after they finish their academics and crush it, because we we pay every kid in middle school at Alpha $1,000 if they get to the top 1%.

And but it funds their Robin Hood for Kids account to teach them how to.

Trade, earn, save, invest, um, spend, and donate.

Amazing.

And you're like, parents are like, "Okay, that seems pretty good too, right?"

That's reasonable. And so those are those are reasonable places, you know, of of where you'll where money is okay. Um, other ones, you know, we use money basically for two things, because money is a big motivator. It's not number one, but it's still big, is if we can inculcate daily habits.

Yeah.

Daily studying, right? Daily good habits. You're willing, and generally I tell parents, you're willing to pay the kid to get the habit jump-started, right? Just get it started, and then it will continue. And so it's worth it to whatever the motivation you need. And if money's there for the kid, do it.

Some kids it's better than others that have money for that.

Yeah. And some aren't motivated by money. Like my oldest daughter, right? She was naturally just loves school. Money never moved the needle at all.

My younger daughter is literally the opposite. And I'll give you this, and we'll we'll tell this one. This one's, you know, sort of because I personally live through it. It's most emotional one. Um, uh, but it I think it encapsulates all the the struggle parents have um, because we had a lot of family discussions. So my daughter, my younger daughter, you know, is opposite of her older daughter, uh, my older daughter. And when she got to middle school, she got to top 10% academically, right? She hit her top 10%. And she came to me and she's like, "Dad, you know, I'm not like my older sister, you know, I'm not top 1%. Top 10's great, you know, and uh, I'm super happy." And I was like, "Well, you know, I the one thing I know about you is you love to shop, and you love that more than.

"anything." And so I bet you $1,000 you can't get to top 1%.

And so she literally filled her Amazon card up and would look at it every day. Everything she wanted to buy, and then she'd do her apps. Oh, that's funny. And she'd do her apps. And then she hit top 1%.

Now, but it encapsulates the problem because we had a lot of family discussions cuz my wife was not a fan of this because of two reasons. One, you're setting top 1% as the standard for somebody who says that's not what I want. So, and then second, you're paying her for this, right? Both dimensions and lots of parents don't like either of those. My family was living exactly what all the parents think.

And but here's the part that you know was transformative is after my daughter hit it. She sat down with my wife and was like, "Hey, mom, I know you didn't like this, but you need to understand that before this, I never thought I was as smart as my older sister." Right? I just I didn't think I was smart. But after doing this, I realized I can do anything she can do if I just work hard at it. That's awesome.

And that concept and that is the second use of where I would tell every parent use money. A lot of education is your kids have natural blocks where they, you're unlocking they can do these things. I love that about the inner city stuff too with Rolling Far because you had these kids that are maybe from families no parent, no father in the home, not doing well and they just assume they can't and all of a sudden you showed them they can. I thought that was really neat.

No. And that is and that part where we should spend $1,000 for we spend 20 grand a kid in this country for public school, you know, spend $1,000 so every kid wakes up and is like, I can get to whatever academic performance, teaching them what's possible. Exactly. And breaking through that those internal hard uh limits that they have.

For people who don't know very well what's going on with Alpha, one one worry is that, oh, you're doing this for all these affluent kids who are from the good families and they're smart anyway for the most part. Uh but like what's the evidence we could do this more broadly? I think you did things in Poland and Kenya as well. Tell us about the more broad evidence.

So, you know, if alpha is the high end where you're like, okay, money is no object. Now, we got to get this down and I have to be able to get these same results at less than $20,000, right? I got to drive that cost down. And to a billion people, I got to get it down to less than a thousand. So, yes.

Well, well, first America though is like 10 to 20,000 or something. It's it's basically it's a trillion dollars, 50 million kids is the round estimate. So, 20,000, right? 20 grand a kid. And then but yes, if I'm going to be doing Kenya and subs Africa $1,000 and um and so and that is our target goal. We're we're absolutely going to get there. It's not going to be tomorrow, but I I'm in this for the next 20 years.

America first, but then the rest of the world. Here we go. Absolutely. But but we'll give you examples. But back to motivation, right? The things are different, which is we can take we we absolutely one of the things about an AI tutor, it doesn't matter where you start. So you can be in the bottom 25%. And if you have a motivated student, we can get them there, right? It's how do you get them to do that first grade phonics lesson like I was explaining before. It's all motivation. It's 90% motivation.

So, we've run we've run pilots. You know, we don't have this rolled out broadly, but we've run pilots, right, in public schools where you take MTSS level three kids and MTSS level three is basically your bottom 10% kids academically. Got it. And we sit down and we're like, here's what's different of us than normal edtech. Normal edtech, you're like, give them the app and see if it works. And we're like, the app doesn't matter. Like I mean our stuff's great but doesn't really matter. It's what are you going to do to motivate the kid to do the work? Yeah.

