104: Matt Clifford – Ambition, Agency and Talent Investing

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Will Jarvis

In this episode, we’re joined by Matt Clifford to talk about the history of ambition, his work building Entrepreneur First, cofounder matching, talent investing, and how to direct more talented people into better career paths.


William Jarvis 0:05
Hey folks, welcome to narratives. narratives is a podcast exploring the ways in which the world is better than in the past, the ways it is worse in the past, where it’s a better, more definite vision of the future. I’m your host, William Jarvis. And I want to thank you for taking the time out of your day to listen to this episode. I hope you enjoy it. You can find show notes, transcripts and videos at narratives podcast.com. Well, Matt, how are you doing this afternoon?

Matt Clifford 0:41
I’m doing really well. Thanks for having me today.

Will Jarvis 0:45
Absolutely. Thank you so much for taking the time to come on the show. Do you mind giving us a brief bio and some of the big ideas you’re interested in?

Matt Clifford 0:53
Yeah, for sure. So I’m Matt Clifford. The vast majority of my time goes on being co founder and CEO of a company called entrepreneur first. And what we do at entrepreneur first is we try to increase the supply of great entrepreneurs globally, we do that by backing individuals who we think will be great founders before they have a company and helping them find a co founder and build a business from scratch. So I’ve been doing that for actually about a decade now, which is probably a lot longer than I thought I was gonna be doing it a decade ago, but I I’ve ended up very, very convinced that it’s actually a really important mission. And, you know, the world needs more entrepreneurs. So as sort of provides a good bridge into like, the big ideas I’m interested in, I’m very interested in the broad idea of talent, and what what people with exceptional talent can and should do to maximize the impact they have on the world, whatever kind of impact they’re interested in. I’m interested in that from a kind of business and value creation point of view, I’m interested from a sort of altruistic point of view. But you know, I think this idea of like, do we as a species allocate talent? Well, our overall is a really important question, and probably still under explored. So that’s one big thing. And then I guess the other side of what I do at EF is, obviously one side is talent. And the other side is technology. And so I’m very, very interested in the question of, are we? Are we doing enough to survive and thrive as a species in terms of making the sorts of scientific and technological breakthroughs that I think are going to be required? If the answer to that question has to be yes. And so I’m very interested in how do we design institutions that encourage the right sorts of incentives for scientists and technologists? And, you know, how do we ensure that, you know, as a society, again, as a species, we’re allocating capital and town in the right ways on that. So that’s probably the second big thing. And then final thing I’d say is, I’m sort of interested in how those two questions tie together into a set of, I suppose more political questions about, you know, what are the set of values that we would want to feel like embed in those processes of both like, the institutions that we build and the technologies that we build. And you know, if you believe as I do that, actually, there are subsets of values that we would want to survive for a very long time, and some that we would not want to be trapped in for a very long time, then I think the question of like, how do we, how do we design these, these institutions and processes to give the values we care about the best chance of surviving and thriving is also really important.

Will Jarvis 3:41
That’s great. That’s great. Well, I want to hit on on all those points. How would you grade humanity right now on on how we’re doing on these spreads? You recently had a tweet, which I really enjoyed, which was, you know, we were promised flying cars. But all we got were three 90% effective vaccines within 10 months of the novel pandemic, with the new technology, you know, it’s, it’s pretty, it’s pretty awesome. You know, do you think we’re, like, kind of beginning to escape the great stagnation? You know, where are we on those fronts? And how are we doing as a species?

Matt Clifford 4:10
I don’t think it’s inevitable that we escaped the great stagnation, I think there. Unfortunately, I think there are a lot of institutional challenges throughout, you know, I hate to use, like nebulous and loaded terms like the West, but I think it probably is the best shorthand for, for what I mean, I think, well, do we have the talent and the sort of skill to be able to create things like, you know, mRNA vaccines for novel pandemic? Yeah, I mean, that should give you a very encouraging sign. But I kind of find the worrying thing about that story is that it took a very legible, like extreme global manifested risk to emerge in order for us to do that. And no sooner had we done that, then we got that too. Business as usual, and I think you see all around you, the signs that we’re, you know, gonna make a bunch of mistakes that exacerbate, you know, the set of things that probably led us to that pandemic, rather than compounding the gains of, you know, being that we saw in things like the development of those vaccines. So, you know, I think the thing I feel very optimistic about is, you know, I’m very, I’m a big believer in our species. And I think humans are pretty amazing. And I think in against painting very broad brushes, you know, I think we have proven to be as a species very, very good at. You’re kind of making scientific and technological breakthroughs. I think the challenge that we have is, as we, you know, as we scale doing that, you know, I think I think we are hitting institutional barriers that threatened to perfectly offset or worse than the advances that we’re making. So yeah, I mean, one of my big worries, I think I’ve written about a lot, but also one of my big motivators for, for building in entrepreneur first, a new kind of institution is that, you know, I do think that over the last sort of 75 years or so, we we have, I think, largely accidentally done a great deal to disincentivize risk taking by actually in most areas of life. But I think, you know, society feels the pain of that particularly acutely in science and technology.

Will Jarvis 6:33
Got it? So maybe it’s something like, you’ve got it, we can build new technology. It’s not like the we’ve lost all the low hanging fruit, we’ve kind of picked all the fruit because if we, you know, there’s the pandemics kind of a gun to our head, and we’re like, okay, we can figure something out if need be. What do you think? Is is the big institutional problem? Is it you know, capital? Is it the the motivation side is do people not have enough slack? Has it just gotten hyper mimetic because of social media? What do you see, like, you know, being on the ground at entrepreneur first, and seeing a bunch of entrepreneurs and shepherding them through? What do you see is the big bottleneck right now?

