#0 Matt Clifford on Scaling Your Ambition

By Nasos Papadopoulos, EF Head of Content

At Entrepreneur First, we’re committed to helping the most ambitious people create the world’s most important companies — from before they even have an idea or co-founder, to when they’re looking to turbo-charge their business.

The Scaling Ambition podcast is part of that mission. 

On the show you’ll hear from founders looking to fulfil their potential by starting a globally ambitious company and discover the principles needed to succeed as an entrepreneur - not from abstract advice or sweeping statements but from real stories of founders who made the leap and overcame the challenges on their path to start and scale a game-changing business.

In today’s episode I kick off the podcast by speaking to EF Co-Founder Matt Clifford.

Matt Co-Founded EF with Alice Bentinck back in 2011 and since then EF has gone from strength to strength, building hundreds of companies worth over $400m including Magic Pony Technology, Tractable and StackHut.

After starting London, EF has now set up additional programmes in Singapore and Berlin and recently raising funding from LinkedIn Co-Founder and Greylock Partner Reid Hoffman to continue scaling the EF mission globally.

In this episode Matt and I discuss:

- Why the risk of starting a company isn’t as big as you think and the two kinds of risk that prospective founders often confuse
- How the world has moved from writing cheques to writing code and why technology entrepreneurship is the best career path for ambitious people
- How EF has formalised its offering to serve the different parts of the startup path – from helping you find a co founder to getting you funded

This was a fascinating a conversation as always with Matt and you’ll definitely get a sense of some of the driving ideas behind EF and insights into the current state of tech entrepreneurship.


What Should The World's Most Ambitious People Do With Their Lives?

Why The World Has Moved From Writing Cheques To Writing Code

Will Entrepreneurship Ever Be Mainstream?

Entrepreneurship Isn't Magical

The Opportunity Cost Of Entrepreneurship For Exceptional People

Smart Entrepreneurs Don't Find Co-Founders By Luck


Nasos: 03:53  Matt, welcome to the show.

Matt: 03:58 It's great to be here.

Nasos: 03:59 Fantastic to have you on to set the tone for what I hope is going to be a fascinating series of podcast called Scaling Ambition. To kick us off, what does the term scaling ambition mean to you?

Matt:   04:13  Entrepreneur First was founded really as an answer to the question what should the world's most ambitious people do with their lives? I think that's a question that Alice and I have been really obsessed with for quite a long time. What we believe is that the traditional answers to that question are not wrong but simply outdated. In every era of human history, the world has had an answer to that question, what should the most ambitious people do with their lives, but it's changed hugely over time.

Matt:   04:46  If you were to try and answer that question today by walking around a university careers fair, you'd come away with the answer that the most ambitious people should become bankers or management consultants, maybe lawyers, accountants, or work for a big corporate. Actually, I don't think that's a crazy answer. In fact, I think for most of the last 100 years, that probably was the right answer because what being ambitious means is about getting leverage for yourself, being able to scale your own impact and actually being in a large organization that has a lot of resources, and having those resources at your disposal was the way to scale your impact for most of the 20th century.

Matt:   05:26  However, I believe that's a bad mistake to believe that's going to be true for the 21st century. We actually believe, and EF is founded on the idea, that we're sitting right now on an inflection point on human history where, for the first time, the way to have the most impact, the way to scale your ambition the furthest, is not to eventually climb to the top of a large organization with great resources but to actually use the global reach of technology to have enormous impact very quickly. We see, for example, the founding of Facebook as a seminal moment in this change. This is the first time, more or less, that someone could write in their bedroom a piece of software, create in their bedroom a product that goes on to reach a couple billion people very single day. That kind of leverage is pretty hard to map onto any other era of history. I don't think anyone has ever reached two billion people before, but even the people in each era who reach the most people, they had to do that through physical resources or through much slower moving forms of nonphysical resources.


Matt:   06:41  I often talk about the transition from banking being one of the most effective ways to scale your ambition to software entrepreneurship being one of the most ambitious ways, technology entrepreneurship more broadly. I call that the world moves from writing checks to writing code. That moment in history is now. Entrepreneur First exists to be the institution that finds people who that message resonates with and then supports them to scale their own ambition through entrepreneurship.


