The 50 richest families in America are betting on this trend

Summary

My First Million Podcast: The 50 Richest Families in America Are Betting on This Trend

Date: May 27, 2026
Hosts: Sean Ellis, Dharmesh Shah
Guest: Joe Montana

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Episode Overview

This episode dives deep into the transformative world of education innovation, led by marquee entrepreneur Joe Montana. The discussion explores Joe’s journey from youthful entrepreneur to education reformer, the founding and scaling of Trilogy, fierce recruiting battles with companies like Microsoft, and now, his billion-dollar bet on reinventing K-12 learning through Alpha School. The hosts probe Joe’s bold approach to product, people, and standards, and his vision for using AI to transform education worldwide.

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Key Discussion Points and Insights

1. Extreme Childhood Learning at Alpha School

• The episode opens with stories of challenge-driven education at Alpha, where even kindergartners face 40-foot rock walls and must pass “receive critical feedback without crying” tests ([00:00]).
• Joe Montana asserts: “This is the best time in history to be a five year old” ([00:09]).
• Alpha’s ethos: hard things plus high support create engagement, learning, and grit.

2. Joe Montana’s Entrepreneurial Origin Story

• Joe details dropping out of Stanford to found Trilogy after writing high school papers on AI, positing that neural nets were “decades away” ([01:37]).
• First big product: a complex configurator that solved an enormous pain point for Fortune 500 manufacturers ([02:59]).
• Early struggles with credibility and sales: “No, the Fortune 500 does not want to buy from a kid dropping out of college,” it took three and a half years to land first customers ([04:32]).
• Once success started, growth was explosive and they quickly became one of Austin’s largest employers ([07:19]).

3. Recruitment Wars with Microsoft

• Joe tells the famous story of out-recruiting Microsoft for Ivy League grads—attracting top talent with the promise of working on impossibly hard problems ([08:12]).
• “Bill Gates literally flew down to Austin to figure out why we were getting the best graduates” ([08:12]).
• The recruitment battle escalated to the point where Gates personally called candidates; Joe countered this with perks like ski trips and hands-on relationship building ([09:23]).

Memorable Quote:
“I need the candidates more than you do, Bill...I’ll just escalate. I’ll bring them on a trip...because he’s never gonna have time to talk to you again.”
— Joe Montana ([09:23])

4. Intensity, Boldness, and The Importance of Standards

• Joe credits his “extra gear” to loving hard work and mission-driven projects, comparing his intensity to Bill Gates and Elon Musk ([10:29]).
• Story of focus: HP was a critical early customer. The entire team worked “200%” on this account: “Every single person's working 80 hours a week on Hewlett Packard. And that leaves us an extra 20 hours a week to work on, you know, the other customers” ([12:59]).
• Intensity at Trilogy included unique recruiting processes: ending their “Trilogy University” induction with a Vegas trip where each grad had to bet a month’s salary at roulette to test risk tolerance ([14:02]).
• Navy SEALs swap program—further emphasizing a culture of grit and embracing challenge ([15:07]).

5. Alpha School’s Approach—Hard is Attractive (If Supported)

• Counter to most tech companies' perks, Trilogy made things intentionally hard to attract the ambitious:

“Kids want to do awesome things... The reason they're excited is because they're going with their friends doing hard things” ([16:49]).

• Alpha leverages this insight by setting high bars: second graders run 5Ks, eighth graders complete Tough Mudders, all with robust support ([16:49]).

6. Making the Unsexy, Sexy: Product Philosophy

• Joe rejects the idea that product appeal needs “coolness,” instead making it “awesome” through technical and intellectual challenge ([19:44]).
• “You’re never going to convince anybody that configuration is sexy...but the AI algorithms under it were some of the most complicated computer science you could solve.”

7. High Standards, High Support—Not “Sink or Swim”

• Joe emphasizes the vital balance between demanding performance and providing scaffolding:
  • High Standards, Low Support = disengagement.
  • High Support, Low Standards = no grit, no skill-building ([24:05]).
• Stories of motivating students with achievable goals and real scaffolding:
  • Even skepticism is overcome with incremental wins and motivational tactics, e.g., the $100 for 100% scores on state exams ([25:01]).

Memorable Quote:
“If you go to your average parent and say your kid can get 100 on the Texas Star, 95 plus percent are like ‘no, they can’t’. And all you have to do is show kids they can right now.”
— Joe Montana ([23:00])

8. How to Instill Motivation and Frameworks in People

• Joe credits great hires and mentors (Jim Abel, Dr. Yeager) for coaching him past high standards/low support management ([27:54]).
• The reference book—10 to 25: The Science of Motivating Your Kid from Age 10 to 25—is required reading at Alpha for a reason ([29:26]).
• Simplicity in strategy: move away from complex 20-page documents to “three lines of three words each,” so no one can hide from the company’s true mission ([30:24]).

9. Alpha’s Three-Point Promise

1. You will love school.
2. You will learn twice as much in two hours as in a six-hour traditional day.
3. You will build valuable life skills—leadership, grit, financial literacy, public speaking, teamwork, etc.
   ([32:03])

• “If you give me time learning twice as fast, I get to go beat the top…I can get a hundred on the Texas Stars and catch up even if I start in the bottom 25%.” ([32:03])

10. Size of the Opportunity and Scaling Plan

• Joe envisions Alpha transforming education globally, with a 20-year road to reach a billion students ([39:35]).
• AI is presented as the lever to multiply outcomes and free kids’ time for higher pursuits ([36:30]).

11. Business Model and Market Entry Strategy

• Alpha targets the high end (private schools) first—a “Tesla Roadster” approach—building credibility and funding, before mass expansion ([42:58]).
• Innovation on business models, including time-back SaaS software and a game-based global learning product ([47:14]).

12. Why Joe Invested $1 Billion and Re-entered the Public Eye

• After talking to other billionaire philanthropists who failed to crack education, he saw AI’s emergence as a unique enabler ([47:28]).
• Was personally convinced when his own daughters loved Alpha more than summer camp ([47:28]).
• Direct quote: “The greatest untapped resource on planet Earth is human potential. And we now have the first chance, right, in 100 years to re-envision it" ([39:35]).

13. Operating Companies, Cashflow, and Business Acquisitions

• Post-dotcom, Trilogy began acquiring distressed software firms, building one of the best SaaS operations and generating cashflows to fund Alpha ([52:18]).
• Joe’s intense, lifelong study of Warren Buffett guided these value-focused business strategies ([53:13]).

14. Learning Framework: Human + AI

• Joe and Alpha’s framework for mastering expertise:
  • DOK1: Facts
  • DOK2: Summaries
  • DOK3: Insights
  • DOK4: Creating new knowledge ([55:10])
• Joe personally “does a brain-lift” every day: one hour reading and summarizing, with a focus on generating at least one new Dok3 insight ([58:06]).

15. Long-term Impact & Societal Vision

• Joe predicts a world where human potential is radically unlocked, with Alpha grads doing things like publishing in Nature as teenagers ([59:40], [61:02]).
• Recognizes some ceilings (e.g., not everyone will play NBA basketball), but insists most people radically underestimate their own or their children’s ceilings ([61:06]).
• “Nothing more important to society than raising the next generation…We now have an answer for the first time in a hundred years” ([62:56]).