Matt Clifford 7:13
Yeah, I mean, I think the the answer to that, and there’s two parts of the answer, I think, I think the first part is around macro talent allocation. I’ll explain what I mean by that. The second, I think, is that we, we need new kinds of institutions that are able to better manage directed risk taking, and again, I’ll explain what I mean by that. But I think the first bottleneck, macro town allocation, I think one of the great achievements of humanity over the last couple of centuries is that it is now possible to live for like, many or even most people in you know, kind of rich countries to live, really comfortable, actually, broadly fulfilling eyes without taking any risk. And that’s great, in a lot of ways. I think that’s a huge achievement as a species. But what it means is that nearly, you know, in nearly all countries in the West, the default talent paths, and that’s a phrase I used to mean like, what what do what is the sort of like, most obvious path for the most talented people in the society to follow? What’s the path of least resistance, that path in most of the West has become, I would argue, dominated by activities that I’m going to be rude, like, I think, borderline rent seeking and how they in how they capture value. You know, I must be really concrete. I do I think it would be good for the UK where I live, if a much smaller proportion of the most talented ambitious people went into finance. Yeah, I do think that will be good for the UK and like, Yeah, I think financial services a really important part of the economy. And you know, somebody don’t think that should be zero. But like, it’s kind of absurd. I think that I don’t know what the numbers are today. But you know, there’s certainly a time when, in the last decade, where if you take the top universities in the UK 60% plus of their computer science graduates even were going into finance. And you know, I look at that, and they say, well, there are kind of pretty good structural reasons to think that the market is distorted enough that a lot of the the financial rewards from going into that sector don’t necessarily reflect massive amounts of value creation for society as a whole. So I think one bottleneck, you know, what, why is Silicon Valley so successful? I think one simple answer is it’s the one place in the world where all the most talented, ambitious people want to build things. You want to want to build primarily companies. I think, building, building society, a society where the most ambitious and talented people want to build things, products that are valued by other people is a really important thing. And I, you know, you can get rent seeking entrepreneurs, obviously, but But you know, broadly call me a sort of Starry Eyed idealist. I think most entrepreneurs are actually like, the vast majority, their efforts are about value creation. So that’s one big thing is just that, you know, all sorts of reasons for this, but most of the world just doesn’t, doesn’t allocate the most talented, ambitious people to the most important problems. And you know, to be clear, I’m a pretty odd and capitalist, like, I’m not like, I’m not saying that, like someone should sit in government and you know, kind of do that allocation. But I do think we need to think hard about like, what are the ways in which we may have distorted the incentives around that. So that’s one thing. And then on the institutional side, I think the other bottleneck is the, I’m going to slightly do an EF pitch here. But I think it’s because I genuinely believe that, you know, this is a huge problem is that most of the institutions that we’ve created for funding innovation, are sort of designed to retrofit

examples of things that have worked in the past that actually come from a period where arguably, the supply of innovation was too small. And so what we ended up doing is building a set of institutions and thinking particularly of traditional venture capital, that sort of look like they’re, you know, kind of building on the best practice of decades of how to fund innovation, which they are, obviously, I guess, in some ways, I am a VC. But But I think the key point here is that every so much of venture capital, conventional wisdom, is basically built on this tiny data set of things that worked in a particular tiny corner of California for a very small segment of human history. And yet they these things often get cast as like iron laws of what works and what doesn’t. To give a very concrete example, which obviously, I spent the last 10 years trying to reverse, you know, the conventional wisdom in venture capital is, you should, if you’re going to start a company started with a co founder, who you’ve known for, like a decade, ideally, you’ve worked with before, maybe you went to school with like, the longer the better, that’s fine. But if you know if that will literally true, that was the only way to build great companies, then obviously, we should do that. But I think like, only takes a moment, it’s thought to think about how much that limits the supply of great companies, because how many people have such a person that not only meets the kind of classic things like are they really smart? Are they really skilled, are they really determined or they’re really ambitious, but also happens to have had their you know, resided in your social network for the right amount of time, and wants to start a company right now, you are literally reducing by orders of magnitude the pool of potential founders. So for me, like the bottleneck that EF takes away, and it’s not just the after people who have sort of copied and adapt to the model, but I do think removing that as a really concrete example of a bottleneck that reduces the supply of potential innovators is a really, I think, good example of how, because, you know, most institutional design in our species comes from actually a very short period of history in which, you know, I think we may over universalize the lessons, that’d be one.

Will Jarvis 13:26
That’s really good. That’s really good. It’s fascinating how the stories we tell about how these things happen, you know, perpetuate, you know, into the future. You said some really interesting things there, Matt, about how, you know, the incentives for very ambitious people, you know, will just take the UK as an example, you know, they all drive to finance, you know, high consulting, etc. You know, you’re at McKinsey Correct. With us. Yeah. With your co founder, right.

Matt Clifford 13:50
I was that guy. We were we were those people. Yeah, exactly.

Will Jarvis 13:53
It may be difficult to reflect here. But I know, you know, you went to Oxbridge, I believe went to MIT as Kennedy scholar, political sides, you know, went to consulting, you met Al some somewhere along the way it McKinsey went, you know, how did you guys decide? So you came up with this idea? You know, how sure, were you when you jumped? That this was going to work? You know, like, I always like to look back, you know, like you were you like, you know, confident or, you know, not really confident like, like, Did you assign odds? I