Nasos: 07:09  Speaking of ambition and scale, a core value here at EF is that scale matters. Why is that such an important part of what you do? How does that link into this whole conversation because Entrepreneur First, you make it very clear that you don't want lifestyle businesses. You want businesses that are going to scale and change the world. Tell me a little bit about that.


Matt:   07:29  I think when we think about why scale matters, we start with the idea of opportunity costs. I think most people will be familiar with that, but very briefly, opportunity cost is the unseen cost of what you could be doing with a set of resources, money, time, effort, whatever, that you're not doing because you do something else. When we talk about opportunity cost at EF, really, in a nutshell, what we're saying is if you're good enough to get onto EF, very selective program, highly competitive to get a place, if you're good enough to make it through that, your opportunity cost is too great to do something small.


Matt:   08:08  We really think that the kinds of people who are becoming entrepreneurs, at least through the EF process, have too much to lose to not try and do something world changing. Maybe it's really worth clarifying this point, when I say entrepreneurship can and should be mainstream, I mean that in the same way that being a doctor is mainstream. That doesn't mean that everyone should be a doctor. We definitely see medicine as a high-skill profession that most people should not do. Entrepreneurship is a high-skill profession that most people should not do, but for those that should do it, I think it just does not make sense to not aim to do something really huge. We all have a finite amount of time in our careers, and actually, I think entrepreneurship probably should appeal most to those that want to maximize the amount of impact you can have in that finite amount of time.


Nasos: 09:01  Talk to me a little bit about the mechanics of the EF process and how you facilitate that because it's something obviously that you learned a lot about over the course of the last few years since starting way back when in 2011. How do you try and facilitate that process now? What are the mechanics of it?


Matt:   09:18  The starting point of our thesis is that the world is missing out on some of its best founders. What we mean by that is we believe that your probability of becoming an entrepreneur, empirically I mean, seems to be much more determined by where you grow up and who you're surrounded by than by your personal characteristics. If you believe that, you start to ask yourself why? What are the barriers? What are the barriers that an institution like EF would have to remove if it's to be successful in the mission that we've been talking about.


Matt:   09:51  I think the first is if you look at the data, clearly having a co-founder is one of the most important predictors of success. Obviously, there's some exceptions. Nothing is uniform in entrepreneurship. That's a pretty well-attested fact. Then you start thinking about where would that co-founder come from? The answer is that in 70 years of venture capital being in roughly its current form, the industry has been very incurious about that question. The answer is well, the co-founder comes from wherever it came from before you turned up on my doorstep. We think that's a lazy answer, and we think there's a better answer.


Matt:   10:32  I often site a blog post my co-founder Alice wrote about the analogies between how we think about this and online dating. If you go back even 10 years, online dating was this really embarrassing socially stigmatized thing where literally you would tell your parents, no, we met in the park, rather than admit that you met online. But actually, when you talk about that now, it sounds crazy. Why would it be better that you met in a park than you met online? Meeting in a park is a random encounter between two people who know nothing about each other, know nothing about what pool of people they've come from, the characteristics of that pool, the interests, the passions, any of that. What online dating does, now in 2018, this feels kind of obvious, is it actually allows you to filter on the things you care about and actually, you should look at the data now on the number of marriages, certainly in the U.S., that started in online dating. It's huge and growing. I think it's already mainstream, and I think it will very soon be the majority.


Matt:   11:40  We think about the co-founder problem like that. One of the reasons that the world is missing out on its best founders is that we've historically said, hopefully, you'll randomly meet someone who turns out to be a good co-founder for you. If not, go do something else. That to me already sounds crazy, but certainly, I think in 10 years, we're going to say that was a ludicrous phase in the era of entrepreneurship because what you really care about in a co-founder is not are you best friends. In fact, that's a very unreliable predictor of success in a startup. What you really care about is what are the characteristics of the person that you're going to enter into this longterm partnership with?