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Notable Quotes & Memorable Moments

• Recruiting Against Microsoft:
  “I need the candidates more than you do, Bill...I’ll just escalate. I’ll bring them on a trip...because he’s never gonna have time to talk to you again.”
  — Joe Montana ([09:23])

• On Human Potential:
  “The greatest untapped resource on planet Earth is human potential.”
  — Joe Montana ([39:35])

• On Standards:
  “If you go to your average parent and say your kid can get 100 on the Texas Star, 95 plus percent are like ‘no, they can’t’...all you have to do is show them they can right now.”
  — Joe Montana ([23:00])

• On Alpha’s Promise:
  “You will love school, you will learn twice as much in two hours… and you will build valuable life skills.”
  — Joe Montana ([32:03])

• On Business Philosophy:
  “Why not be the best? Why would you do the other?”
  — Joe Montana ([54:54])

• On Scaling Education:
  “You know, my view is I’m 20 years to get this to a billion kids...AI is going to transform the world. There is nothing that is going to have a bigger impact than education.”
  — Joe Montana ([39:35])

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Key Segment Timestamps

• 00:00–01:15 – Alpha School’s “hard things” culture, bold childhood education
• 01:33–04:32 – Joe’s origin story, founding Trilogy, first enterprise deals
• 08:12–10:12 – Rivalry with Microsoft over top college recruits, recruiting tactics
• 12:59–14:02 – Work culture intensity: HP stories, 200% focus, Vegas risk challenge
• 16:49–19:44 – Recruiting hard workers; “hard is attractive”; extending philosophy to Alpha
• 23:00–25:01 – High standards, high support, and scaffolding in education/company
• 29:26–30:05 – “10 to 25” book reference and parenting model at Alpha
• 32:03–36:30 – Alpha’s three-point promise; learning science; time-back product
• 39:35–42:56 – Scaling for a billion, market size, why this is the “best time to be a 5-year-old”
• 47:28–49:54 – Personal motivation for investing $1B; being convinced by his daughters
• 53:13–55:10 – Influence of Buffett, becoming world-class, DOK1-4 learning model
• 59:40–62:56 – Impact of AI on human knowledge, Alpha’s ambitions, and societal implications

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Final Thoughts

In this episode, Joe Montana emerges as a bold, systems-level entrepreneur—willing to invest at a billionaire scale to reimagine education. His ruthless focus on high challenge and high support, his belief in unlocking human potential, and his data-driven frameworks merge to create a compelling, actionable vision for education’s future.
The hosts and guest maintain an enthusiastic, “let’s change the game” tone—that resonates with entrepreneurs, parents, and anyone interested in the power of technology to reshape society.

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For listeners interested in the intersections of entrepreneurship, AI, education, and human motivation—this is essential listening and a playbook on ambitious, systems-level innovation.

Transcript

[Sean Ellis]

I'm going to read you the most alpha sentence possible here. Kindergarteners must climb a 40 foot rock wall and pass a receive critical feedback without crying test.

[Joe Montana]

Right? This is the best time in history to be a five year old.

[Sean Ellis]

Explain.

[Joe Montana]

I feel like I can rule the world. I know I could be what I want to. I put my all in it. Like, no days off on a road, let's travel. Never.

[Sean Ellis]

Well, I'm going to flatter you for a second. So the easiest one is I, I wish there was an alpha school near me so I could send my kids to it. I actually have a kindergartner, so that would be perfect. But you have this really amazing story. It's kind of the story that me and Sam like to tell on this podcast because it sounds like a movie. Here you've got this sort of secretive billionaire, right? This guy who in his 20s, drops out of college, figures things out. You're on the COVID of Forbes magazine when you're 27 years old and you built multiple huge companies, multibillion dollar companies, and then you disappear for like 20 years, nobody hears about you. You stay out of the public limelight. You're not out there like us, talking on podcasts and saying how great you are. And then you take a billion dollars of your own money and you use it to try to reinvent education. Now you're back.

[Joe Montana]

Yeah. So in 2005, I got married, which was also the first year of podcasting. I did a podcast actually at Stanford. That was my last one. And then I went, signed it for 20 years. And then now my youngest daughter is about to go to college. And so now I'm back on the road, right? I'm back in the limelight. And I hopefully Balfa will be doing it for the next 20 years to fix education.

[Sean Ellis]

Why don't we start at the start there? So you have this idea for Trilogy and you drop out of college.

[Joe Montana]

Actually, in high school, I wrote a paper about AI. And so literally in high school, I was writing a paper on AI. One of the paragraphs said neural nets are decades away. I then went to Stanford and I was in class with the father of expert systems at AI, Professor Feigenbaum. So my buddy and I, you know, we're like, we can't sit in Spanish class anymore. So we dropped out. You know, back then it was rare. And so the parents are not excited. My dad famously said, you're a moron. And then we built Trilogy and our claim to fame. Actually, in the 90s, it was the first AI product to sell a billion dollars.

[Sean Ellis]

Did you have the idea when you dropped out or you drop out and say let's come with a whiteboard, let's come up with the idea?

[Joe Montana]

No, that we, we had the idea which was you could build this product called the Configurator, which was expert, had a range of things that they could solve. Configuration was one of the domains that they've been trying to solve since late 70s basically. And you know, by the late 80s I was like, oh, we can totally do this.

[Dharmesh Shah]

I tried to figure out what Trilogy did because at one point you guys owned so many different products. I think you owned a bunch of different companies. And I was trying to figure it out and I was like, is it sort of like if an airline needs to like buy parts to build an airplane, your you built software that would help them decide how many bits and pieces for each, like how many seats they need, therefore what they should order from the manufacturer. Was that. Right.

[Joe Montana]

The first product we had that started the company was a configurator. Just think of a configurator on like you know, a car website or Dell computer where you're configuring your computer. Now just imagine it if it's a million times more complicated, which is a room size phone switch or a Boeing airplane or you know, back then main brain computers, you know, big manufacturing systems, that the problem back then is reps would be out in the field selling these complicated products and then what would happen is they'd get to the manufacturing line and the manufacturing line didn't build them. It was an unbuildable configuration. And so being able to take that knowledge of how, what is a correct configuration, put it in your thousands of sales reps hands. So they would sell accurate configurations which would save millions of dollars a day to the Fortune 500. So we just found all the Fortune 500 manufacturing companies and said we can take what all this huge problem is costing you just eight zillion dollars, put it in this sales builder which your sales reps would be able to build correct configurations and then you'd pay us millions and millions of dollars for it. And so that was our first product and that's what launched the company. And that was the first one that drove the billion dollars revenue.

[Sean Ellis]

And you're at the time, you're only what, 20, 21 years old, you're saying like so simple. We just went to the Fortune 100, knocked on the door, they handed us the millions of dollars. Yeah, how easy could it be? So what was it actually like when you were doing that. I mean, were you just, like, really savvy early on? Were you making dumb mistakes but figuring it out? Can you take us back?

[Joe Montana]

Yeah, well, there's. There is, you know, if you want the long form, there's that. There's a 2005 podcast where I was presenting to Stanford about why if you're doing what we're doing, it's the dumbest thing you could do, but you got to try it anyway, which is, no, the Fortune 500 does not want to buy from a kid dropping out of college. Right. And we lived painfully. It took three and a half years. But the flip side to it, if you ever build a product that the Fortune 500 wants and it saves them, you know, hundreds of millions of dollars, they will buy it from you because they have no other choice. We went into multiple sales cycles where, you know, they'd go in and at the end of it, they'd be like, oh, we're going to go hire back then Anderson Consulting, or we're going to call, you know, one of these Oracle to. To solve this problem. And when those companies couldn't solve it, they would come back to us. We were the most expensive software you could buy in the 90s because we also had super high pricing because we're like, they're not going to buy from us unless they have to. And we know it's worth hundreds of million dollars. Right? We are the last choice on the list. And when they're like, okay, we gotta deal with these guys, then you're like, great, I'm gonna charge you lots of money because you have no other choice.

[Dharmesh Shah]

Well, that's not. That's not a very young kid mentality. Every time that I've read about you, you've had this confidence that I love. And it seems like even what you're describing is a very confident move for a very young person to make.

[Joe Montana]

And back to. There's some background that helps on that is Jack Welch, who was CEO of gde. My dad was a strategic planner. And so I grew up in that GDE culture. And I remember telling my dad, I was like, God, that's just. TVs are like the only cool thing you guys make. And he's like, oh, let's talk about the gross margin of a CAT scanner versus a T Commodity tv. And so I was learning all of that from, you know, a young age. And so that helped when I was ready to start my business, that I understood ROI and, you know, that I was going to be selling value and all of those things. But then I took that and said I'm going to be the best product manager and I'm going to put the two together. And I actually think today with Alpha, that's a lot of what I'm doing. It's just taking the product management part and the go to market business part and saying if you took those two things, how would you change education?

[Dharmesh Shah]

Can you put some things in perspective? So I, I used to live in Austin and a bunch of my best friends are Austinites. And at one point, I don't know if you know this, Sean. I think at one point Trilogy was the largest or a top three largest employer of folks in Austin. And like your growth was like astronomical. I mean I think that you're doing hundreds of millions in revenue and only like five or six years in. Can you sort of brag for a moment how big and how fast did you get?