Matt Clifford 14:21
don’t know. I mean, the the the true answer is I think we walked into it without really even properly interrogating that question. I mean, I think for us it was it was in some ways a very stupid business to start age 25 with like no experience of entrepreneurship or venture investing or tech right. I think we will run about nearly everything as apart from this one central bank that turned out to be right enough that it like swamp everything else, which was betting that the pools great founders was bigger than it appeared and that you could bet Pretty company, but like in terms of did we think that specifically would work? I don’t think we even interrogate that assumption. I think we, we sort of, you know, I mean, it’s a bit of a cliche, but I think there is a lot in in the idea that naivety can be a real strength, if it turns out that the conventional wisdom of the industry that you’re entering is in some way sclerotic, and you know, it doesn’t necessarily reflect, you know, at the efficient frontier of what’s possible. And so, for us, like, I think if we’d actually properly asked that question, we would have not done it. You know, I in that, there would have been very little good evidence supporting the what we now as we would call the hunch, you know, like, and that that kind of naivety, I think, can be helpful. I mean, you can overplay that, like it’s naivety is also unhelpful, I mean, one thing I always tell our entrepreneurs is, it took us a long time to get to anything that looked like this. Today, if we’re lucky, you know, built $10 billion with a company, it’s been been quite successful. But you know, it took us four years before we really I think, could even vaguely say, like, Ha, maybe this is maybe this is a thing. So I think, you know, one advantage of starting young is, you know, we’re 29. At that point, we still felt quite young things we’d started when were 35 would have been like this. It feels like we’re wasting a lot of time.

Will Jarvis 16:36
Yeah. Got it. So Should people on the margin? And this, you know, I don’t know, it’s hard to get Yeah, it’s very hard to give general advice. So keep that in mind. But on the margin, should people stick with things more if you’re smart? And if you’ve, you know, think you’ve got a good hunch?

Matt Clifford 16:55
I don’t know is the answer. I don’t know. If you should stick with things more, I think what you should do is I would split it into two parts. So I see people make what I believe are two mistakes, two different kinds of mistakes when when confronting this sort of question. So one, I think people vastly undervalue the the optionality inherent in trying to find out. So as in, I think that, when you one of the underrated things about starting a company, is that you will, for very low cost, learn whether something might work. And if it does work that is so enormously valuable, that it was definitely worth paying the cost that it might not. It’s such an asymmetric bear. And I hear so many people who I think could be great founders agonize almost get to this, like analysis paralysis around one, whether they’re ready, and to whether or not the idea is good. And the answer is like, both your abilities as a founder and the quality of the idea are much closer to being like, procedurally generated by the act of getting smarter than they are like these things that you can analyze ex ante. And so like, I think people massively undervalue the, the value of finding out and that’s the first thing like it’s less about sticking, and it’s more like, you know, try at all. That said, I think the second thing people do is the bit where it doesn’t make any sense to like, stick at something is if the, you know, you should be thinking in that you should be creating experiments for yourself, where you can evaluate in, you know, in the along the way, what is the positive signal, I would expect to see if this was going to be a thing. And now for ETF that was long and painful, I, you know, took us for example. 10 years from founding, not 10 years from investing in this but 10 years from founding to build our first billion dollar company. And even then I’m like, Ah, is that really proof that it’s working? You can always second guess whether you’ve really got proof. But I think what you can usually tell yourself about any given experiment in an entrepreneurial context is, what is the signal I would expect to see now if this was going to be actually a big success? 10 years from now. And so for us it Yeah, for the reason we kept going, and there were, you know, we left our jobs in September. And I can easily imagine a world where we’d quit by January. But what we did, which I think was good, like one of the few really good decisions we made that first year was, rather than give ourselves loads of time to recruit the first cohort, we set the deadline to be New Year’s Eve of that year. So we had like three and a half, four months. And you’re what, like, we got hundreds of applicants, and a lot of them were terrible. But there was like a real hardcore group of, you know, like seven, eight applicants who were like these people, really interesting, pretty good, exceptional people. And so we had no idea and to be clear like and to emphasize the point and like how people should stick or not stick to something, we had no proof that the methodology or the thesis, were going to work like call, you could put these people in a room and nothing might happen. But for the stage that we were at REL, you know, like, in the back, we were making that was a positive signal. And so like, I think it buys you a bit of almost like a willpower boost to then like, observe the next set of outcomes. And, you know, actually, that took a bit longer, you know, then it was, it wasn’t until the following September, that we really got to observe whether these people would build companies and then you know, another six months before we know whether anyone would fund them and see that, like, I think you’re just constantly running at a moving target. But the thing you need to be honest about honest yourself about is like is this where you would want to be given the goal that you’re getting, you know, kind of, say you’re aiming for for the long run?

Will Jarvis 20:52
That’s super helpful and super helpful. So it’s like it’s a moving target. But you need to keep it kind of your eye on a ball. Like in the future, you’re trying to meet these goals, and getting feedback. And it’s kind of a more procedural thing than just like,

Matt Clifford 21:04
Yeah, the one thing I just emphasize on that, just just to tie the two halves of my question together, it’s yeah, the nice thing about that, is that if you’re honest with yourself, and actually after three months, or whatever, if we hadn’t got those applications, hey, it’s cost you three months, like the important part, it almost feels like almost feels like sticking is is the is winning and like, like dropping is losing? Not at all, like this is what I mean about the option value, right? I mean, it’s so asymmetric. If it turns out not to work, I don’t feel guilty about it great. If you learn something, move on. Like, I think if more people took that approach, we’d also increase the supply of people actually trying to do new and interesting things. And I think that’s important.

Will Jarvis 21:43
That’s, that’s super interesting. I want to do this for EF. So I ran this calculation for something I was I was writing for Eric recently, about, you know, the expected value of getting into Y Combinator and something like $25 million. And that’s, that’s like, it’s like double the value of a Harvard MBA. And I’m sure EF would be something like very impressive like that, where it’s like, the the expected value is actually like really high to like, go through a program like this, even though you know, there’s like kind of tail weighted at times. Yeah, yeah. Do you think like, people are just bad at assessing? Like, taking those small bets, like, you know, you guys like we’re rational about it’s like, well, you know, three months, we go back, we do something else. If it doesn’t work, that’s fine. But the upside is, is massive. It’s, you know, billions and dollars of value created for the world. Do you think yeah, are people just bad at assessing gret risk? And are they just to kind of focus on avoiding the downside, if that makes sense?

