Full transcript: Matt Clifford on London Real
0:00 In London, technology is the silicone roundabout. Introducing a new talk show dedicated to the people of the London technology startup scene. Silicon Real. Each week, interviewing entrepreneurs, venture capitalists, financial technology, accelerators and incubators in an exciting three-person format. learn about the people behind the innovation. Locally filmed, locally sourced.
0:34 Silicon Real. It’s about the people. This is Silicon Real, the weekly talk show dedicated to the people of the London technology startup scene. I’m Brian Rose. I also host London Real. It’s a similar show, same studio. We get some crazy people in the room like Howard Marks, George Galloway, Tim Ferriss or Neil de Chris Gras Tyson is our guy this week, the astrophysicist.
0:59 With the rockstar astrophysicist? Yeah, yeah, yeah, yeah. He was, voted the sexiest astrophysicist alive. Really? Which I told him is kind of a backhanded compliment.
1:07 Tough competition. Yeah, I know. Him and Stephen Hawking. He is America’s most famous, like, you know, scientific guy, scientist. Very cool.
1:15 Anyways, that’s London Real. Check that out if you want. We’re here today to talk about tech. My co-host is Colin Pyle, entrepreneur. You’re around the world doing coffee deals.
1:25 You’re in Germany, you’re in Italy. You’re trying to deliver these biodegradable pods. What’s going on? Yeah, so been really sort of cleaning up a lot of mess actually the last month or so. So as a startup company, really tough to nail down your supply chain.
1:39 So we fell on our face a little bit and we’re getting back up and redeveloping it. So things are looking very positive and I hope to have a first batch of 100,000 pods in about 10 days. So we got back on our feet quick, but these things happen. Awesome, that’s why they’re gonna pay you the big bucks. There we go for dealing with all these issues so excellent before I get to our guest I just want to give a shout out to task grab it they’re one of our sponsors for the show They’re an online marketplace where you can outsource small jobs to people in your community They do a bunch of back-end stuff for for silicon real actually doing like the clips and things like that But they’ll also find you a housekeeper plumber you name it So we love their show that we had Lauren Sherman on their head of community about a month ago She really killed it and they’re here in London task grab it co.uk you get 25 pounds free by using the code real25 So yeah, check them out. And again, I’ll always say I’m just shocked at actually the level of ability of a lot of these people Taskers that what they can do like well, I love them cuz they sent free cupcakes to our office to my co-founder the other day Yeah, have you gotten free cupcakes it was on Valentine’s Day Alice is a lot harder than any of us Yeah, what’s up Lauren? We’re gonna talk to her about that But no it is a great service and it’s it’s really a temporary workforce that you can just outsource like that
2:51 And you know, they bring a lot of that really cool vibe. They kind of have that startup Silicon Valley, you know San Francisco field to a big about community. So thanks so much to them. Yep. All right, let’s get on with this We have mr. Matt Clifford who is the chief executive and co-founder of entrepreneur first Which identifies and invests in Europe’s top technical students by supporting them to build startups that solve real problems Using technology when they graduate correct you start at the very early stage taking individuals pre-team and pre-idea India, this is a concept we haven’t talked about.
3:23 Your first round of 33 people, I think you built 11 companies one year later and you have a collective market valuation of about $50 million. It’s impressive stuff. Matt, welcome to Silicon Real. It’s great to be here. Thanks for having me.
3:37 This is such a unique story and I’m getting really excited preparing for this because we’ve had the incubators in, we’ve had the weiras and the seed camps and the number one seeds. We talked all about this stuff, but we haven’t had anybody that goes right to the crib and takes them out from right when they’re graduating, which is a crazy, interesting idea. Still wet behind the ears. Yeah, and I was wondering if you start looking earlier than college. We’re looking forward to our first compared to the sites.
4:04 No, no, no, we go earlier than EF. Earlier than EF. I was like, ah, wow. Yeah, maybe like. Promising fetuses.
4:09 In vitro, yeah, that’s what I got. It’s a fantastic idea what you’re doing. I think it’s hard for people to get their head around it right away. I was wondering if you could walk us through kind of the basics, or some of the questions you get asked normally when people are like, what the hell is crunch for no first? Yeah, so I guess kind of if you stare right back and you say, you know, you imagine yourself as a computer scientist or an engineer, someone who really loves tech, and you know, you may be 21 years old, you know, you’re a great university, or you know, maybe you don’t study those subjects, but you’re a self-taught hacker and you just love building stuff.
