BloomTech, previously Lambda School, cuts half of staff

A little over a year after buzzy coding bootcamp Lambda School rebranded as Bloom Institute of Technology, the venture-backed startup is conducting massive layoffs, according to sources. The workforce reduction, per people familiar with the matter, has impacted half of the company’s staff across content, product, data and engineering teams. The layoff is expected to have impacted around 88 employees, using metrics provided in BloomTech’s 2022 diversity report metrics. 

Employees were called into an All Hands meeting this morning in which BloomTech CEO Austen Allred notified staff of the impending layoffs. After the meeting, those impacted were notified via e-mail. According to documents seen by TechCrunch, employees will get normal pay and medical benefits until January 31, 2023 and are “expected to work” through that period. Those laid off were also offered optional time with managers to talk.

This is the company’s third round of known layoffs since the COVID-19 pandemic began. During BloomTech’s last big layoff, in April 2021, Allred admitted that it’s been difficult to make his for-profit company’s vision of “incentive-aligned education work.” In a now-deleted tweet posted earlier today, Allred quoted a prior statement of gratitude for employees pushing through the work despite being attacked from all sides, adding “even more so today.”

The name change to BloomTech appeared to be part of the company’s attempt to get things back on track. At the time, the startup updated its tuition payment options to introduce an outcomes-based loan. The financing instrument allows students to take a loan with zero dollars upfront, and then get 110% of their tuition refunded, including fees and interest from an approved lender, if they are unable to secure a job in web development or computer science within the next year.

At the time, the move meant that BloomTech was expanding beyond the original vision of scaling income-sharing agreements (ISAs), the controversial financing vehicle that it helped pioneer. ISAs, which are used between 90% to 100% of students within BloomTech’s cohorts, will continue to be offered as an option, with some changes.

Fast-forward to today, and the current state of the tech labor market doesn’t make BloomTech’s mission any easier. The widespread layoffs within tech companies have unlocked a massive market of trained professionals looking for their next gig; all potential competition for BloomTech graduates hoping to stand out against ex-Twitter and ex-Stripe employees. Career Karma, a platform that helps connect students to coding bootcamps, cut staff this year, while Flockjay pivoted away from its bootcamp pitch in 2021.

Market uncertainty is certainly one factor that impacts outcomes, but BloomTech has also been embroiled in a number of lawsuits over the past few years led by students who claim to have been misled by the institution. BloomTech’s pitch is that it can help students land tech jobs, but questions have arisen about what happens when students get jobs after graduating from BloomTech’s program that are unrelated to their studies there, and whether they still owe the company a share of their resulting income.

These tensions have grown over the years. Most recently, reports one education publication, a student accused BloomTech of intentionally misrepresenting its job placement rates. Last year, leaked documents obtained by Business Insider raised questions about the company inflating its efficacy and hyping up a curriculum that didn’t upskill folks at the level expected.

Allred responded to request for comment days after publication, saying that “BloomTech’s employees are fantastic. We had to cut costs to become profitable. You should hire them.”