Matt Clifford 22:38
It’s a great question. I would say two things, both of which are slightly avoiding the question. So feel free to press me at the end of it, it feels like I haven’t had a bad question. No, no, it’s not about quiet. I think. So my first answer would be, I don’t think most people even get to the stage of making that calculation. Gotcha. And that, I think, is I think, making that decision is downstream of a lot of cultural norms that most places don’t have. I actually find that when we if we get candidates to that stage, actually used to do it the right bias, the right call, as they usually do. So yeah, the expected value of this is high, it’s totally asymmetric. Like, you know, worst case, I’m going to meet a community of people who I’m probably going to be front, you know, we don’t have a lot of problems with people, like getting to the point of running the calculation and then being like, Oh, I just, I’m putting so much weight on the downside. Which to be clear, I don’t think it’s absurd that they might, there probably are some cultures where that will be more likely. But But I think getting to the point of making the calculation, there’s like a legibility thing, like, Is this even an option that I can put a shape round? There’s a big deal. And then there is a, there’s a sort of broader sort of cultural issue around just what’s, what’s legitimate. You know, one, one satellite anecdote that maybe illustrates this is when we, actually in both London and then when we open up in Singapore, we found that one of the key stakeholder groups that we just had completely not thought about was parents. So we target generally, or we did at the time, young people, you know, people literally coming out of university or in the first couple years, these days a bit more flex on that, but like, and, you know, one thing that was non obvious was that, to me, at least, was that if their parents thought this was legitimate, and or even prestigious, then it was then then that totally changed the calculation. But and you know, you could say, oh, sure, a great founders don’t care about what their parents think. I think this is this is sort of this weird, very Silicon Valley centric reasoning where it’s like, people are wildly impact by context, like, you know, it’s the classic, like, what is the, you know, what is the water you’re swimming in that you can’t see. And I think like, I think it’s a really dangerous idea for society to sort of imbibe that entrepreneurs are these like, completely, um, you know, against the grain weirdos and misfits, you know, who just like, they don’t need any sort of like social validation in order to do that actually was not true at all. In fact, I think the history of that Silicon Valley is the opposite is creating a context where it’s normalized so that people don’t even have to make that that calculation. And so like, in both the UK and in Singapore, we deliberately hacked the process by partnering with organizations that carried prestige, even though they were completely irrelevant to what we were actually doing. So, you know, the first, the first kickoff event we did for the first London cohort we did at 10 Downing Street, you know, the Prime Minister’s official residence in London, like, was there any relevant stats? No, not at all. But they all got a picture outside the front door, and they will send it to their parents, and every single one of these people signed up to join the program. So I think I think we just generally still on the right, the power of culture, and like a lot of the way that people make these decisions is just downstream of that in like very deep ways that mean, they never even get to the calculation.

Will Jarvis 26:20
And that’s really their resume. Brian Armstrong tells the story where he was working at Airbnb kept applying to accelerate you might have been Y Combinator. I’m not sure it till he got in. He couldn’t explain to his parents why he wanted to leave and start calling guys. Absolutely,

Matt Clifford 26:33
absolutely. One thing that I think is really fascinating about so many amazing founders, is that when you dig into their stories, there’s so often a point where they are so far outside the like, classic, mythologized version of Steve Jobs already on my story. There’s, there’s often a moment where you like, if you met this person, at this point, you would think they were just like, either a wannabe or a loser. You know, like, and I don’t mean like about their talent. I just mean that. There is this, I do think it’s so like, pernicious the myth that like, the great founders just had everything figured out from the start. And we’re always these ultra sophisticated people like sophistication, all these things. These are like cultural attributes that are like, learned and inherited, imitated, and, like one of our biggest company tractable EF, I really distinctly remember the founder, I don’t think he’d mind me saying this, replying to an email from a VC when he were gret was graduating from EF. And, you know, he was like, brand new to startups. And the guy was like, can you send me a deck, and instead of coming to ask someone at EF what that meant, he was just like, what’s the deck, that’s what he put into this thing. This is a guy that runs a billion dollar business. And like, you could take that snapshot and be like, this person, you know, is x or y. And the reality is, like, entrepreneurs, in my experience, are just very talented people who would be successful at nearly anything they did. And therefore redirecting this talent to entrepreneurship is really high value.

Will Jarvis 28:05
That’s, that’s so good. That’s been one of the more surprising things about about running this podcast, and you talk to people like you like Vitalik, Buterin. And, you know, just the list goes on, and you just realize they’re they’re just, they’re people. Yeah, I mean, they’re, they’re not they’re not, there’s not some Halo, or that, you know, I mean, they’re very smart, very talented, but at the end of the day, they are just people.