[Joe Montana]

Well, so once we had, it took us, you know, we dropped out. It took three and a half years to actually build the product and convince anybody to buy it. But then as soon as they started to buy, Silicon Graphics bought it. Hewlett Packard bought it at&t. IBM. Right. It just, we started to roll through the biggest companies with, you know, massively, you know, high pricing.

[Dharmesh Shah]

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[Joe Montana]

You know, we were in Austin where they didn't have lots of software engineering back then. And so we hired 2,000 Ivy League graduates, you know, MIT and Stanford, and brought them to Austin. So our claim to fame to the 90s was if you ask Microsoft and Bill Gates, who's the only company who out recruits us out of college, they were at their peak. So Microsoft would win 90% of college graduates back then and we against them won 70%. Bill Gates literally flew down to Austin to figure out why we were getting the best graduates. And this is also how intense he was, is we're at dinner and he's literally going through every single person that we had made an offer to, you know, there's Fred here, and you're offering him back then, you know, $48,000, you know, and we've sort of reverse engineered how you guys, huh? You know, we think he's like a $38,000 guy. You know. Why, what was his technical capability that you, you really like? I mean, it was crazy, the level of detail he went through, right? Because it was, it was a fight for talent. And if you're getting talent, you got to get the best people.

[Sean Ellis]

What was your response to Bill Gates during that dinner?

[Joe Montana]

Well, no.

[Dharmesh Shah]

Yeah.

[Sean Ellis]

What do you say?

[Dharmesh Shah]

Well, listen, Bill, here's. Here's how you do it. Well, what did you say, what it was?

[Joe Montana]

He's like, I will call. He's like, after leaving, he's like, I'm going to call every single candidate who has a Trilogy offer and a Microsoft offer, and I'm personally going to call them. And I'm like, I need the candidates more than you do, Bill. And I. You. This is just. I'll just escalate. I'll just escalate. I'll bring them on a trip and we'll, we'll do a week ski trip, and I'll ask him, how was the last time you'll ever talk to Bill Gates? You know, how was that called? Because he's never gonna have time to talk to you again because he's got tens of thousands of employees. And so. But they did for a period in the 90s, right? A would have, you know, whether it was Ballmer Gates or Mike Maple, the other third in the office of the president, those three would call all our candidates and we would just continue to fight and it would escalate. Right. It's just we needed them more than they did.

[Sean Ellis]

This is one thing I wanted to learn from you because, you know, when we're talking to you right now, you seem like a friendly, nice guy. You know, you seem like a normal, normal dude, but you, you definitely have a gear that, that most people don't have. Can you talk about that? That extra gear, which is some version of boldness or intensity you set out,

[Joe Montana]

you have a goal, and you just do whatever it takes to achieve the goal. And there's no amount of work you wouldn't do to hit the goal just like this. I have to win the recruiting war. I have to win. I have to be. If I don't beat Microsoft and get the best talent, my company's doomed. And so whatever it would take. Right? And I think that's true, you know, for everything that you want to do. You just have to have and back to that gear. I had been lucky enough that I do find what I love to work on. So I love build the stuff in the 90s, right. And it was awesome. And so I was loving every minute of it. And you know, if I look at what I'm doing with education right now, I have the best job in the world. So I'm working seven by 24, you know, on education and there's nothing that we won't go do to figure out how to go fix this and get this to a billion people. And I think just back to entrepreneurs. They have that gear, right? And Bill Gates has a gear, you know, today's the world's best out. It's Elon, right? You know, when you go to dinner with him, you're just like, oh, I suck. Like he is so much better, right. That his level of intensity and working on the most important problem and being able to focus on it is just a critical skill. And if you want story I guess going back to the early days. So my dad had terminal cancer. But he said, you know, look, you know, I, I basically have 18 months. How about I sit on your board and help you, you know, figure it out. Your a young punk who doesn't know what he's doing. But it was obvious that I had, you know, caught the tiger by the tail. And, and you know, and there was a meeting where this massive deliverable we had to hit Fiula Packard. It was one of our first one. And HP's, you know, yay or nay was everything. And he's like, is your entire company focused on this? And you know, we have, we have the board meeting. I'm like, absolutely, of course we do. Totally focused on it. And he's like, so your engineering team, like if, if, if I asked them, you know, what percent of their time do they focus on Hewlett Packard versus all the other companies? And I'm like a hundred percent on G. Packard. They everybody understands we are not going to miss this. And he's like, really? Okay. Stops the board meeting, goes out and says, get Bill Reed who ran our development. He's like, bring him in here. You've got a lot of customers, Bill, you know, working on this stuff. What percent of this team is working on Hewlett Packard? And Bill's like, well, since you come from traditional work, you know, traditional world, I would generally say 200% because we're working 80 hours a week. Every single person's working 80 hours a week on hewlett Packard. And that leaves us an extra 20 hours a week to work on, you know, the other customers, right? And that's the kind of thing where, you know, when you're talking about intensity and focus, right? And your team trying to deliver on it, right? It's just, it's, you know, and I was like, oh, my God. Greater, you know, you're like, hey, dad,

[Dharmesh Shah]

have you ever seen me kiss a grown man on the lips? Because it's gonna happen for the first time completely. That was Right.

[Joe Montana]

And that is exactly the. When you talk about intensity, when you're trying to solve this, right?

[Dharmesh Shah]

I heard a story, though. It's not just intensity. I heard a story, I don't know if I heard it through a friend of a friend or online, that you would take people you were recruiting like, like at the end of your, your university cohort, I, I forget what you called it. And you would take them to the casino and you would give them some money to gamble. And if they, and you wanted to teach them, they wouldn't want to gamble a lot of money. And you're like, well, you're not a good fit. We need the people who are going to gamble more.

[Joe Montana]

Well, so actually, so this, you can go, look, there was a cover story in the Wall Street Journal on this because it was actually their money. And you know, we get all these kids down and they're like, I want to be an entrepreneur. I'm risk taking. That's who I am. I'm like, great. So at the end of our trilogy, university, 100 days, you know, if, if enough of the teams had hit their goals, we would take everybody to Vegas and then we'd get everybody around a roulette wheel, right? And we'd say, you have to bet one month's salary on the number, right? And so everybody would have to put one month salary down. And you know, there's a lot of people who are like, well, I, I'm not an idiot. I don't want to bet one month's salary of it. And we're like, first of all, that's not a huge risk. You're going to be asking a venture capitalist someday to give you millions of dollars and you're literally not willing to take any risk at all. And so we would we that every year. And the Wall Street Journal wrote this big story about it. I actually got a lot of flack from parents after they read this story. They're like, what are you doing to my dad who just got out of college? But yeah, it's back to just, you know, pushing people, you know, if you want. Here's another Intensity. We actually Trilogy University, you know, there's Harvard Business know, case studies on it and, and you can read about it. But we literally had a swap program with the Navy SEALs. Literally. The Navy SEALs are like, okay, you know, we're going to send a couple of our seals over to your program and you send a couple your Trilogy kids to California to go part. To be part of ours. It was sort of the physical versus the mental. And you know, it was that level that we were considered by the seals. The only thing on the standard and rigorous that would equal them on the physical side. And kids, you know, back to recruiting kids when they would like, oh my God, you know, I get to go do. Oh, they'd only last a week, you know, or, you know, really a few days before they.

[Dharmesh Shah]

Yeah. Is it, is it easier, is it easier to make a meathead good at programming or a nerd good at like swimming cold water?

[Joe Montana]

Seals are actually super smart, right. They filter, right. So they were coming in as super capable. Now. They'd never been in an environment where you're having to make. It was kind of thing of a different environment of decisions and things like that than there are other ones. But it was, you know, it was those kind of things. When you talk about intensity and doing things that are non traditional, we're. I'm all about that. Right.

[Sean Ellis]

It sounds like on the recruiting side, you also did something counterintuitive.

[Joe Montana]

Right.

[Sean Ellis]

Instead of making it easy. Because when I moved to Silicon Valley, it was all about ease. Google will do your laundry, they'll cut your hair, they'll walk your dog, they'll. They'll give you free food. You want some more free things. I went to a vending machine and it gave me a MacBook. It was unbelievable. But you were like, you realized that actually young ambitious people wanted something hard, not easy. Can you talk about that a little bit?