4:42 You get to that kind of point where your parents start to say, right, So what’s next? When are you gonna start kind of actually getting a job and you look at your options? And the way, you know, kind of, I think it has been in the UK over a long period of time, really, is that, you know, the banks loom very large in that. You know, the banks are very aggressive recruiters on university campuses. So we see some big corporates, professional services is huge.
5:06 But actually, like, if you wanna build stuff, like really build products that solve real problems, you know, that kind of reuse cutting edge tech, what do you do? And that’s kind of the question EF wants to be the answer to. If you imagine this guy or girl, maybe we’ll talk about this, it’s mainly guys right now, kind of looking at their options. One option is to try and start their own thing. But if they’re going to start their own thing, they need a team.
5:28 I think that’s pretty much universally accepted. No one’s going to invest in people that don’t have teams. But what if in your final year at uni you’re about to graduate and you don’t have that team already? No one’s going to fund you to find a team. So kind of that’s That’s not an option for you, actually, if you haven’t already got that person.
5:47 Or you do have that person, but you recognize that you don’t have the big idea that could really be worth your time. So what do you do? Again, you kind of don’t have the options. You pretty much have to go join a big company. Because you would need an idea to get into a wearer.
6:00 Right. Exactly. Yeah. And you know, like Seacamp and wearer and doing great stuff, but they’re not going to take the kind of people I’m talking about. That’s not their model.
6:08 So what EF wants to say is if you are actually truly brilliant, truly exceptional, you want to build stuff but you maybe don’t know what yet or with whom, EF is your answer. You can kind of think of it as the place where we think the top tech talent in the country comes to hang out to build stuff when they graduate. And so do you recruit them yourself then? Yeah, absolutely. So it’s a huge part of what we do as the recruit.
6:30 And so for every position, how many guys do you touch? I mean like Tom’s to be honest. When we started this in 2011, we had no money, frankly, we’d never done it before, we had no idea whether it was possible to build teams, we had no brand, no track record, and even then we had like 450 applicants in our first year, we were like, whoa, this is crazy, this is like really tapping into something on campus that people are feeling. This year I think we had like 700, and you know, so we’re talking like serious numbers of applicants per place.
7:06 Where did you get this idea from? You were at McKinsey before and doing some other things, but like, where does this come to you in your head that we’re gonna start a stage earlier than everyone else? It’s one of those things that in a way was kind of like over determined. There were so many things that in retrospect kind of pushed us here. So I guess one is like tech is what I’ve always cared about.
7:25 And yet when I was reviewing what I was gonna do when I left university, when I left grad school, I was like, I was like, well, you have to go get a serious job, right? Because otherwise no one’s gonna take you seriously. So I’m gonna go somewhere very serious and I’m gonna go to McKinsey. And that kind of, in retrospect, seemed strange. And then when I was at McKinsey, I think in my class of analysts, like nine of us are now in tech, which kind of seems strange, right?
7:47 Why are these people, I’m like, you know, some of them wildly successful, like the founders of Go Cardless were at McKinsey with us and, you know, doing exceptionally well right now. You know, like why are these people going to McKinsey first? Is it because, maybe it would be totally legit if it was the afterwards, they’re like, yeah, everything I learned at McKinsey, I applied to a startup. But honestly, you go talk to us, and they’re like, kind of had to spend the first year unlearning.
8:06 Most of what I learned at McKinsey, so it’s not that McKinsey is the training ground for tech people, it’s that people feel they have to do this. So that was the other kind of thing just going away in the house in my head, so it’s like, well, if McKinsey isn’t what these people should do before they start their company, what should that be? And McKinsey has the cash and the glamour. Is that why people go there? Yeah, and frankly, I mean, full disclosure, I actually had a great time there.
8:31 It was good in lots of ways. The best reason to go there is if you have no idea what you want to do. Is it like the showhouse of lies? I’ve not seen that. I wouldn’t like to comment.
8:42 No, I mean, by and large, it’s a lot of smart people doing interesting work, real problems. And I think they’re still sponsors, but I would say it’s not execution, by and large. It’s not implementation. And it’s certainly not building stuff from the ground up. It’s advisory.