Right. And so we literally on on our pilot we like gave the kids gift cards, right? If they gift cards unlocks if they finish the lesson. Yeah. They they'd unlock the gift card if they finish the lessons. And all of a sudden if you talk to the parents who did that at that public school system, they're like or the the teachers are like it transformed these kids' lives. The parents will say the same thing.

Yeah. We have, you know, our middle schoolers, back to Alpha, our middle schoolers were like, they read about how these Ukrainian refugees didn't have uh schools and teachers, right? And so, this was uh two years ago now where they're like, "Well, we're going to go to Ukraine, right, and teach them how to use our engine and and cool, you know, fix it." And they're like I'm like, "Wow, that seems really hard for you guys to do that." They're like, "Mr. Lemon, you say we're limitless and can do anything. We can do the impossible." I'm like, "Okay, that's true." Although, I did find one thing that's impossible, which is convincing parents to allow their kids to go to Ukraine during a war. So, the parents said no. So, the kids went to Poland instead.

Yeah. Refugee center. There was refugee center right on the border. They went there. And back to motivation. So, before they went and they had to spend from August to to um back to when you talk about life skills. This is what they did from August to January is they had to raise money for it. I mean, they had to go raise all the money. So they're walking around Austin, you know, they had to learn Ukrainian food. Like you couldn't go on the trip unless you were able to order your food and you know cuz you had to be able to talk to kids and you know relate. And so they did all these things and then in January like they they fly over there and you know the the refugee workers are like oh they so want to learn. They have a thirst for learning and all these things. And the uh the middle schoolers get over the alpha kids and they call me and they're like Mr. Lemon, these kids' lives suck. They have no interest in doing math problems. None.

And I was like, you guys are the experts. You're their age. Figure it out. Figure out the motivation. They call me back the next day. They're like, $2.50. If we pay these kids $2.50, because they have nothing. Yeah. $2.50 a day, they will do the lessons. And if you know, and just we could really crush it if you double it if they do a fiveday streak. And so they changed the program name to learn and earn.

And so no and so we've had for a couple years we have over a thousand Ukrainian refugees right on this system. Learning as fast as our $40,000 private school. Such it's such a cool use of being a billionaire is to be able to help tons and tons of kids and you figure out they need a little tiny bit of money and it it's must be really satisfying to be able to use that scale of money to change these lives.

Yeah. And I I look at this it's going to we're going to be able to fix education. I I know there's been so many claims in 20 years and all this hype and stuff and obviously I'm gonna spend the next 20 years and you know to to make it happen but you know this every kid can get this system like I you know our our vision if you said what what do we have to get to sometime in the next 3 to 5 years we need a tablet that's less than $1,000 so on device AI to you know hit the cost target on device AI that teaches every kid on this planet everything they need to know in two hours a day or less all the things we spend six hours in homework very Neil Stevenson.

Exactly. It really is and it's just and make that available. But the key to that whole thing is how are you going to motivate the kid to engage with the app? That's the thing that dates left out. These the motivation incentives are actually much more key than they really matter. And so some of them are just, you know, there's cash stuff, but others, you know, and that we're talking about is, you know, a big motivator for kids is video games and screen time. And so like we've backed to other motivation things besides money.

I heard you have some kids who just won't study at all, but then you'll like let them play video games if they unlock certain things by studying. That's very clever.

Well, back to parents allowing motivation. How about for one hour in the AI tutor, you give them an hour of screen time, right? Most parents when they're worried about managing screen time, you know, they're like, "Well, if my kids top 1%, yeah, I'm going to let them play some video games." It's when they're behind that you don't want them to spend.

That was a deal I made with my parents. My actually my dad and I made this deal that as long as I had straight A, he'd stop worrying about my bedtime. My mom hated this deal. I was like third or fourth grade. She's like, "What are you doing?" But it's like, but you know, I think it's fair if you're And this is my for my oldest daughter. I was always like, you can read as late as you want. Just you can't complain when you when you get up for school.

As we're doing my oldest, too, she reads really late at night and they just read and they think they're like getting away with stuff like it's totally awesome motivation. So anyway, so like you can do it. Give kids video game time.

Two policy questions that come out of this before we finish that I think a lot of people are curious about. So one of them is a battle I'm really involved in. I think for example, New York State right now currently bans any use of AI in these things. So your so your apps actually are not allowed there as far as I understand. Uh this is a big battle in our country. Are we going to let AI get involved and help kids? Um is I mean are you following this at all? It seems like there's a lot of states that want to regulate these things and it's it's a big big question.

Yeah. Well, it and it's it's a huge question and you know it is a big one because I also am on record that you know n if you deploy chat GPT to students 90% of them use it to cheat. Yeah, it's not necessarily that useful. It just it is a cheatbot not a chatbot and and so it can do harm for sure. It can also be awesome like the way using it right is great.