[Joe Montana]

That's a huge insight, which is this is the hardest hundred days of their life. And that was what allowed us to recruit them against Microsoft or all these other companies. I was actually at the board of directors of Fortune 10 company and we had taken some of their mekis who wanted to go to Trilogy instead of their company. And they're like, how are they going to this little company, you know, instead of us? Yeah, I'm like, well, during the internship you made it easy, right? And so they're just, oh, I'm not doing anything significant. And when they come down to Trilogy. It's going to be the hardest thing they ever did. They're going to work on something significant. And kids want to do awesome things, right? And mapping it now to our education. When we talk about the kindergartners climbing 40 foot rock wall, it's the same thing. Kids want to go do hard things now. They need to be supported through it. You can't take a kindergartener say good luck, right? You need to sit there and you have to have high standards and high support. You need both parts. But you know, we have these, you know, with alpha tests where you do all these crazy workshops, you know, and then you have to test to pass it. You gotta climb the 40 foot rock wall. You know, our second graders gotta run a 5k or eighth graders have to do a tough mudder. They also all have to cross the finish line at the same time. You know, we have all these tests, but the ones that drive back to the most excitement, I mean they all are hard, are the ones where the kids can beat their parents. Like there is nothing that motivates a student more and a kid more than them being able to go head to head with their parent and winning like fair. Not where the parent tanked it. Like they love that. Kids love that. One of our claims on the, you know, is kids love school more than vacation, right? I can't build a school that kids love more than vacation if I have low standards. It is. The reason they're excited is because they're going with their friends doing hard things.

[Dharmesh Shah]

I actually think, Sean, this insight that you guys just came up with is actually quite brilliant. And you did a really good job of tying it into alpha but like of making things hard. And that actually attracts a certain type of person. But what's interesting is like if you're a kid, it's exciting to climb a 40 foot foot wall. It's exciting to beat your mom and dad. When I think of like a configurer software that's not like that exciting like that, you know, versus Microsoft. If you're making like, well, Microsoft's not terribly exciting either. But if you're like Apple, you're making like the ipod, you're like, you know, it's like this consumer product that I can hand to you. How cool is that? Or we just talked to the guy who founded MTV and he was recruiting these people and it was music, it was entertainment. That's cool. Configuring software, that's not that cool. But yet you said we're making this awesome stuff. Can you dive Deeper into what makes something awesome. Because that, I actually think that that one trigger of like making school awesome, making Trilogy software awesome, like, other than making it hard, what is necessary for something to be awesome?

[Joe Montana]

Yeah, sure. So you're never going to convince anybody that configuration is sexy, right? Versus all the other options. However, the AI algorithms that under lot configuration at the time were some of the most complicated computer science problems you could solve. And so when you're sitting there and you're looking, oh, I'm going to go do an about box for Microsoft Word as choice A. Or you're going to go work with the smartest people tackling this challenge that no one's been solved before, right? It is a technically impossible challenge. And the best computer scientists, like, you know, in 1985, Rice, Stanford, MIT, their number one computer scientists all came down or graduates all came to alpha, right? And that is because we were working on the hardest problems. It's the same thing. You know, people always ask, you know, when you know, on companies, why do people do startups? Like, why do they go to down to SpaceX? Why do you do it? It's like, because I'm with other people who are super smart, who are working hard and we're all trying to do something that's really, really hard. The Navy seals, why are you joining Navy seals? Right? It is the camaraderie. It is the, you know, everybody together that starts in kindergarten. It starts in. Kids love this stuff, right? And it goes up to, they're getting out of college and then late career. Like, the people who are joining us, you know, who are, you know, my generation of my age, these are people who are like, okay, I'm going to go spend the next decade trying to fix education. And it's going to be a nightmare. It's going to be super hard, right? But they want to get in and do it because the alternative is, oh, I'm going to fire and play golf all day. And, you know, the challenge and the excitement is what motivates people.

[Sean Ellis]

You said something earlier about high standards and high support. I want to talk about high standards for a second. All right, let's take a quick break and I got a question for you. When a buyer asks AI for a solution like yours, does your business come up? Most companies have no idea. And by the time they found out, they've already lost the deal to another company that did. HubSpot has AEO, which helps you show up in the moments when the right buyers are looking for a company like yours before the first click before they fill in the form. That is the moment HubSpot AEO is built for. Check out HubSpot.com, the agentic customer platform for growing businesses. I was at a Tony Robbins event a decade ago and somebody was, you know, all these people come to Tony Robbins. Some people who are at the edge of their craft, they're the top 1% performers. They're there to get that edge. And there's some people who are, you know, on the edge, you know, broken and, you know, they're looking for a fix. And he said, if there's three words that would solve every problem you have in this room, it would be raise your standards. And he basically said, you know, your life will be what you tolerate. And he goes on, he gives a bunch of examples. David Perel was telling us, he said that, you know, Joe once sent me as a holiday gift two bottles of wine. And it's the note on it said, here's 200 point bottles of wine to remind you something like that. To remind you of what 100 point looks like a reminder about standards. Can you talk about what that means? Because it's easy to say. It's really hard to do.

[Joe Montana]

You can't get higher than 100 points, right, on a, on a wine ranking. And it's the same thing on a test like our kids Alpha get hundreds on their tests. If you go to your average parent and say your kid can get 100 on the Texas Star, 95 plus percent of parents are like, no, they can't. They can't do it. And you know, we have a building with a few hundred people in Austin who get more hundreds on the Texas Star than a school district of 100,000. And all you have to do is just show kids they can right now. You also have to support them and show them how to do it, right? But the back to the motivation of what should the standards be? And the standards that should be are we should get a hundred. You should know everything, right? You should be great at your craft, right? Whatever it is. And who wants to be number two? And all of those motivations, right, that drives human potential, human nature. And when you're building a business or with a school, it's the same thing.

[Sean Ellis]

How do you instill that in your team though? Is it just about being a sort of Steve Jobs asshole where nothing's ever good enough?

[Joe Montana]

No, it's the exact opposite. Which is most parents are one or the other. They are either high standards, low support, Just throw your kid in and figure it out. Good Luck. Right. And that's what's going to cause grit is you're just going to keep struggling. Okay. That's a way to do it. Because they'll try a little for a little bit, but then they'll decide it's too hard and bail. Right. And you get tons of disengagement with that path. You can do the other one. I'm high support, low standards, which is, oh, I don't ever want stress. Right. But I'm going to be there supporting the whole time and do it. And that's terrible because you never learn how to do hard challenges. You never learn resiliency and grit. Right. You never get self confidence because you never tried something hard that you struggled through. And so you have to give the scaffolding and show people how they get there.

[Dharmesh Shah]

What does that look like within a company?

[Joe Montana]

Yeah. Let me give you the school one and then I'll give you the company one, which is I go to the seventh grade as my first year. I'm like, all of you guys could get a hundred on the Tetra star. And they're like, Mr. Leamont, that's impossible. No way. Can't get a hundred. I'm like, no, no, no. I'll give you a hundred dollar bill. Hundred for a hundred, Right. And it's still impossible. It can't just. Right. I don't know how to do it. And I was like, no, no, no. Here's the catch. Any grade level. And they're like, you're going to let me take a kindergarten test and give me a hundred bucks for a Texas, you know, 100 star? I'm like, well, they start in the third grade and so the kid's like done, goes and takes a third grade test, it's a hundred. They're like, can I do fourth grade? And you're like, Absolutely, I do fourth grade. And then they do fifth grade and they only get an 82 because they didn't know all that. They hadn't done their school, not given the mastery right through it. And this is where you have to give the scaffolding. Do you want the AI tutor to look the ones you miss and give you those lessons that will get you to a hundred? And the kid looks at it and is like, ah, that's like going to take me a week of work. Sure. For another a hundred bucks, I'll do it. And then they do fifth grade and then sixth grade. And by the time they get to seventh, what you've done is you've changed their mindset. That when you're getting a hundreds all the grade levels, you're like, well, obviously I can do fifth grade and I obviously can get it to sixth grade. It's just a matter of work and then it's just a matter of work to do it in seventh grade. And so you've taken a kid who thinks it's impossible and you've given him a scaffolding, right, to work through, plus motivation, because motivation matters, right? And you give them scaffolding and motivation to do it. So if you're building a company, it's going to be the same thing. Go build a billion dollar product. And that seems hard, right? You're like, what is the scaffolding you're giving your team where you're making it, where they understand, okay, I know how to get. And that's the part when you think about high standards. If you as a company give high standards with no support, they don't know how to get there. They'll try for a while and then they'll disengage. Lots of companies are trying to move their companies to be AI first, right? We want to be an AI first company. And they're basically like, here, here's, you know, cloud code. Good luck. Right? And what is the scaffolding you're going to be able to do to get your people to that standard? Are you able to sit there and role model? This is what excellence is. This is what we mean by excellence. And then once you show them, here's how you, if you don't have the skills, how you can repeat it. And so that's the part when you look about, you know, this is HR is am I getting the people in who have the skills to do it? And then can you give them the training and the motivation model where they want to.