9:01 Yeah, and for big companies, right? What I think you really learned from that type of role is just an incredible work ethic. Yeah. Well, that’s certainly true. That’s certainly true.
9:11 Hitting deadlines and just dealing with intense stress of getting projects done in time and hundred hour weeks. Yeah. I think those are the lessons that really help you out when you do that. Yeah. And that’s a really good point, actually, is one of the things we did want to do when we stepped back and creating EF was like, well, what are the bits that actually, McKinsey or wherever does prepare you for?
9:29 And a lot of the program design is to try and get people into the mindset of deadlines and of really hard work, I suppose. So there were a few things that kind of bubbling away, makes things, oh, there’s a room for this. And then, I guess we kind of got lucky in that it was just timing that this was August 2011. It was about the time that all the kind of tech city stuff was really bubbling up and kind of actually, probably the one time that startups have really got inside McKinsey, was McKinsey were quite involved in that piece of kind of work for the government, I guess.
9:58 And so it just was suddenly kind of staring us in the face that there was this opportunity. is around the time that the guys at Silicon Middle Roundabout was starting to really push into getting grads to think about applying for jobs in startups, and lots of things came together, really. It felt like there was demand on campus, there was a supply of mentors and capital, and it was worth taking a shot. Okay, let’s get into the specifics of what you do. You guys have a 12-month program, where the typical incubator is three to nine.
10:26 12 weeks. 12 weeks. Where is longer? Isn’t that what dad used to say? Yeah, where is longer, actually.
10:31 Yeah, I thought it was three months, but that’s what I’m saying, it was like nine months or something. Is that a longer sex? I think it’s more, I thought it was sex, but I don’t know. So your program’s 12 months, you take them straight out of their graduate school, they can only be out of school for like three or four years? Up to three years, yeah.
10:45 Up to three years. They can’t have an MBA? Yeah. Is that controversial? No, no, no, well, I mean, like, it’s…
10:52 The MBA specifically or master’s degrees? No, no, it’s an MBA, and I’m sure it means we miss some great people, but I think if you, so when we went around and like did our kind of customer development or where you were going to call it, like talking to people when we started EF, one thing people say was, oh, this has been done before and it always fails and it always fails because you try and, universities do it, they get the business school together, the engineering school, and they get them to try and come together and it always fails because the power dynamic’s just wrong, like the MBAs want a code monkey and, you know, they like find a code monkey and then the engineer’s like, oh, I don’t want to be your code monkey. So I actually, you know, big important part of what EF is, is, you know, if you come around the office it I hope feels like a kind of hacker culture and I think that’s what the guys who come in feel like you know that they want to be around builders like that and I’m not saying NBA’s can’t be builders not even saying they’re not builders but it’s just a decision we’ve made in order to keep a really kind of flat power dynamic you know if I team up with you there’s like no expectation of who’s the boss it’s just like we’re gonna build stuff together okay that’s the only reason for that and you’ve had two years graduating just about to graduate the second and what’s the size of your second year? Exactly the same as the first year. And then we just selected the third
12:05 Year and that’s bigger that’s nearly double in the 50s. And do you pay these kids? So the way it works is when we say 12 months is absolutely true but half of that’s part-time and half that’s full-time. So we actually count from the day we make your offer as the day to start the program and the reason is that as you can imagine if you’re taking individuals probably the most important thing you do is get those people to know each other till they’re comfortable forming teams. So between now, we made the offers about a week ago. Between now and September, the whole focus is on building a genuine community of people such that within that group of 30 or this year like 55, you kind of feel there’s multiple people that you could realistically start a business with. So in practice that means we get them together sometimes on a purely social basis, sometimes like hackathon style to actually build stuff together, sometimes just to kind of get some like external stimulus in terms of ideas like people coming to talk about about trends or big problems that need solving, big challenges.
13:01 And this, we do this again, again, again, in increasing intensity over the summer. And we call this the part-time program. By the end of the part-time program, which finishes the end of August, you commit to a team and an initial idea. We’re totally transparent. Those teams and ideas at that stage are very unlikely to be the ones that you graduate with at the end of February.
13:24 But nevertheless, they’re an important starting point. They’re an important point for iteration. Full-time program is full-time from September for six months, and at that point, it is actually about trying to turn that team and that idea into a company. What’s great about EF is because you’ve done that kind of six months of kind of light touch getting to know each other when the teams break down because it turns out you and I can’t stand each other or the idea turns out to be terrible.