Matt:   12:17  We believe at EF that you want that person to be highly committed to starting the company. You want them to be extremely smart. That probably goes without saying. You want them to be really insightful about the area you're going to work in and you want them to have some edge. You want them to have some reason why in retrospect when you look back you go oh yeah, they were obviously the right person to start this company. Until EF, I don't think there existed a place where you could reliably find such people. That's why we created what we call EF Form. Form is our product, if you like, for helping the world's most ambitious people find the right co-founder for them. I'll go so far as to say the best co-founder for them.


Matt:   12:59  What is Form in practice? You can get into more detail, but at the high level, it's a group of 50 to 100 people, depending on the location, who come together, who've been extensively prescreened. We spend literally thousands of hours selecting these people and not just selecting them but scouring the world for the right people to invite to join this community. Our belief, and we can get into the results in a moment, is that actually picking a co-founder from among this pool of people within the context of EF Form actually produces better results than happening upon a co-founder in the wild.


Matt:   13:34  That is probably still a very controversial belief in VC, but I think six years on and 100 companies later is much less controversial that it was when we started EF. I think people thought that was actually crazy when we started. In a way, it stands to reason if you actually say that the characteristics that make good founders are somewhat predictable, and that really what you care about is optimizing that then of course being a member of a community of exceptionally ambitious, exceptionally smart, exceptionally committed people is a better way to find a co-founder.


Matt:   14:09  We actually think that the world will look back at this pre-EF era and say, wow, that was really inefficient. That was a really strange way to try and build companies as scale. That's what Form is. Form is the best way to find a co-founder. Form is unique. No one has done it at the scale that EF has done, and certainly, no one has got the results that EF has from doing it.


Nasos: 14:35  And after Form comes ....


Matt:   14:36  Comes launch. We have two products, Form and Launch. They fit together snugly. Let's recap Form. Form is input individuals, output companies. The challenge is, to use this sort of nature analogy, they're a little bit like newborn animals of any kind. They're exceptionally well-formed, but you wouldn't want to leave them in the wild, and that's why Launch exists.

Matt:   15:07  Launch is our product, our second product, that takes nascent teams of the kind we just described and turns them into seed-funded companies. By seed-funded companies, what I mean is companies where someone else, not EF, some third party who does this for a living has said, "Yes, this is exciting. I want to commit real money to this." Companies that someone else has invested in.

Matt:   15:31  Form and Launch run back-to-back. Form, individuals in, nascent companies out. Launch, nascent companies in, seed-funded companies out. We've done our job if at the end of launch, we have companies being funded by top-tier investors. Fortunately, that's exactly what happens. Our companies have been funded by some of the best investors in the world precisely because you look at these companies at the end of Launch and you say wow, these are exceptionally strong founders with incredible backgrounds who are doing something that it looks like they were born to do, and they've already achieved real validation of some or all of their business model, their technology.

Nasos: 16:17  A lot of people listening to this will probably be interested in the idea of starting a company, but there are obviously risks associated with that. Whether it's not being able to form a team or not being able to get funding for your nascent company, there are risks involved with entrepreneurship, and most startups do fail. What do you have to say to people about the risks associated with this entrepreneurial career path, and do you think most people overestimate them?

Matt:   16:47  I think we really need to differentiate between two different kinds of risk. Startups are risky. The entrepreneurial career path is not actually risky for you as an individual. Do I mean that you won't experience any failure on the way? Absolutely not. But over the course of a career, does it lead to significantly worse personal outcomes for you? Well, we think not. To be clear here, as I've said before, we believe entrepreneurship is a high-skill profession that is not for everyone. I'm not saying that everyone should be an entrepreneur. There's no risk associated. I'm saying that for the kind of people we select at EF, starting a company and failing really should have almost no impact on longterm outcomes for that person. What we see at EF is absolutely, EF is not magic. EF is not magic. It is not join EF at the start, and you are guaranteed to have a seed-funded company at the end. Instead, what it is is we want EF to be the most valuable community that you were ever a part of. There's one interesting path, maybe three or four paths, that we should talk about. What happens when people don't start companies?