[Dharmesh Shah]

You are very good at understanding how to get people to do what you want them to do. Did you learn how to do this because you wanted to build an awesome company and you're like, I got to figure out how to motivate people and how to make them productive. Or were you always into human psychology and business was a good example of just making it work?

[Joe Montana]

No, I was not good with human psychology and I did want to build the company. And how I got there is one of the most important hires I ever made is this guy, Jim Abel, who was my head of hr, who would coach me through a lot of this where I started very much as high standards, low support. He was the one who was like, look, here's the part, here's what you have to do if you want to bring your team with you. Here is the organization you have to build if you're going to bring. Once I had, you know, 2,000 employees and I'm like, oh, my God, you know, what do I do? He was the key insight on that side. And then, you know, on the school side now there's this. There's a professor, Dr. Yeager, who's written a great book that every parent should read, which is called 10 to 25 the science of motivating your kid from age 10 to 25. He's the one who actually developed our child development side and how our adults, our guides work, which is he mentor mindset, high standards, high support. And he's done a ton of studies that actually show, literally with wording changes where you can take a student and just say, look, I'm about to give you feedback. That's gonna be hard. But it's only because I know you can go crush this, right? Because I know you can do it. Back to the growth, the Tony Robbins part, right? The growth mindset. And it's. I'm giving it to you because I know you can do it. And so here's what you'll need to go do. And you can then give them the coaching back to that book. 10 to 25 is a. Every parent should read it. And it actually is our model where people say, how does Alpha work?

[Dharmesh Shah]

It only has 305 reviews on. It's not that popular. It looks like the books, once you

[Joe Montana]

get to middle school at Alpha, you have to read 10 to 25. There's another book, self driven Child, that we do not allow kindergarten moms to read because it talks about your kid being independent. And a kindergarten is the last thing you want to worry about. But once you get to middle school, that's where kids, you have to, you know, they're moving independence. And so those are the two books that drive our model.

[Sean Ellis]

Talk about simplicity. Because as you're explaining things, I feel like you're taking big ideas and you're compressing them in a, a great way that makes it easy to sort of, you know, grok. You're giving us good frameworks.

[Joe Montana]

I used to do big, you know, 20 page strategy documents. You know, here's our big strategy documents. And you know, when Jim joined, he'd like, read this document. He's like, joe, this is useless. And I'd be like, it's really not. It's like really good strategy. What are you talking about? These things are super awesome. Like, what are you talking about?

[Dharmesh Shah]

What's wrong with you?

[Joe Montana]

And literally I'm like. And then he's like, when you think, you know, he's like, joe, look, you have a couple thousand people now. Your strategy document has to come down to three lines, three words each. And I'm like, not going to make a strategy of this complex tech company sloganed. Like, we're not going to use sloganeering to get there. I was, I literally went to one of my co founders. I was like, God, when we hired Jim, he was really smart, but why would he, like, try to dumb this dab? And I remember thinking about it, right? And so he kept coaching me on it. I'm like, guys, these are like Stanford and Harvard graduates. They can read a tornado strategy doc. And he's like, no, the next we're gonna have a company meeting and you're gonna get up and, you know, slogan. What. What are your key phrases? I just was like, I'm not gonna do it. So he interviewed everybody in the company. Literally. Back to intensity. He was like, met with every single person in the company and then put on the board after it was. It took him over a month. And he's like, joe, this is what your company thinks your strategy is. I'm like, wow, that's like the opposite of what we're doing. And he's like, exactly. He's like, the problem with the 20 page strategy document is every single employee takes the one sentence that they can attach to and say, see unaligned, right? I'm aligned. And when they're really not, and then that's. You just lose, right? You defused all your focus. And so he tried to reverse engineer. He had his three lines of three words each. And I was like, okay, they're definitely not that, but here, I'll go now. I understood. And then, you know, we created it and that now for everything we do, right?

[Sean Ellis]

So what is it for alpha? What are your three lines?

[Joe Montana]

So our three lines for alpha are for every student, right? Every parent understands. We make three commitments to every kid. The first is, you will love school. We used to just take a survey, do you love school? That's 96%. And so it's too easy. So we added one 18 months ago where we say, would you rather go to school or go on vacation? And four weeks ago, when we surveyed all our kids, 46% of our students said, I would rather go to school than go on vacation. Right? So great. High standard, high bar are delivering love of school. The second is, you will learn Twice as much in two hours a day as if you sat in class for six and did homework. So that's our learning engine. Does you learn 10 times faster? And so we don't make you do a whole day and learn 10 times as much. We're like, no, we're going to shrink it down. You'll learn twice as much. So no matter where you start on a percentile level, we'll get you to top 1% if you're in the system long enough. Right. If you give me time learning twice as fast, I get to go beat the top. I can get a hundred on the Texas Stars and catch up even if I start in the bottom 25%. Right. You can move up. And the third is we use the rest of the day to teach all the valuable life skills that kids are going to need to thrive in this new world. Right? And that's, you know, leadership and teamwork, entrepreneurship and financial literacy, storytelling and public speaking, relationship building, socialization, grit and hard work. And so that those are the skills, but those are the three things. So if you're coming to Alpha, why are you coming? Right? It's putting together a very simple, clear product message that everybody understands. And the wording, the part that Jim was really great about when you do this, when he's like, it's not sloganeering, which is if you can't say the opposite of it, right, then it's not on the list. So when we were doing the core values of trilogy in the 90s, I was like, well, we obviously have to have integrity on the list. And he's like, joe, was there ever a company in the world who's like, I'm going to be the non integrity company. He's like, those are wasted words. Those are nonsense words because they mean nothing. He's like, I want edge, right? They have to have edge. And so, like, Love School is a great one. There's lots of people who do not think kids should love school. They're like, well, where are they going to learn grit and all these things that love school is antithesis. I remember when I put my kids into alpha 10 years ago, McKinsey and Brian were actually the ones who started it. And I was like, brian, what is the thing I don't understand about education? You know that? And he's like, well, first kids must love school. And I'm like, yeah, it's sort of like sp, you know, I didn't like school. And you just sort of suck it up. And that's just part of the game. And he's like, you're totally wrong. And that is completely true, right? My number one people want to, you know, talk about how they can use time back or software. And the number one question I ask ask of every head of school now is are you willing to rebuild your school so kids love it more than vacation? And if the answer is no, I will not let you use the software because it's not going to work.

[Dharmesh Shah]

Can I ask you a question that sounds really stupid, but I think you'll have a really good answer. Why does a kid need to learn two times faster?

[Joe Montana]

It's not stupid. I get it a lot. Everybody's like, why 2x? There's a couple different dimensions. And so let's talk about it. The first is, you know, kids spend six hours a day plus homework today, right? They spend six hours a day plus homework on school. And so the answer is, if I can build a product, a technology that lets kids learn in half time, shouldn't we do that to the point of the name of our product is time back, which is we want to give kids their time back. And right now we suck up 12 years of kids lives sitting in class and doing homework. And in the old world for a hundred years, there was no other alternative, right? And now because of learning science and generative AI, you can literally build an engine that teaches kids 10 times faster. So you're like, well, okay, let's do it, why wouldn't we? And back to obvious simplicity, product positioning, There's a question of whether it works. But once you believe it works, right, and you get the results that show it works, who wants to have their kid be in the six hour learning instead of the two hour learning? Because then your kid can do other stuff, right the rest of the day.