13:48 There’s actually a lot of liquidity in people. So it feels very natural. It doesn’t feel like failure to say, you know what? We’re not gonna work out. So let’s start something together.
13:56 And I would say if you look at our results in terms of fundraising and valuation, there’s zero correlation between valuation and whether it was the first team they’re settled in or not. So in terms of funding, we don’t provide any funding at all for that part-time bit. Basically on the reasoning that the guys would be alive anyway, just like a job. Doesn’t pay until you start in September. And they have office, shared office space with you?
14:20 Yeah, so we make our office available for the full time. And we partner with Workspace Group who have kind of these kind of club workspaces all over London, our guys get access to those and it’s been fantastic, it’s been great. And then our funding model, going through a big change this year, essentially we’re funding everyone for the first three months on a kind of stipend basis, currently working out exactly the details, but more or less paying a kind of minimum wage style covering of living costs for the first three months.
14:51 And then that funds the liquid stage, if you like, stage at which there’s high team instability, high idea instability. We find that three months in, by 1st of December, actually there’s high degree of stability. You kind of know if you do three months together, you know if you want to work together. And you’re also starting to get a sense from the market whether anyone wants what you’re building. So at that point, we turn into much more of a conventional kind of investment approach, much like, say, Seacamp or Weier or whatever, you know, we put in a fixed amount for a fixed percentage of the company.
15:18 Okay. And you guys are obviously expanding fast. did you expect to have a class in the 50s this year? No, I think it, to be totally honest, this was driven by the quality that we saw in this applicant pool. We didn’t feel like, we didn’t feel we could turn down any of these 55 people.
15:34 Wow, and where’s the applicant pool primarily coming from? So we’re about 60% of people are applying in their final year at university and about 40% kind of with one to three years out. This year we had applicants from 105 different universities across Europe, which was great. Although in practice, probably 80% of the people come from about 10 in the UK, 10 universities in the UK. And that’s probably a broad reflection of where we spend our time.
16:02 So mostly UK. Mostly UK. Because it’s English, first language, it just happens. Yeah, and where we’ve dedicated time. I mean, our recruiting is, I would say, by far our kind of biggest asset.
16:13 I think we’ve spent the last nearly three years really building great on-campus networks of people who wanna build stuff. and I hope we’re starting to become part of the option set for anyone who considers themselves a builder. So a lot of it is driven by where the cohort were from, actually, because they tell their friends and I think everyone’s having a great experience. So they say, you should apply to do this. Also, it’s just, where do we go do workshops?
16:37 Where do we go spend time? So it varies a bit. We sometimes suddenly get loads of applicants from a unit that we’ve not spent any time in, which is great, but by and large, it reflects what where we’re spending our time. And what is the grand scheme for you guys? Do you want to scale the hell out of this?
16:55 Do you want to have a group of 500 people that are going to be your graduating class in a few years’ time? Well, I think the way I’m thinking about it is like, I really believe the world is changing in terms of how this kind of type of person thinks about their career and what that means. And, you know, I think it’s something that Paul Graham at Y Combinator said that, you know, used to be about what’s the most prestigious company you can work for and now it’s like, what’s the biggest company you can make?
17:17 What’s the biggest company you can make? And we see that on campus, these are what people want. And we believe at EF we can be the people that actually enable that in a very real sense for a whole swathe of engineers, hackers, whatever you want to call these people around the world. And yeah, I can see this certainly operating in the hundreds of people. And actually what we’re starting to see as well is one thing that’s changed throughout the cohorts is the type of things they’re building.
17:44 It’s partly a reflection of just how quickly technology is advancing, partly a reflection of the kind of people who are applying, but it’s becoming more and more hardcore in terms of the actual technology. It’s not rails apps and kind of flappy bird clones. It’s serious hardcore things in machine learning. And so I don’t think it’s crazy to say a model like this could be like the Bell Labs of the 21st century, right? If you can actually get all the smartest people who want to build stuff to come together for six months when they graduate to give it a go.