Matt Clifford 28:26
Yeah, and if I can lay but the point is, for another one. I’m very passionate about this, like, I really believe that. Very few people have really bothered to look at the data on what makes great entrepreneurs. And so like, there are so many myths and so much like totally bizarre analysis, often by VCs, who I think would completely reject this quality of analysis, if it were about anything else, but they select entirely on the dependent variable, and say, like, oh, well, great founders have these characteristics. It’s like, well, what relative to what population like, you know, there’s all this stuff. But the number one thing that I take from reading the literature and you know, I don’t want to pretend I’ve been like ultra comprehensive in it. But like, the most surprising thing I’ve come across in the literature around entrepreneurship, is that whenever you get a quiz, a natural experiment, that means that people who wouldn’t normally be entrepreneurs, but a very high scale, become entrepreneurs, somewhat involuntarily. A great example is, for example, in the UK, and us in periods where banks hire fewer people, like exogenous Lee, we know because there’s a downturn, not only to people, more people become entrepreneurs, some more predictable, but I think the conventional wisdom, like from VC land would be, well, these these people weren’t passionate about entrepreneurship, right? Otherwise, they’d have done it already. These are people who, like enforcer, it’s probably less good. No, like, on average, those people do better than people who choose to be entrepreneurs in normal times. Why? Basically because they’re disproportionately high. Scale individuals. And the reality is, again, with the possible exception of Silicon Valley, in most places around the world, and I’m gonna, I don’t mean this in a rude way, but like, you could increase the average caliber of entrepreneurs in terms of just raw smarts and capability by transferring from whatever is the most prestigious career path. And that plays into entrepreneurship. I think conventionally like, Yeah, but there will be there will be true for hours, that’s just a complete, you know, kind of made up concept. It’s not a real thing, like all the evidence is involuntary entrepreneurs that come from high skilled professions do better than average entrepreneurs. And I find that like, an incredibly liberating fact for humanity, that we can actually just allocate more talent to this space, and you will get better outcomes.

Will Jarvis 30:44
That is super encouraged. That’s a very crazy statement, you know, that is very encouraging. Because there is a story, like you said, where it’s like, well, you know, it’s like, very, it’s not just the skill component, there’s these other weird things, you have to have like all these these interesting insights. And it’s like, very, you have to know someone for a long time. And you can’t engineer this. But in reality, a lot of what you can do is you can take high skilled people if you redirect them in the right way, and they can be successful in building kind of breakout companies at the end of the day.

Matt Clifford 31:12
I totally believe that. That is what I’ve spent a long time bagging on that, but I think the evidence is actually relatively clear on it.

Will Jarvis 31:19
That’s great that that is that’s super interesting. I I’m curious, I want to talk a little bit about, you know, EF and this, this idea of co founder matching, which is something you guys really did pioneer, you know, no one thought this was possible before you did it. Are there? You know, I don’t You don’t have to give the special sauce away. But I’m curious. It does seem like it is a difficult problem to match people together? Well, because these findings, are they are really important. And how do you match people together? Well, do you encourage people just to, you know, break up quickly? Do you encourage people to, you know, search, you know, in a wider space? How do you get people to find good co founders?

Matt Clifford 31:58
Yeah, well, I think you sort of touched on it, I think, again, it goes back to this thing where I think people, when people think, stop, think about this problem, they tend to think about in an overly analytical way. So let’s say there’s an EF cohort and 50 people, I think, you know, left to their own devices, most people and I think this makes a ton of sense why they would think this thing, you know, breadth first, right, you know, I’m going to meet everyone in the group. And then I’m going to like stack rank them in some way against some sort of criteria. And then I’m going to sort of like, work with the person that’s top of my list. That was our intuition to we spent a lot of time in the first few years trying to make that work. And lots of other things work like personality testing, like all sorts of like, companies approaches that had a formula, but what we found that literally none of these things work. And again, I think that your, the quality of your co founder relationship, again, is like somewhat procedurally generated. In other words, you only can find that out by actually working with someone else. And I have a whole book about this coming out in September, by the way, how to be a founder. But it’s not out yet. So I’m not plugging it. But But But basically, what we say in the book, and what we’ve practiced for the last decade, ETF is that you just need to invert the social norms that exist in the real world, quote, unquote. So in the real world, if you and I will, we’re considering starting a company together, the bar for us deciding to do that would be really high. And the reason it’d be really high is primarily because once we decided to do it, the bar to decide to get out of it would also be really high. You know, it would be super embarrassing. Like, it’d be embarrassing to have the conversation, you and I, but it also be embarrassing to tell our friends like Oh, how’s it going with will actually, we stopped working together like just all these like, small but like, in on math, like extremely powerful incentives to make it hard to test a co founder relationship. So what EF does systematically is it just inverts those two things, it makes the batter getting into a team really low, precisely because we engineer a sort of like artificial social norm, that there is going to be no awkwardness whatsoever when we get out of the team. And it turns out that if you do that, and you have to really lean into it, by the way, you can’t say by the way, guys, don’t be awkward did that getting a team I mean, we go to great lengths, like every time you form a team, you have to sort of like I say register it you click a button on the platform. And then when you get out of team, you click the button again, that will be sent to a Slack channel that everyone sees that’s like, will amount of got into a team and then we’ll have broken up and if you break up and it goes on the Slack channel, you have to like write a comment and celebrate the breakup explain what you learned. And then everyone piles in and like congratulate you on breaking up why they congratulating you one you learned something about what you need in a co founder and what it’s going to make what you know take for you to find a really productive partnership and to without science sounding too sort of like mechanical about it. You You’ve added liquidity back into the pool, like, you know, like, if people want to stay tight, your velocity really matters in a fixed size community, like you want to make the time spent in bad teams really, really, really short. So there is a little bit more to it than that. And obviously, like we’ve built a set of tools and methods and get can norms that facilitate this. But broadly, we, we try and approach it from a position of extreme intellectual humility, I have no idea who you should co found with an order you until you try. Now, as it happens, a button almost all the good teams that year form in the first few weeks. So we give people three months, actually, we’ve cut it a bit, but you know, we give people quite a long time. But the vast majority of teams form in the first few weeks. But you know, the the average person we fund three months later, so as in around the average company, we fund, the founder has been through about two and a half parents on average before they found the right person. And I do think that although there’s a bunch of our teams that were first, you know, the first person I met, it worked, the people where that’s not true, they will at least tell you that there was a huge amount that they learned about what they’re looking for through the failed partnerships.