Use it right. It's it's un we can't we cannot ban using AI right because it transforms kids childhood and so we have to fight this to the end which is the correct use of AI can have every kid have a dramatic like AI to a 5-year-old this is the best time in history to be a 5-year-old if we allow AI to transform the 12 years of schooling that you and I went through this is an awesome point and make it so they love it versus like I yeah for a lot of my school too I was stuck as a prison right it's terrible so this so hopefully the moderates to win on this one. It's going to be a big battle. I'm very involved in that.

The other policy question is school choice and and and I know there's lots of different views on this, but you know, my my view and I've been involved in this battle is that we should let parents like try things because when you try things in a free society, then the best new ideas can win. And so, and school choice is going to fund a lot of new alpha schools, it sounds like. So, how are you thinking about this?

So I look at school choice I'm you know yes is my answer which is you know I'm a I'm a product guy and parents want different things and trying to have one school where you have to solve all parents problems it's an impossible job and so I'll be like I look at the superintendent of public school districts or you know principles of public schools it's 10 times harder than mine I I don't know how to solve it to be honest where you know you want somebody who wants X and the opposite of X like I want academics I hate academics Right. I care about all these other things.

Yeah. I want values. Don't teach my kids your values. I mean, it's an I part of what we do at Alpha is we're very clear of this is what we do. Right. And if you don't like it, don't come. Right. And you need that kind of thing. Like we have a sports academy, right? We have a sports academy. And if you think sports motivates your kid, send them to a sports academy. We also have a gifted talented school.

Yeah. You yourself are creating multiple types of choices. Correct. You have to create all these different choices and we need a thousand entrepreneurs creating all these choices so a parent can send their kid to a school right that's going to motivate them. when you sit and say I have to make a kid love school so much they don't want to go on vacation man, you have to optimize that school for them right? And like you look at our gifted school right as as an example, you know, in most public schools there's you know, one or two kids who are gifted, they're often shunned dork nerd right? It's not great to be a super smart kid in a lot of schools man. You go to our gifted school, I mean, those kids are they freaking amp each other up. It's so amazing. Like they came to me and they're just like Mr. Lemon, we're going to be the last human smarter than AI, right? I mean, and I mean, it's just, you know, and just back to an example, you know, two two of the groups came and said, we want to enter the global AI debate this last spring. It was think 10,000 people from around the country or the world. It's global competition. When it was cut to the round of eight, we entered two teams. When it was cut to the round of eight, both our teams made it to the round of eight and we became we're the last Americans, right? And we ended up like second and fifth. And this is the kind of stuff when you can build school choice where you're like, let's go put all those kids together and have them be awesome. I mean, it's just so amazing. And they they love school, right? They don't need money incentives and stuff. They're like, when you ask them what would make you love school more, they're like more academics, right? And you're like, yes, give them a third power hour. Give them a That would have been my nerdy friends in me. I love it. I love it.

How do you One other thing I wanted to ask because a lot of my friends, my wife asks about it a lot. uh it feels like in the age of AI um a lot of people are kind of losing a lot of their values and principles foundation right so I think you know I think if you're British and you're Christian it's really important to be proud to be British and proud to be Christian otherwise you have what happens which is society kind of goes ary and and so in America with my kids we're really proud to be American and and we really believe in the American Constitution and its values in a way that schools usually don't teach because we really strongly believe in that and we also really strongly in our case believe in our Jewish traditions and Jewish values which we want to impart to our How do you think about giving kids these foundations in a place that's this that's obviously not religious? Like what do you do?

Yeah. Well, I I believe that you know part of teaching kids you are indoctrinating them, right? And this is however you want to use your educating them, indoctrinating them. You're giving them you're giving them values. And so every parent has a set of values, right, that they want to impart. And if you want to step back even more than America, just globally, it's one of the things to get to a billion kids that we think about is, you know, every country believes I need to care about my customs, laws, values, and curriculum.

Yeah. Of what we're going to have our kids. And I believe in the AI world, every family and every society, every country has to say, what are those values that we want to have kids learn? Because today, if you take America, there's a whole set of values that are getting put into kids via Tik Tok, right?

Which is not which are not my values at all. They're not your values at all. And they are super destructive to tons of kids, right? And we look up every day pro- socialism. It's like it's like a lot of really crazy I always I always tell my kids the two things that you know Tik Tok that your generation believes that a bunch of people don't is that socialism is better than capitalism and the rights of the listener are better than free speech and those that is what's on TikTok right those are the two things and it's brainwashing them and they're in it for hours right and so that's why they believe it.