18:18 I think that’s some pretty exciting stuff that come up. It’s just a fascinating continuation because we had someone on here that ten years ago said in order to raise enough money to make a real good run in the tech space you needed $20 million. These days most people agree you just need a few hundred to get that product to market and now Matt is talking about a whole new paradigm change where maybe you just go get the talent and then since it’s possible for them to maybe get an MVP within three years four or five months then maybe just go straight from there. It’s crazy. We make investments now. What’s your average kind of investment? It’s all fixed so it’s a new model this year with the stipend style arrangement that I described but the last program we did we just put in kind of when they were stable we put in 17 and a half K for 8% it’s just totally fixed we cannot get them to spend that money like you know it’s like it sounds like a tiny amount of money rent none of them spend it it’s not like can they spend it on rent or that is actually Oh no, well they compare themselves to a salary, for example, but they do not, they’re just so lean.
19:20 And I think what we’re seeing, one of the guys who comes in and talks to the founders is Ed Ray, who’s one of the founders of Betfair. He tells this great story. When they sell Betfair, they had to raise a million dollars before they even opened up to buy the servers. Our guys would never pay anything for servers, never mind buying them, and not only that, but they just don’t want to spend money on anything. It just means that the real, what are the barriers if you are that kind of incredibly smart computer scientist?
19:48 Well, there’s, I guess, can you afford to live while we pay a stipend? There’s a like, does it mean I’m gonna cripple my career? Well, no, that’s crazy. We have 100% employment rate, even among those who don’t succeed in their company. What are the other barriers?
20:03 I mean, why wouldn’t you give this a go? It’s where we wanna get to. And I think we’re getting there and I think the faster we scale, the more we’ll get that mindshare that means that people do come and give it a try. What’s holding you back from scaling, I guess, is cash? No, actually, no, it’s mainly like, process and learning.
20:22 Like, it’s the last thing I would wanna pretend is that it’s a clean and straightforward process. I can imagine our cohort listening to this and thinking, man, that makes it sound easy. It’s messy. It’s really, really messy. They come out this end and great companies come out this end.
20:36 Yeah, exactly, it’s gorgeous. You’re dealing with people and personalities. Yeah, and like, you know, I hope we’re really transparent about this. Like it is not for everyone. Like there are super highs and super lows and people do fall out with their co-founders and it’s really messy.
20:50 And right now, I would say a lot of my time goes on, not the kind of really bad bits, but the kind of like just human side of it. Like the biggest challenge in scaling is really finding the right people and the right processes to make those messy bits just clean enough that we can keep growing. So, for example, I think right now we have a huge pool of mentors who come in and help, and that’s great. And I don’t know where we’d be without them, but what we see time and time again is what companies at this stage, which is the earliest, earliest, earliest stage, need is continuity.
21:27 And right now, Alice and I are the only people that provide the continuity to them. So launching from the September program, we’re gonna have some part-time partners who come in on a more regular basis and provide that continuity. And if we can make that work, then I think that takes away one of the massive barriers to scale. Do you do team building exercises and falling backwards and to catch you or off-sites? Not quite.
21:52 Okay. We are team building exercises. Do you do English for that too? No, I mean, we encourage them to spend a lot of time together and we monitor what they do when they do that. But the main thing we do is make them build things together.
22:05 I mean, I really, as I said, this isn’t for everyone. It really is for builders. for people who want to create products with exciting technology. And we find by far the best way for them to build bonds and build trust is spend a weekend not doing very much sleeping and just building. And you’ll get to know people pretty quickly that way.
22:24 And so we met and do it again and again and again, really. I mean, the summer, if you join EF, you’re only one day a week with us, but that one day a week, you’ll be creating real products with the people that we select. Work environment must be really important to keep that vibe just right. between feeling good and open and work ethic, I’m guessing. It’s really tricky.
22:43 It’s something we, again, kind of changing a bit in that, at first we said, you have to work in the EF offices. It’s really important to create the community, which is true, but actually it makes it pretty noisy pretty quickly and pretty, it’s not clear to me anymore that that’s the most productive way of doing it. So we’re very fortunate again in our kind of workspace sponsor that we have these six sites across London that the guys can use. So now what we say is you have to be on Mondays for checking with me or Alice, and you have to be on Fridays to do our kind of end of week demos, which is how we kind of build the sense of collaborative but competitive.
23:18 Oh man, Colin’s got pretty far this week, I need to get pretty far this week. And the rest of the time they can work wherever they want. I like that structure, that sounds good. All right, well this is silicone real, so it’s time to get real, you know, you’ve got a couple grumpy old men in the house, who we both used to work in a kind of a Wall Street area, you and Toronto, I was in New York City and London And we’ve had this conversation time and time again.