Matt:   17:53  One is they actually do EF again. There is a lot of randomness in entrepreneurship. There's a little less randomness at EF because of the way we designed it. We certainly would never claim that this is a deterministic process. Sometimes people get to the end of Form, and they say, you know what? I've learned an awful lot about what I should have done at the start of Form, so they do EF again. Actually, those people have a remarkable success rate. Some of the companies we're most excited about in our whole portfolio are companies where someone has done EF twice. Partly that's because I think you learn so much. Almost everyone I know who has done EF Form says even if they don't end up with a company, it's one of the most transformational learning experiences of their life. One of our alum recently published a blog post, which I love, which is EF is life acceleration. I think that's a really good way of thinking about it.

Matt:   18:44  A second path, which is very common, is for people to join another EF company. By creating a community of exceptional people, you actually have a privileged access to a filtered set of opportunities, which we think are pretty exceptional. Each EF cohort contains companies that end up being well-funded, super ambitious, fast growing, exciting places to build a career, and every cohort, many people who don't form a company, go on to join one of their cohort mates companies or, in fact, to go on and join one of the alumni companies. One thing we do a lot of work on is facilitating contact between the EF cohorts. That's the second important path.

Matt:   19:25  A third path, which might sound a bit strange, is that we actually have several EF alum on the EF team. There's at least five people who work for EF who did EF. In fact, Zefi, who runs our Berlin office, was on the very first EF cohort back in 2012, and his journey has taken him to building a company, raising money, deciding ultimately that it wasn't going to become a huge win, and then rejoining the EF team to help us build EF in Berlin. That's actually a path that some people get really excited about.

Matt:   19:58  The fourth is obviously EF is deeply embedded, not just in its own community, but in the broader startup ecosystem. One thing we also try and do is make sure that people are able to tap into the opportunities that exist in the much broader EF network with other startups, with venture capital funds, with some of our partners who work in and around the community.

Matt:   20:23  As I say, EF is really all about the other people. Because EF is about the other people, it's also about the opportunities that they create. Absolutely, to recap, the primary goal is to build a seed-funded company that can have a world changing impact, but people shouldn't think of this as a mechanical one shop thing. In fact, it's a community that we hope builds dividends for you over the course of your entire career.

Nasos: 20:50  Sure. I really like the principle that while startups themselves are risky, the entrepreneurial career path is not. By becoming part of a network where you can expose yourself to some of that potentially unlimited upside in terms of connections, building companies, et cetera, that the seed risk, if you actually separate it, is not really there.

Matt:   21:14  Well, exactly. I think if I were to try and give one piece of generic advice to ambitious people, it would be harvest cheap options. Collect opportunities that don't cost you a lot in opportunity cost but potentially have an enormous upside. That upside can be measured many ways. I think most people hear that and think financially. Certainly there is an element of that, people create large amounts of wealth at EF, and that's a great thing. I also mean in terms of learning. Getting on the steepest learning trajectory that you can is just a hugely important thing for ambitious people at the start of their careers.

Matt:   21:56  I see EF as providing really exceptional optionality for ambitious people. You come in, and it's a cheap option. Cheap in terms of opportunity cost because you commit three months to Form. Hopefully, that's the start of a 10-year journey that takes you through to an IPO, but if it's not, you've really not lost anything. Your optionality is there to jump into one of these other very steep learning trajectories. The average age coming into EF is probably late 20s these days, but that's very early in the scheme of a 21st century career. Harvesting the optionality to jump into another path or to jump into something that does become world changingly big, I think that's just an amazing opportunity.

Nasos: 22:40  For sure and I think we've spoken, obviously, about capping the downside, but let's not forget to mention the exponential upsides. Just run me through very quickly a couple of the success stories that you're most proud of here at EF.

Matt:   22:53  As I said, I think EF's track record is starting to look pretty impressive. Certainly, EF companies raise more money at higher valuations at seed than companies that are not EF in general if you look at those two groups as a whole. They also raise a second round of funding at much higher rates than the market as a whole. Across the whole portfolio, we're seeing some exciting numbers. As you are sort of hinting at, we've also seen some fairly spectacular success over a very short period of time.