Right. That's why you just you believe it. And so if you believe the opposite like we wake up today when we talk about our AI tutor and putting thing thoughts in that no you we need to out compete Tik Tok and so explicitly in alpha obviously even there's no religion you still want to have those values for example of of free speech and of and of and of and of markets explicitly in the school.

They're explicitly in the school and well when you just take civics right what is the correct civics right and you know we have the 250th coming up next year you know what are the core American values that founded this company right country and how do we get this right. And it's important because if you just taught to the test you wouldn't necessarily get those so you actually have to also teach to principles as well as to the test. Correct. I love it. That's that's really important.

And principles and core values matter and you every you know now we don't take a left right position, right? We we believe in both sides. Part of critical thinking as an example just to go into it is we believe if you know everybody says we want kids to think critically, you know, and have critical thinking. How we measure that is can you argue both sides of the debate? And no matter who you are, if you can't steal me on the other side, you don't understand the debate.

Yeah, that's important. We need to teach every kid how to do that, right? On every issue. And that's a measure where we're like, "Ah, that is going to do more, right, to help the civics debate in this country than anything else we can do."

I had a really good teacher who had us do that and have to argue both sides. And it's really tough to get turn your mind around and do it, but it's fun when you can win both sides.

No. And it and it it it puts you in the other string. No, mine I had the same thing, which is I grew up in Catholic school and my junior year morality teacher, right, Father Gonzalez. I came in one day, he's like, "Well, Joe, it's going to be your happy day. You're going to argue against the Ten Commandments today." And I'm like, "Okay, this is going to be fun." I totally just my personality, right? Imagine imagine most schools doing that. Most Christian schools wouldn't be able to That's great to be able, right? The Jesuits very much viewed Yeah. I was a Jesuit school and they very much viewed that there's no dogma, right? We are going to learn and the other argument in order to in order to defeat it. Right.

Exactly. No. And he said there was another kid in my class who like you have to argue proabortion. And the kid said I won't. I refuse to do it. And he's like I'm going to give you an F. And the parents came in and they're like, you know, the priest is saying, no, you have to learn how to even though we are pro-life, you must learn the other arguments otherwise. Yeah. Because you don't understand the other side. You're never going to be able to work with them. And Exactly.

Joe, we started this podcast to like push back on cynicism and pessimism and nihilism in our country. I think what you're doing is is obviously very pro optimism. What's your grand vision for 10 or 20 years from now? Like what can we achieve for our country if this works?

Yeah. Well, education is the most important thing that we can do, right? There is nothing more important than educating our youth, right? And raising the next generation. And when I look at AI, you know, and what's coming over the next 20 years, it's right, it's going to be a mixed bag for some adults, right? In that, you know, we're in Austin and there's robo taxis and, you know, uh, Whimos and everything and being an Uber driver is not really going to be great five years from now. But when you take AI and say, what's it going to do for kids, right? It is an unmititigated good, right? It is awesome for them because it is going to transform those 12 years and these kids. AI gives kids superpower used correctly. It gives kids superpowers. There's no longer, right, 12 years, 6 hours a day, wasting most of our kids' childhood. These kids are going to be able to do awesome things, love it, engage in it. And when we look forward 10 and 20 years from now, we're going to be like, you know what, the number one use of AI was to transform our next generation to be awesome.

A lot of people are worried about AI and social media and Tik Tok and all these things. Is there a way that we can take this and do what you're doing to transform them to be more principled people who are actually better leaders later who can withstand that?

100%. I I mean I back to the whole principal part. It matters right on the values you're going to be able to do it. But when you have when kids are learning 10 times as much they love it. You're doing challenging things that they love these kids, right? The last line when we didn't even get we we forgot to talk about four and five on our on our uh list. But number five is character, community, right? Classmates and culture, right? That's the core part of a school. And when you talk at the end of the day, all we you care about as a parent is did I raise a good kid, right? Character, right? And this and we look at what we're doing at Alpha and if you you know meet Alpha kids, you're like, God, those are good kids, right? And I believe that's a that's something that we absolutely can do and AI is right. It's a double-edged sword. It can be used for bad and we can Tik Tok brainwash everybody and it'll be really bad or we can use it to transform education to actually build the kids that we all love and are excited about.

I love it. And and just so we have it, what are the five that the five things are? You must love school more than vacation. Your kid can crush academics in two hours a day. Third, uh life skills, the whole life skills discussion. These are the critical life skills that your kid needs to succeed in an AI world. Fourth is guides and coaches, right? When you take them out of teacher in front of the classroom can provide 10x the value to growing kids, right? And connecting with kids, right? Then and then fifth, the core community, right? So character, community, classmates, and culture are the core thing of a school that you they are hard to measure, right? But they're critical if you're going to build a school of the future.

Awesome. Well, talking to you makes us all a lot more optimistic. Thanks for your leadership, Joe.

Thank you.