23:38 You know, I’m kind of new to this space. And we see a lot of guys that are coming straight out of college and they want to be an entrepreneur. They’re going to start this and they’re going to start that. But they’ve never had a job for a while. You know, you worked at McKinsey.
23:50 We both worked in banking. And we know there’s a few things you get from doing that, like Colin says. You’ve got to show up on time. You have to do what your boss says, even if you don’t like it. You have to do all these things.
24:01 And we think that it’s an asset to have that going and you have a venture to know how to work and we don’t even know if you can get that without. So what do you say to people that say you can’t take these guys straight from the college campus and put them right into a startup? I’d say go talk to the investors who do their seed and A-rounds and tell them that. But you know what I mean. Yeah, no.
24:22 And you’ve been that way. Yeah, no, I mean, I think there’s an element of that and I think we would say that most of it for Rosalie’s fill it out in the selection process. You could be a complete genius and build anything, but if during a selection, it becomes very clear that you can’t turn up. But I mean, that’s an interview. How do you determine that interview?
24:48 Well, we do a lot of things during our selection process other than interviews, including we actually hold a selection hackathon where they have to turn up on time, work in a team, we watch them work in a team, we watch them interact with people. The other thing is I actually think that you can replicate a lot of the kind of corporate, the benefits of a corporate environment with a sufficiently structured program. Like, you know, if you have like weekly, you know, weekly demos where you’re like, you know what, you’re gonna have to show not just everyone you’re with, everyone you’ve been selected with, but some external guests, which is what we do, every week kind of where you’re up to.
25:19 Like, you just look stupid if you’ve done nothing. And you have a single swim in that environment. And you know, our model is very much built on the fact that we’re gonna, we’re not gonna, they’re not all gonna be Mars Zuckerberg, right? You know, we’re gonna lose some, and that’s, And that’s fine, and if actually going through the process is what it takes for us to work out who is up for this and who’s not, that’s fine, and the model’s robust to that. That’s not how we make our money.
25:41 That said, you would be amazed at how the best of them, the ones that are building the companies that are now valued at millions, they don’t have this problem. You can’t tell that they’re 22. You feel they’ve had 10 years in banking. You can’t tell that they’ve never worked in an office environment before. They’ve just got inherent maturity.
26:03 And one of the things we actually explicitly look for in interview is, do they feel older than they are? And one of my favorite ever moments last year was we have this great company Kiva. They kind of do Git as in version control for non-developers. So if you’re using Microsoft Office, you can do nicely version control versions of what you’re doing. and their key customer group, at least when they were starting out, was management consultants.
26:31 And I remember talking to an angel investor who was like looking at their seed round and he was like, yeah, but you’ve kind of cheated with Kiva because they’ve all worked in consulting before. I was like, no, they haven’t. And he’s like, yeah, yeah, yeah, the guy was at McKinsey, it’s like, no, he wasn’t. I’m like, I think that actually the best people, and we’re in a fortunate position to be really picky, they’re kind of ageless, like they just pick this up.
26:54 If you are really, really good at customer development, if you go out and talk to your customers again, again, and again, you become like them. And actually, if you talk to Kibo, you can totally believe that they would be, have been management consultants. Actually, they’re both kind of, both graduate straight out of uni, you know, in kind of summer 2012. So, yeah. Okay, that’s a pretty good answer.
27:13 You got anything you want to say? No, I like it. Yeah, I think it’s phenomenal. I think I love the twist on kind of the incubator approach. I think there’s so many accelerators and incubators, And I think we’re not even halfway through.
27:25 It’s a favorite topic on us. Colin and I have an acronym. It’s called NAI, not another incubator. I think this is serious. I mean, I think if you’re starting an incubator now, I think you’ve got to like look long and hard and say, there’s only one question that matters in the economics of incubators, which is why would anyone come here instead of what a combinator?
27:46 I think that’s the only question that matters. Because, you know, venture is, you know, Venture returns are on a power, you know, power law. You know, you don’t kind of get 10% of the returns from the best 10%. You get 99% of returns from the best 1%. So if you’re gonna not pick Dropbox, like you lose all your economics.