Will Jarvis 36:14
Gotcha. I love that. Do you? Do you have a sense of, you know, seeing somebody cohorts of what works on a co founder relationship? Is it kind of like a technical pairing and more in a business side sales marketing pairing, or is there just really no formula and it is just people need to try it, you

Matt Clifford 36:33
definitely need complementary skills, for sure. Now, depending on the kind of company that that could dictate very different pairings. Like, sometimes it makes sense to have two people with really deep technical skills as the two co founders, sometimes you do want someone with, you know, you know, his TED talk about the business guy, but you know, you want a person where, you know, she she has sold things before, or, you know, he has worked in the domain that you’re trying to sell to before or whatever, you know, that that, that that makes a lot of sense. But you know, there is really contingent on the idea. What I would say is the way we, what I what we do know is the way you measure that is just by productivity. So like, well, what are the chances of investing this early, we invest three in companies three months after the founders met at most. And sometimes it’s like, you know, six weeks, what you can measure, even if the idea is not even sat is how productive is this team together. And, you know, I hesitate to say anything universal about entrepreneurship, because there are so many exceptions, but it is really tough for me to think of a really good company that we have funded, that wasn’t really productive as soon as they started working together. And it is, the converse is also true. You know, like, I don’t think that teams that are super productive, it’s very rare, if you really, genuinely are just getting so much done as a pairing is so unlikely that you don’t figure something out, doesn’t mean you’re going to be a billionaire. But like, productivity, is this core core metric. Yeah.

Will Jarvis 38:09
Does that look like just kind of output, like, you know, work product, like, Whatever, whatever that looks like, whatever the product is, like, they have produced a lot of impressive things in a short amount of time.

Matt Clifford 38:19
Yeah, I mean, I think over the years, we’ve measured this in lots of different ways that you have, and you know, I think, I think we’ve got better at it. But the heuristic I give people that you can implement very easily yourself, is this. Just gonna sorry, it’s so obvious to the point of being banal, but I think I think is worth doing systematically, which is, decide what an ambitious goal would be for a week, as in like, what what would actually be like, if I’m working at my peak? I, you know, we could get this done together, write it down, revisit in a week, did you do it? Now, what I think is interesting, is one, the best teams are consistently like, let’s say at least three weeks in for they’re hitting like an ambitious goal. There, the good teams, the best teams, also creating what I would call like, positive surprise. It’s like, oh, we genuinely were stretching ourselves in setting that goal. But then this other thing happened. And we did this. And it was actually great. And, you know, I think, for me, if I could only, you know, if I could only know one thing about a team, it would be like, how many positive surprises do they generate per week on average? And I don’t care what they’re working on that would we have like a half billion dollar company in the portfolio that was just working, was running in completely the wrong direction for the entirety of the year, but were wildly productive in doing so. I took them you know, another year post, you have to figure out the right direction, but I would always bet on the productivity. That’s how I think about

Will Jarvis 39:46
so boundaries should should focus on shipping, being productive as possible. Like he really is like that. That’s a that’s a good metric. Yeah. I’m curious, do people come to you with ideas or do they do they co found, like, find their crib? out, or am I come up out of the out? How does that how does that work?

Matt Clifford 40:02
Yeah, it’s a funny thing that like, obviously, it doesn’t work if no one has ideas. Um, well, we found that it’s pretty tough to like, start with a blank sheet of paper. So, you know, I think we’ve often struggled to phrase and frame this for entrepreneurs, like, we’re not anti idea. Like, actually, we love it, when people apply with ideas, it’s just that we’re not going to take the idea into account in deciding whether to so like, I would say, probably 70% of people dealing with ideas of which half are terrible. And if we have used it as a filter, we wouldn’t have admitted them. And so like, what we ask people to do is like, we don’t tell people what to work, you can work on whatever you want. But we think most people should be open minded about whether their idea might not be improved by working with someone else. So we take people with ideas we tip of without ideas, but the point is that we are at the point of admission, completely agnostic about that we don’t think at that stage, that it is a helpful proxy for the quality of the entrepreneur.

Will Jarvis 41:09
Gotcha, gotcha, that makes it makes a lot of sense makes a lot of sense. Met, I’m curious, can you talk a little bit about the history of ambition, you’ve written a little bit about this, you’ve done some really good podcast on this? You know, what is the history of ambition look like? And why is it important?

Matt Clifford 41:26
Here, we it sort of touches on one of the themes we’ve already discussed, which is this idea of there being default paths for ambitious people, which could be more or less valuable for the world. So you know, the way I think about ambition is like ambition is the is the search for, for impact. And it’s the search crucially, for full average. So in the absence of social and all the technologies, most of us can’t have a lot of impact outside our immediate person. And, you know, there’s nothing wrong with that. But ambitious people almost by definition, are sort of thinking, how do I, you know, simply by my own actions, find levers that just magnify and amplify that impact into the world. And so the history of ambition is a search for, like, those levers and finding the most effective levers that there are. Now, obviously, the what those levers are, is both culturally and technologically determined. And so, you know, like, my argument that I’ve made is, you know, a lot of the entrepreneurs of today, you know, if they were alive, 1000 years ago, they wouldn’t be entrepreneurs, because there wasn’t the, the one of the social and cultural and technical technologies that gave leverage instead, most of them would be probably priests, unto me in a Western Europe sense, which, obviously, where I grew up that why not because they were particularly religious, in fact, probably wouldn’t be, but just that they, the church was a path to literacy and to scale through, you know, the sort of parish and, you know, a pickleball system. And that gave some people not very many, but like the most talented, ambitious, a genuine path to achieve real scale. And it was kind of the only path really, for people that were born, you know, not into wealthy families already. And you know, English history in the medieval and early modern period is full of these kind of amazing stories of people came from absolutely nothing climbed the church hierarchy and became very powerful. The example I’ve talked about most is a guy called Thomas Woolsey, who became Cardinal Wolsey and built one of the grandest houses Hampton Court, in England. But, you know, I think the point that I have tried to make to people is that over time, those ambitions, that sort of those levers change. So you know, like, various points, you know, arguably, you know, military service was, you know, one of the biggest levers for ambitious people. You know, I think one of the interesting things about the 20th century is that you started to get like a much more formalized set of mechanisms around how ambitious people could could amplify their impact around organizations. So like, by the time you get to the 20th century, one of the like, obvious ways to seek leverage is, you know, run a big company and tell those people want to below you want to do, he’ll tell people, you know, bureaucracy was an incredible invention in the history of ambition. And I think the thing that I would emphasize is that every time you get a, you know, a sort of social sort of social technology change, you usually also get an institutional change to train people for that new social technology. So I won’t belabor the point, it’s probably quite obvious to people but you know, a whole with the rise of literacy, you get a whole set of innovations around what schools are in what universities are military, school, Business, School, etc. And so you can probably see where this is going. That might you know, my big claim is, to me, it’s very obvious in the 21st century, by far the most powerful