[Sean Ellis]

How big is this going to be? Because I'm completely alpha pilled, not from this conversation, but my kids are both in elementary. I volunteer in their schools maybe once or twice a month. It's a great place, but it's very much like a bundle of daycare, a little bit of education, a lot of learning, social stuff, that's great. But in terms of just like the learning and the life skills, I don't think it's anywhere near what's possible. And when I heard about alpha and specifically this, the 5K story, it blew me away. I was supposed to like the AI part and instead I love the part where it was like, cool, after they do the two hours, they had this thing where it was like, I don't know, second graders or something. It's like, who here thinks they can run a 5k? Nobody raises their hand. So they don't believe themselves they could do it. Hey, parents who thinks that if, if their kid had to run a 5K right now, they could, like, dude, they're whatever, first grade or second grade, whatever it was. And nobody raises their hand. And over the course of whatever, some amount of time, month or two, whatever it was, they were like, well, great, can we walk a quarter of it right now? And then they walked a quarter. And then they were like, yeah, that was, could we walk half? Could we jog a quarter? And they basically did what anybody would do and they sort of trained their way up and the kids all did it and they, they were able to do it. And I just thought, man, that's a kind of an incredible experience. I want my kids to have that type of, like, growth and opportunity. So I think this is going to be big. But you think about this all the time and you've already built companies that you know are multibillion dollar companies. So how big is Alpha school going to be?

[Joe Montana]

85% of Alpha parents say, I saw my kid do something in the last 10 weeks that I thought was impossible for their age.

[Dharmesh Shah]

This is for the folks out there who have a business that does at least $3 million a year in revenue. Because around this point, that's when you're able to look up after being heads down for years building your company, and you realize two things. One, you've done something great, but you're still a long way from your final destination. And two, you look around and you realize, I am all alone. I've outrun my peers. Which means you're now making $10 million decisions alone by yourself. And that is when mediocrity can creep in. My company, Hampton, we solved this problem by giving you a room of vetted peers of other entrepreneurs who are going to hold you accountable, call you out on your nonsense, and help show you the way. Because the fact is, is that there's only a tiny number of people in your town who know what you're going through and who have been there. And they're hard to find. And if you can find them, it's hard to have this explicit time, this explicit place where you sit down where the rules are clear, that we are here to help each other and to be one another's board of directors. The biggest risk is not failing. You have a company and it's working. You're going to be fine. But the biggest risk is waking up 10 years from now and saying, I barely grew in business and in life. And for people like you who are ambitious, wasted potential and regret is what we want to help you to avoid. We have made so many of these groups and we have a thousand plus members. And I know this stuff actually works, whether you work with Hampton or you get your own group on your own. But having a group like this, a group of people who you meet with in real life once a month, it can change your life. It changed mine and I know it will change yours. So check it out. Join Hampton.com we as parents, because of

[Joe Montana]

the old system and learning 2x or 10 times, or learning these lifestyles, running 5Ks, climbing 40 foot rock walls, launching businesses, you know, Broadway musicals, our expectations of what kids do is much lower than what their capability is, right? The greatest untapped resource on planet Earth is human potential. And we now have the first chance, right, in 100 years to re envision it. And what we're showing at Alpha is these kids can do 10 times more than we expect. I believe how big this is going to get is. You know, my view is I'm 20 years and get this to a billion kids, right? And it is going to utterly transform education, you know, for everybody. That when you think about AI is going to transform the world, right? There is nothing that is going to have, there's no part of the world that AI is going to have a bigger impact than education. It is the unmitigated win, right? This is the best time in history to be a 5 year old because the 12 years ahead of you are going to be great. And so there's lots of work to do, right, to do that. But I believe that once you realize what's possible and why we get all the, what we're showing with Alpha. So once you show this is possible, there isn't a parent who doesn't say, I don't want this for my kid.

[Dharmesh Shah]

You were silent for the last 20 years, but you've been quietly building that. Why weren't you talking then and you're talking now? Is it just because you need to influence parents to give this a shot?

[Joe Montana]

So there's two parts. One is 2005 is also the year I got married, which was last time I talked. And so, you know, in building the family, being in the limelight's harder, right? It's easier if you're just quiet. And second, it didn't help the business. So in the 90s it really helped the business. Didn't help the business. After 2005. And then now for this, it absolutely does. Right. The biggest impediment to change in education is the parents, right? Because all we know, right, we're fish in the water. All we know is the education system we went through and our parents and our grandparents. And so there's just massive resistance to change, right? There's disbelief, right. Our marketing department, you know, their slogan is we educate the parents. Right? Because nobody believes this like you listen to one of my podcasts. The number one feedback is, well, I don't believe kids can learn 10 times faster. I don't believe these kids really love school more than vacation. Right? And so back to being out there and getting the message out. I consider it critical. And education historically hasn't had that.

[Sean Ellis]

To do a billion students, you need like 10 million Alpha schools or something. How, how are you going to do that?

[Dharmesh Shah]

I saw you doing the math.

[Joe Montana]

Sean.

[Dharmesh Shah]

Sean, right. When he said that, I saw him type and I knew exactly what he was doing on his calculator.

[Joe Montana]

So I mean if there's a hundred thousand schools in the U.S. you know, and back to a billion now, there's going to be different ways to get there. One is just physical schools, right? And so I am learning how to scale physical schools, right. This is going to be, you know, across the nation just to give you scale if you want. On the business side of this, you know, private school market in the US is about a hundred billion dollars. So it's a huge market where even if I don't get to public school, we will. But even if I don't get to public school, I have a hundred billion dollar market that gives me a great beach end. It's why AlphaStart, it's why we're hiring private school is because it's you, right? The anchor, right. And the credibility and the revenue, right. That then funds everything else.

[Sean Ellis]

It's your Tesla Roadster.

[Joe Montana]

Yeah, yeah. Tesla Roadster is a great one. So there, there's that hundred billion dollar market and that's US K12.

[Dharmesh Shah]

How long does that take to make a profit? And are you just using your money?

[Joe Montana]

Yeah, so I put in a billion dollars for my, my software company as the, the first payment. But back to this. Getting to a billion kids is going to take tens of billions of dollars. So fixing education is a multi trillion dollar industry, right? It's the second largest industry besides healthcare globally and there's nothing there. Right. It's, there's no, there's no private market players really. And so, you know, there is definitely the opportunity to build SpaceX for education. And so. And the capital requirements are high. You want all these campuses. Now we're busy innovating on the business model to show that you can build a profitable business so that capitalism can provide the capital needed to scale education. Right. Historically, everything in education has been nonprofit. And the problem with nonprofits is nonprofits are non scalable, which is the better your product, the faster your donations go away. Right. There's plenty of really good charter schools who have 3,000 person wait lists and if you ask their head of their school, why don't you open another one? And they're like, I'm waiting on a $40 million donation to build a new campus. I don't have that problem because I have a thousand families in New York City at the info session. Right. Who as soon as I want capital to build a new campus. Right. Every I, I'm funding it right now. But everybody's going to be happy to, to give me capital to, to build the business. Second, you know, and, and thinking about Alpha, Alpha is the high end private pool. You should think Stanford of K through 12. There'll be a couple hundred locations, thousand Kid, you know, K12 locations. But it's 5% of the market. You know, we have other physical schools around Austin that we're incubating to figure out where we get product market fit. We have a gifted school. They're trying to find the 100,000 smartest kids who you know, when you say what would make you love school? They're like more academics. Right. One in 20 kids when you ask them that is like more academics. They want a third power hour in the app. They want math Olympiad. Right. They want all that. We have a sports academy. Right. This is like 40% of the market, maybe 50% of the market. Which is when you say what would you love to do? Kids are like sports. So like Texas Sports Academy. You know, our baseball team just won national championship beat IMG if you know. Right. Our basketball team is for one. You know, our academics are 10 times better than IMGs. We're rolling out a set of other sport that you'll see for, for August where these teams will be the best in the country, but also the best academics, sort of, you know, Alpha premier academics, but also sports. And so we're working on, you know, I don't know if you've heard of Founders School yet that we're building for high school. And so we're building all these different school types, but those are, you should think, physical schools. And my view of the market is in 20 years, AI is going to change the world in a lot of ways. But in 20 years, parents are going to drop their kids off at a building. 90% of parents, you have homeschoolers and stuff, but It's a niche. 90% of parents are going to drop their kids off at a building and in that building are other kids and adults, right? That's one of the misconducts. You know, there's robot Terminators stuff. It's not right. Kids need adults to develop them, right? And now if we do our job right, what occurs during six hours is totally different, right? We totally transform it in the last hundred years, but that's the market. And so we have to bring the physical school. Now how do I get to a billion kids? You know that it's going to take 20 years is not enough to build that many schools. So we're working on other products. One, just the time back software itself, where if I can go get people who want to build schools or transform their schools and they realize this isn't EdTech, right? EdTech failed. The second is we're doing stuff outside of school. So to give you one example, we have some of the world's best video game developers, right? Building, and they're spending two years building a video game on this, these concepts, right? And it will be free to learn, you know, think free to play, free to learn for 500 million kids. And it'll start shipping later this year.