Matt:   23:24  Two fairly prominent ones, one that's from our very first cohort, Represent, a company that was started by two grads who had an idea about what the future of giving looked like and actually over time managed to turn this into an online ecommerce apparel empire called Represent. Represent ultimately exited for 100 million in early 2016. Pretty spectacular success and in fact, really exciting to see Brian, the found and CEO of Represent, reinvesting some of his win there into EF. He's now an EF investor, which is a great vote of confidence.

Matt:   24:08  We also have two other EF alumni investors, Rob Bishop and Zehan Wang, the founders of Magic Pony Technology from our third cohort, which at least in terms of time to exit, an even more spectacular ascent. Rob and Zehan joined what we call Form in September in 2014. They started working together after six weeks having tried other co-founders and experimenting with other ideas along the way. Magic Pony was born out of discussions between them about how machine learning might change video. They completed launch in the March of 2015. We did our demo day to raise money off the back of that from really great investors in London, Octopus and Balderton. That's March 2015. Their round didn't actually close until August of 2015 for various reasons, and by June 2016, from close of round to June 2016, ten months, Twitter bought them for a reported 150 million dollars.

Matt: 25:16  Creating spectacular value in a very short period of time even though, this is worth reiterating, that this at the time EF was very young. This was only our third cohort. People at the time, I remember the demo day for EF three, venture capitalists still being very skeptical that anything of value could come out of this apparently madcap way of building companies. That cohort already has 150 million dollar exit under its belt and actually look at that cohort and I think there's at least another one of that size or bigger coming and perhaps many more.

Nasos: 25:55  Yeah, we'll have to see what happens there. The upside is certainly plain for all to see, I think. Let's just finish up, Matt, with some personal reflections on this process for you. We've spoken a lot about what you've learned at EF about this process of building companies, building game-changing companies, but what have you most learned about yourself through this process of creating with Alice a company that is changing the world?

Matt:   26:21  I think one of the main lessons for me has been patience. The tech world really likes overnight successes and typically reports everything as an overnight success however long it takes. EF is, I hope, still at the very start of its trajectory. We're trying to build an institution here that outlasts us. I believe that we will do. But we're certainly at the stage where we feel very well established. We have backing from some of the world's best investors, Reid Hoffman and Greylock and many others. EF now is reported in the tech press as this overnight sensation. I think back, and we literally didn't have a paid employee until September 2013. We started the company in August 2011. There was two years of there being nothing. At the start of 2016, just before the Represent exit, just before the Magic Pony exit, before we raised our bigger fund, that was coming into our fifth year. Really, although we were very confident in the thesis and very excited about potential, it was hard to know what could I show people for what we've done? I think if I'm really honest, I was starting to get impatient.

Matt:   27:40  Turned out 2016 was a great year for us, and that was very satisfying in some ways, but I think what it actually taught me was you've gotta chill out about these things. It's very easy to say yeah, sure I'm getting into a 10-year journey, but then actually living that over a period of years is very different matter. I think it's given me a perspective that I hope is helpful as I work with our founders now, which is if you are on a ten-year minimum journey, if you're going to really live the idea of exponential growth, that means that the first five years are often going to feel pretty flat. That's what exponential curves look like.

Matt:   28:18  It's one thing to know that intellectually and another to live it. I've learned a lot about patience, and I think it's made me much more patient now about what the next ten years look like. I firmly believe and certainly hope that EF is the only job I ever have to do. I hope that we look aback in 10 years at what we've done over the last six and say that was a pretty flat part of the curve. Hopefully, I'm better equipped psychologically to deal with that now.

Nasos: 28:44  Well, let's hope that it's all upside from here, and we're going to be riding that slightly more vertical part of the exponential curve.

Matt:   28:51  Absolutely.

Nasos: 28:52  Matt, thanks a lot for coming on. Pleasure chatting, as always.

Matt:   28:54  Thank you.




Entrepreneur First