technology of ambition is software, you know, kind of Um, services that can be delivered over an internet connection and all the, and all this sort of, like adjacent things to that. And, and there’s a bunch of reasons for this, you know, scale is built in, you know, like, if it can be delivered over an internet connection, you can literally reach billions of people, cost is very low, like it really like the fact that it’s so cheap to get started in tech, at least again, sort of taking a sort of western perspective means that, you know, the relative power of capital compared to town is low. I always say like, you know, the sort of tagline is, you know, from writing checks to writing code is a big shift towards individual talent, in my view, and scope, there’s almost nothing, you can’t No, probably can’t attack through digital technologies. And so, you know, my argument is that, it kind of seems obvious to me that, with the rise of that technology of ambition, we’re gonna see the demand for entrepreneurship increased by orders of magnitude will be orders of magnitude more people that want to be technology entrepreneurs, say 30 years from now than 30 years ago. And so the question is, what are the you know, what are the institutions that we need, that can have a comparable impact on, you know, that field, the university or the school there, you know, literacy, honestly, I hope and believe that entrepreneur, first of all, we wanted them. And, you know, in particular, because I think by taking our unit of interest as the individual, rather than the company, there’s a real opportunity to create, you know, that legibility and that legitimacy that we talked about earlier, but also start to actually shift the culture and, you know, kind of, you know, with some irony, I suppose, become a badge of legitimation of that career path, that enables lots more people to have a lot more impact.

Will Jarvis 46:48
That’s great. That’s great. Do you think that as a piece of technology that, you know, founders and individuals can use for leverage? Do you think we’re, you know, internet is becoming mature? Are we still early? You know, where’s your sense of where we are in that cycle? I, when I when I think to the really, really big companies, it feels like, you know, the Google’s the Facebook’s, you know, those were Amazon’s is were built in the early 2000s, the 10, to the Ubers, and the Airbnb s are a little bit smaller. So is there a sense, like some of the fruits been picked? Or do you think it’s just like, you know, perhaps the lat that’s kind of a lagging indicator?

Matt Clifford 47:21
It’s a great question, and, you know, sort of much debated. My strong belief is, the answer is, we’re just getting started. I think, I very much, I don’t know, if you’ve seen or your listeners have seen, you know, the essay by Ben Thompson on this topic, where he talks about, effectively, a lot of the platforms we have today, and natural endpoints for, you know, kind of in the history of computing, you know, kind of everywhere, and, you know, we can compute everywhere, today, you know, kind of on a handheld device. And, you know, if you just sort of look at the chain of companies that were disrupted, it’s less obvious today, what the how much further, you could go on these dimensions so that I sort of by but, you know, to try and bring it to life, I think we I mean, thinking of, for example, biology as an information problem. We like it the tiniest, were a speck on the chart of how far there is to go on that I suspect the same is going to be end up being true for energy. I suspect there is a Google scale company that is not Google to be still a built in AI. I just think that the other way other than Ben Thompson’s way of thinking about is like, what are the, you know, how do you think about the possibilities of combinatorial innovation with the building blocks we’ve got, and it feels like we’ve taken that a long way. But actually, I think we’ve sort of remained very much in our silos, like, you know, Google is an internet company, like, yeah, it’s doing a lot of other stuff. But it’s certainly not like biology as an information problem company. And I suspect there’s a trillion dollar company, several trillion dollar companies in that, for example.

Will Jarvis 49:09
Gotcha. So it’s still still a lot of low hanging fruit.

Matt Clifford 49:11
There’s a lot to do. I don’t know if it’s low hanging. I think he’s a hard bargain. But I think there was a lot of fruit to

Will Jarvis 49:18
pick. That’s great. That’s great. I’ve got kind of two last questions here. First one is you gave a great talk. It was It may have been at one of the EAA Global’s maybe was more the local conferences in Oxford, about you know, how EA should should think about using the internet for scale and founding companies as is a good career path. Do you still think that’s true? Do you think EA should on the margin, think more about, you know, building great companies as a way to be effective, you know, and effective altruists in the world?