[Dharmesh Shah]

Why, like, why, why do this? Like you, you're incredibly wealthy. And then also like you're, you're kind of a shark. Not in a bad way. You're a tycoon, you're a titan of industry. You're like a take over the world type of guy. Why school?

[Joe Montana]

This is a great question, which is, you know, before I did this and put my billion dollars in, I talked to a dozen billionaires who'd all spent over at all, spent over a billion dollars on education. And to a person, every single person said, don't do it. And they're like, it's the lowest ROI you can get. Any philanthropic thing, it doesn't affect it. There's just no, you just can't impact it, right? It's just this impossible problem. And like every dumb entrepreneur or good entrepreneur, right? I'm like, I'll be different, you know, and for me it was one where, you know, the, I just had this experience which was, you know, I'm back to the life story. So I was, I was doing the AI, have my software Company, right? Big. We're making tons of money, piles of cash flow, right? Plenty of money. But 12 years ago in Austin, McKinsey and Brian started the school Alpha. And McKenzie's like, come on over to Alpha. And I'm like, I'm not going to your weird school. That is a weird, janky school. And, you know, it took her two years to convince me. And the, the only way she did was at the. You were in May, at the end of May, say Gabriel gets out and Alpha was still in session. She convinced my two daughters to spend a week, you know, before they went to summer camp and they went and spent a week and they came home after the week and they're like, dad, I don't want to go to summer camp. We want to go back to Alpha. And that was my insight. That was 10 years ago. And then I sat and just talked to McKinsey, you know, while her kids. I'm like, this is great for Austin, great for our families. Too bad it doesn't scale. The stuff just doesn't scale. And then four years ago when Gen AI came out, I was like, ah, neural nets, right? For my high school. They're finally here. And I was like, this will enable Alpha to scale to a billion kids. Because back to fixing education. First off, you need tons of capital. You need somebody who can sit and say, I need a billion dollars. I'm the most well funded principal in history, right? Novice is gonna fund ed tech. All the edtech stuff's failed, right? It's never worked, right. Every. All the billionaires are like, done with the plan to be on it. And so I sort of just woke up and I'm like, I actually do have the skills, I think, to go try this. And now I can tell you, four years later, I'm four years into. Was the best decision ever. Like, my job today is so much better than my trilogy job. Like, not even close. I went four years ago, I went to my team. I'm like, for 25 years you guys have been telling me how much better you are than me. And, you know, you guys are great. I'm like, so good luck.

[Dharmesh Shah]

Is the company better now, now that you have a new CEO?

[Joe Montana]

Well, two part. Well, yeah, it's. I went and said, guys, and I'm going to be your worst shareholder you've ever thought about, which is, you know, I'm like, I'm just going to pull every dividend that I can out because I need to fund education. So you're an acquisition company and I have to turn you from being capital intense, I. E Buying companies and turning them around to being capital light but somehow still making all those acquisitions work because I'm going to be sucking all the capital for education. And on the face of it, everybody's like, okay, that seems like an impossible problem. The team actually has done a fabulous job, better than I had ever thought of, of how to do be super capital efficient. The downturn in SaaS really helps them because there's lots of companies now if you want to just know their business. What's happened is we're considered one of the best operators of SaaS, right? We know how to generate cash flow out of businesses better than anybody. And so they're Boeing to all the SaaS, companies that have died, that are now owned by the private credit, right, the Blackstones and the blackrocks or you know, where you're hearing about, you know, why the market cap and SAS is down 90%. And they go to them and they say, look, you have two choices. You either can put another 100, 200 million into this SaaS company that's gone bankrupt and reboot it, or you could just sell it to us for a dollar and we'll split the cash flows. And you know, four years ago when they did this pitch, everybody's like, yeah, I'm not doing that because I'm going to give another $100 million to this big. You know, the private equity firms, they have a lot of companies in their portfolios that they're just turning over to the credit guys. And those guys built four years ago, had faith and hope. You know, the last 12 months have completely changed. They're like, oh my God, AI is here. Guys aren't gonna last at all. The last thing I wanna do is write a big check and hope they can reboot for AI and they're like, looks like just getting the cash flow is the best thing we can do. And so now I haven't seen the last pipeline laugh around. And I saw 20 billion of pipeline of companies that were, they were looking at about splitting the cashflow was buying for a dollar. So they did a great job.

[Sean Ellis]

How did you get into buying companies in the first place? So you, you start trilogy, you're an entrepreneur, you got a product, you're selling it, you're doing that game. What, why did you, what, what triggered you to start saying let's go acquire other companies? And what was the moment?

[Joe Montana]

Two parts after the dot com meltdown, 50% of our cast customers went out of business. And you know, in 2000 in the dot com turndown, there was two parts that happened. The, the configuration market, our original market, we had tapped out, right? We dominated. It was full. And then during the downturn, we saw that we're just better operators than the other people. We were able to go through it, make profits. All these other software companies were not making that transition. They were dying, right? And they were available for a dollar, right? You could buy all these companies for nothing. So we just, we, we just literally was like, okay, well, let's buy a couple and see if we can turn them around. And we did, and we made tons of money. I'm like, oh, okay, let's just do this. So we bought hundreds of companies since then, but it was nothing. This strategy was just like, oh, wow, companies are really cheap. Why don't we buy some?

[Sean Ellis]

I heard that you studied Warren Buffett intensely.

[Joe Montana]

My journey on this is I had been investing since, you know, high school. And at Stanford, I, I was in the fund we ran part of Stanford Endowment, you know, and I came out of it during the 90s and the. Boo. I'm all like, oh, I'm so great. I remember 98, like, reading an interview with Warren Buffett. I remember me thinking, man, that guy's an idiot. Then after 2001, I was like, oh, maybe I'm the idiot. Maybe I don't know what I'm doing, right? And my returns weren't good, right? Really good on the way up. But after the bus, you know, my, my life to date were terrible. And so I was like, I should probably listen to him. And so I literally just read everything. So there was not a book or anything. Back to my standard of being expert. Being an expert, if you're going to be an entrepreneur, you have to be the best world in whatever your field is. And so my standard, well, here's what I need to do. I need to know everything about Warren Buffett so that if I'm watching him being interviewed, I can pause it and answer the question the way he would. Because I know what he thinks, right? I'm so into the way he thinks. And so I literally. That's what I do, is we do the same thing with our Alpha High students, where we're like, an expert is one of our pillars. And then when he'd say something that I didn't, you know, that I'm like, oh, I'm surprised, right? I would then have to go back and research and figure out why I didn't understand it.

[Dharmesh Shah]

I love talking to people like you who, like, we have Dharmesh Shah. He's the founder of HubSpot. And he's like, I'm just. Because. And he has got the story where he's like, I'm the best ping pong player there is because, like, one time someone wanted to play ping pong with him and he got beat and he's like, oh, I want to be the best because he's competitive. Some people, it's a board game where they just love winning the board game. What's. What's your thing?

[Joe Montana]

If I'm going to do it, it is just why, why not be the best? It's just, well, why would you do the other. Right. Is your other alternative.

[Dharmesh Shah]

Well, what about you, though? This is actually interesting. Are you using alf? Like what, what learning techniques have you learned along the way that you yourself are using to learn?