Matt Clifford 49:45
Yeah, I do. I guess I think there are two different arguments that could get you there. One is just that it’s quite a you know, if as a community yeas, decide that that’s good. And you know, I think there’s a lot of people that believe that I Um, anywhere within the EA movement, the nice thing is the you have even more downside protection from the normal concern, the sort of normal, I guess normally I would argue, hey, it’s such an asymmetric bet that it’s worth taking, if you’re an EA, and like a large chunk of the cohort of entrepreneurs are also a, you should feel really good about that. Because, you know, like, maybe you’ll be the next sandbank for free, but if not, hopefully someone else in your cohort. And actually like in that sense of what you really care about, you know, it’s just like, what happens to the proceeds of your gains, like the Maury A’s that get into this space, if you believe what I say it’s like, actually largely a talent game, rather than, do you have the entrepreneur gene, then it sort of seems like the expected value is really high. And the more he is that doing it, the more likely that when you pick from the distribution, it’s an EA, that makes it really big and can do the next future fund or whatever. So and that’s one argument. And the other argument, though, which is like not an earning to give argument is, I just do think that if you can find things that work at unit scale on a positive and then do them billions of times, that is an underrated, you know, that is an underrated way to have positive impact in the world. And, you know, I mean, like, I’m gonna say something very facetious, but it’s like, not insane, which is, you know, you could argue that one is the most EA companies you could build would be just about a dating, dating app, you know, like, and there’s a lot of evidence that, you know, matching really matters for lifetime satisfaction. And there’s lots of spillet positive spillover effects on that. And, you know, I think the market for filing your match is, you know, still, probably, I’m not suggesting people go out and build a dating app, but it’s just an example of like, I think you could have even just a lot of counterfactual impacts in sort of like pro yo way by building something that just has a ton of consumer surplus. I think there’s obviously better examples that are like, how do you scale like more conventional positive impact, but I’m a big fan of consumer surplus at scale. I think that’s like one of the most important things there is

Will Jarvis 52:02
absolute? Well, you mentioned this earlier, most founders, you know, are especially founders that you kind of go through EF they’re not building rent sinking companies, they are building companies that are absolutely. deflationary value to the world, which, which is super cool. Well, my last question here, you just raised a massive round in a in a downturn, though last, which is, congratulations to that. For your Onyx scale. It’s super, super cool. It’s great sign of, you know, everything you guys have built, it’s really inspiring. What’s next for EF? What does the next 50 years look like?

Matt Clifford 52:33
Yeah. Well, you’re right is a very exciting time it Yeah. So yeah, we just raised $158 million from coalition of, I think some of my view, some of the world’s best founders, people like John Patrick Collison, Reid, Hoffman, Marlon way, many, many others. And we structured this, I’m not gonna be too boring and technical, but we shot this and I think a pretty interesting way in that we this not a fund, it’s a it’s an investment into our company, its goal is to be a permanent capital vehicle. And one of the reasons it’s really exciting to structure like that is that it allows us to think and behave like like an operating company rather than a fund. And the reason I emphasize that is, I think one of the limitations of funds, although they make so much sense for most VCs is that they’re kind of a single product, like, you basically swapping cash for equity at a price determined by the market. And some people are really good at that. And that’s amazing. But what is quite hard to do in a fund model is to go back to your LPs, your you know, your investors and say, Hey, I know we’ve been making you a ton of money doing X for the last 10 years. But now we’re going to try to do Y. LPS don’t like that. And rightly so like LPS have to be more conservative than, you know, like individual angel investors, they, you know, they’re investing, like for example, pensioners money or whatever. What’s nice about being a company is that you create complete long term permanent alignment between my analysis interests and the interests of every investor, which includes, by the way, some really big institutions, including some pension funds, but what we’re able to say is, look, we’ve made a ton of money for our investors over the last decade by doing product A, but we believe we are touching just a tiny fraction of the you know, kind of space of great founders that the world’s missing out on like today, EF has one product, and it works incredibly well, for people in the first eight years of their career. Who wants to start a company right now and need a co founder. That’s great, as I say, done about $10 billion of value through that one product feel good about that. But you know, what about second time founders? What about people with 15 years of experience who or people don’t want or can’t make a three month full time quit your job commitment right now? Once you start to think about like the space of founders that the world’s missing out on, you start to think like wow, this happens to be a multi product company. And yeah, like we We’re going to continue to do what we’re doing is we’re not abandoning this product is we love it, we think has had a ton of impact. But I think what you can expect to see from EF is even in the short term, even in the next sort of 12 months is a lot of experimentation around the product offering for different kinds of founders globally. And I think if we do that, right, then, you know, to answer your question over the 50 year horizon, I think the way I see is we want e f to be the obvious place for any entrepreneur to find their co founder, and we want to have a product that fits. You know, every every entrepreneur, you know, in every sector in in every part of the world, and I think that one of the one of the my big reflections in general is that founders probably under a devotee in built, you know, if you care about impact, then something that goes on for a very long time, you know, almost by definition, and eventually has more impact and stuff that doesn’t. I think I’ll always increasingly to think about, what does it take to make sure that EF outlives us, you know, what does it take to, you know, to be self funding not to have a need to raise external capital, but also to be, you know, why do universities last for like, 1000s of years when companies normally that I think largely because they’re incredible platforms for talent, that have been very flexible in the product that they offer, in a bit of CAP very fixed the idea of being a springboard or amplifier for individual talent. I don’t think we want to be a university that’s not anywhere close to our goals. We’re all about building companies that otherwise wouldn’t exist. But when you start to think about, like, being a platform for talent, like aiming to be a meaningful part of the life story of some of the most impactful people of this century, and this is something I can imagine spending the next 50 years working on,

Will Jarvis 56:48
man, I love that vision. I really love that vision. That’s so cool. I wish you guys the best of luck. I can’t wait to see what comes down the pike. Matt, thank you so much for coming on the show. Where can people find you? Where should we send people if they’re interested in the F?

Matt Clifford 57:01
Awesome yet? Well, you can find EF at join e f.com jinef.com. And you can find me probably best on Twitter at Matthew Clifford. I tweet a lot about the app but also about some of the other things that we’ve been talking about as well.

Will Jarvis 57:15
Excellent. Thanks so much. Thank you. Special thanks to our sponsor, this market analysis for the support. Bismarck analysis creates the Bismarck brief, a newsletter about intelligence great analysis of key industries, organizations, and live players. You can subscribe to Bismarck free at brief dot biz market analysis.com Thanks for listening. We’ll be back next week with a new episode of narratives. Special thanks to Donovan Dorrance, our audio editor. You can check out documents work in music at Donovan dorrance.com

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