[Joe Montana]

Sure. So our, our framework about how to be an expert is, you know, you, you dive in, right? Our students do the same thing. I do the same thing our students do, which is you spend one hour a day reading and then summarizing. Right. Their work. So we've created a, a structure called a brain lift, which is, we think a lot about is what is the role of humans and what is the role of AI? You know, going forward? Like if you're a kindergarten mom, you're like, are you preparing my kid for the AI? You know, AI age coming. We think a lot about that, right? Of how. What is the role that humans are going to play as AIs keep getting smarter. And so we have a concept in, in learning science. There's this concept of depth of knowledge, right? Which is sort of the hierarchy of, of. Of knowledge, which is. Dok1 is fact, right? Do you know facts? Dok2 is. Can you summarize them? Right? You have summaries of the facts. Dok3 is. If you look at all those facts and summaries, can you have Insights? And then Dok4 is really creating new knowledge, right? Oh, I have insights that no one else has because of this. And LLMs are very good at helping you do Dok 1, 2 and 3, right. And reasoning around that. And then the part that the humans still do really well is Dok4 creating new knowledge. And so what we do every day is we spend the time reading the current experts that are helping fill your Dok1 and Dok2 right. In this brain lift. And then you are having Dok3. I'm having insights on it. Kids can learn 10 times faster. Is an insight. Right. Based on the learning science Facts, right? You can, you can just derive that. Dok4 is insights that are so counter to what, you know, what, what do you think that no one else believes? So this would be the equivalent of. If I ask an LLM, help me design a school, it's going to put a teacher in front of a classroom. And if I say, wait, I want to design a school that doesn't have teachers doing academic teaching, the LLMs are going to reject it and say, that's unethical. And so AI is not able to help me. If I load my brain lift basically as context on top of the LLM where It has the DoK1 facts, the DoK2 summaries, the DoK3 insights, all on research papers, all this stuff. And they wait, read all this, take this into context now help me design a school. It's like, oh, yeah, actually based on all this, I totally see how alpha can work. And then it actually can help me, right? That is the skill we think is critical we start teaching it in high school.

[Dharmesh Shah]

But is it summarized in you, you spend an hour, you, you personally are spending an hour a day. And then you're literally just summarizing what you're saying. And then do you write out like, here's my insights and my new ideas based off of what I've just read for this last hour?

[Joe Montana]

Yeah, I will load, I'll change my brain lift. So for me, how I actualize it is I basically have a Twitter of a custom timeline of content and authors, right. Or experts, like ongoing science. Right. I'm going to go read it and see if there's anything new in there. Or I'm going to summarize the article and put it in the brain lift. And then if it causes me to have new insights, I'm going to, you know, I try to have one Dok3 insight, you know, a day as my standard. Doesn't happen all the time. But that's what I'm trying for, you know, DOK4 are ones are. These are the big ones, right? And then you're. You, you have that knowledge and if you work that way, right. Of having expertise, right? Any field that you want to be an expert in, right? And AIs help you do this, you know, if, you know, back in the 90s, I did the same thing, which is I would sit In Stanford's math CS library, you know, in 1989, you know, when I'm dropping out, and I would read every paper written about configurators, right. Of how they tried, why they'd failed, you know, back then it took forever. You'd have to send, you know, to the, you have to Germany. Daimler had really good configuration stuff. I didn't. They'd have to send you the paper over, you know, and you'd get it a week later. Now, literally on an LLM, right, you can learn this stuff really quickly.

[Dharmesh Shah]

Dude, how are we going to, how are we going to convince people to buy shit they don't need or do stuff that they shouldn't do? If everyone's a super baby and really smart, right? The like, there's like, what's, what's the world look like when everyone's skinnier? What's the world look like when everyone has access to AI? What's the world look like when a billion people are smarter than they are now by a significant amount?

[Joe Montana]

Well, I actually believe, you know, back to this whole thing is I believe, the human knowledge graph. I know there's this dystopian view that AI is going to cause everybody to be dumb and if we do it the wrong way. Just to be clear, if you take CHOP chatbots on unmanaged Chromebook and deploy them to kids in K through 12, those kids are not learning. Chatbots are cheap bots. It's terrible. I understand why people want to ban AI and do all that stuff now. There's also a good way to do it. There's in our way, you know, a very different way. And I believe we should be teaching all the kids good way because they can learn 10 times faster. We have a student who's going to be published in Nature. She will be the first high school student as a lead researcher published in Nature. And that used to be. I have a PhD from Stanford, right. And we are pulling that capability down to a 17 year old girl and there's 10 people at Alpha right behind her who are like, oh, she can do it. I could do it. And that concept of like unlocking human potential, we haven't even, you know, scratched the surface of what they, what you can do. You know, if you talk to our Sports Academy, you know, as an example, because of the two hours a day in the morning and the, you know, you get skills training in the afternoon. You know, our Sports Academy guys are like, we're going to be in every field. We're going to be the number one team in the country within a year of deciding that's going to be our sport.

[Dharmesh Shah]

Wait, but how are you going to do that with sports? How are you going to make someone 7ft tall you know what I mean?

[Joe Montana]

Like to be good at basketball on all things, right? There's human limitations, right? I can't even with my learned 10, there's knowledge, there's also IQ, right? And I can't be a nuclear physicist. I just don't have the cycles, right? Actually in cognitive load theory I don't have the working memory, right? As you get older, you get slower. Like my brain, my neurons fire at about half the speed of my daughter, my 18 year old daughter. Now the difference is I have a knowledge graph right in my brain that I uploaded, you know, the last, you know, 50 plus years that allows me to take shortcuts because I know the answer, I don't have to think through it. So in a list of 10 things, she has to go through each one. I can read the 10 things and be like, oh, seven's the answer. So I can still get to it. But you have to load knowledge into your brain even as your brain slows down as you get older or even if you don't have the fastest brain to start with. So I can't make people 7ft tall, they're not going to win, you know, the NBA. But whatever the boundary of your human potential is, we can get you there. Got it, Right? We can get you to the boundary. And what the surprising part is, your expectation of what your boundary is or what your kid's boundary is is wrong. That's where when you talk about the excitement, the energy and why I get up every day to do this is I literally am surrounded by kids who are just doing magical stuff and you, we have to get it out to everybody, right? There is nothing more important to society than raising the next generation. Every parent, right? That's your job. Every society, that's the most important job. There is nothing more important. We haven't had an answer for a hundred years or a way to change it. We now do. And it needs not just to be me, right? I have to go get all the best people in the world to work on this problem because it's more important than all the other ones.

[Sean Ellis]

I can see why you out recruited Bill Gates.

[Joe Montana]

I'm in. Where do I sign? Yeah, well, come on board, I'm going to show you. I'm going to back to your audience, right, of people who want to start businesses. I haven't done it yet because I'm still working on exactly the business model and the go to markets to prove it. But I'm going to show this is the single best market. If you're an Entrepreneur to enter. It's a multi trillion dollar market with no competitors.

[Dharmesh Shah]

Dude, is the Catholic Church going to be like, is it going to get like the Pope knocking on your door and like, hey, Joe, what are you doing?

[Joe Montana]

They. No, we are working. Back to this, back to school. So there are Catholic schools that I'm working with who are like, how do we adopt to our learning? Because it's, it's just so obvious that no matter what you want, you know, the Catholic Church has a different afternoon they want. Right? Everybody has their afternoon they want, but everybody gets. Okay, well, why do we're wasting the kids time in class? Let's, let's get that two hour learning thing working so that we can then build the afternoon that we think our kids will thrive in.

[Dharmesh Shah]

Sean, is your, is your cup full or what? Oh, my gosh.

[Sean Ellis]

Yeah. This is amazing. I loved it. I love the stories, I love the insights. I love what you're doing. We're big fans. We've been talking about Alpha for a while, so it's fun to have you here. Thanks for coming on.

[Joe Montana]

Thanks a lot. Appreciate it.

[Dharmesh Shah]

You're the man. We appreciate you. That's it. That's the pod.

[Joe Montana]

I feel like I can rule the world. I know I could be what I want to. I put my all in it. Like no days off on a road. Let's travel. Never looking.

[Sean Ellis]

Hey, let's take a quick break. I want to tell you about a podcast that you could check out. It is called the Science of Scaling by Mark Roberge. He was the founding CEO of HubSpot and he's a guest lecturer at Harvard Business School. The guy's smart and he sits down every week with different sales leaders from cool companies like Klaviyo and Vanta and OpenAI. And he's asking about their strategies, their tactics, and how they're growing their companies. As you know, head of sales or chief revenue officer, if you're looking to scale a company up, if you're a CRO or head of sales that's looking to level up in your career, I think a podcast like this could be great for you. Listen to the Science of Scaling wherever you get your podcast.