28:05 And you know, like if one of the reasons that we don’t wanna take team, you know, we get a lot of people apply who are in teams with ideas. Question we ask is like, why do you wanna come here? If you could get into Y Combinator, you should go to Y Combinator. If you can’t get into Y Combinator, we don’t want you. And that’s like me, but like actually, it’s a huge issue for anyone starting a new accelerator is you make money from a tiny, tiny proportion of massive outlier winners.
28:29 And if, yeah, I’m not saying that, you know, YC can pick perfectly and, you know, they’ll always get the right ones, but it’s a pretty big bet that you’re basically taking the people that other people didn’t want, but you still think they’re gonna provide the outside winners. And I think it’s dangerous because a lot of them, it’s, a lot of them now are becoming sector specific. So, you know, education, for example, or stuff like that, and I think, again, you’re picking the idea and you’re picking the sector when I think what you guys are doing is incredible because I really, truly believe that it is in the people and it is in the team, and you take any good team and they’ll kind of make whatever they choose to be successful, and so I think fostering that in an environment with mentors is great, and I think your success will probably be not that 1%, but you might have a wider range, but you may not have the knockout, but I think on average your success will probably be greater.
29:21 I mean, I think, you know, what we have told our investors and what we truly believe is, you know, we believe we can build Y Combinator quality teams before these people are eligible to go to Y Combinator. And two of our teams did go to Y Combinator. You know, we don’t want to be a finishing school, that’s not our long run aim, but I think for us it’s like testament to the quality of the people that you can get in. Which I do think is a real challenge if you’re a generic accelerator that doesn’t have a differentiator.
29:47 And I’m sure there are lots of accelerators that do have differentiators, but. So why hasn’t someone tried to copy you guys, or have they? Well, I don’t think many people know about us yet. I think it’s super early for us. Too late.
30:02 No, I’m joking. But I think it does sound crazy. I mean, I remember whenever our startups have bad meetings, either with investors or mentors, where they come when they say, man, those guys hated us. They were just like, why are you even doing this? Alice and I always just say, every meeting we ever had when we started EF, they were like, cool, that’s really nice, well done.
30:22 Goodbye. People thought it was totally crazy. I guess in some ways it is. If you listen to the rhetoric around teams that investors, particularly seed investors put out, it’s hard to imagine that you could ever replicate the kind of team that people want to invest in through this process. I think, just empirically, you seem to be able to and we think the teams that have come out of the last couple of programs are incredible.
30:48 But I think we’re totally realistic about this, that if we continue to produce great results, then people will try and do it, and that’s fine. Does anything like this exist in the U.S.? Seems like the U.S. They’d be pulling them out of high school. Not that we know of.
31:04 That’s my next question. I mean, there are definitely programs that have a view of founder first, so the Founder Institute, for example, or there’s certainly not quite the same intensity of program. I mean, I kind of see our competitive advantage is that, as I said, it’s incredibly messy, and the devil is in the detail, and the mess, the mess is, it’s how is it messy is the question, and I think that’s what we’ve learned. Interviewing 700 applicants on loan is a bit of an operational.
31:29 Ultimately, it’s a human services issue. I mean, like, yeah, I mean, you’re dealing with so many personalities and individuals, and, you know, that is your capital, and how you interact with them, and you don’t want to. And our recruitment networks. I mean, we just hired this amazing woman Zoe to kind of work full-time on talent, just because it was becoming such a huge part of Alice in My Roles, and she was formerly at Mein Kandy in Apple, and she just gets what hackers want, and we’ve got some exciting stuff coming out.
32:00 Do you pull people out of freshman year, a la Bill Gates, a la Zuckerberg? Do people drop out of school to be with you? People drop out, but we don’t pull them out. So if we get an applicant and they tell us, hey, I’m in my second year, we don’t say, I’m sorry, you can’t come, but equally we do not target those people. Okay, so I mean, like Colin says, I mean, are you tempted to innovate more and go to the high school or get in earlier, or at least maybe so they know about you their freshman year?
32:26 So yeah, so we’re gonna launch in September something called Founder School, which is gonna be our on-campus kind of activity. And rather than doing a kind of autumn recruitment push, we wanna be in university year round. and we wanna be a brand that you know about from day one. And the way we do that is just by being really authentic, it’s not gonna be a recruiting brand, it’s gonna be a building brand. We’re gonna help people build the stuff that they wanna build.
32:50 And if you go look at a computer science curriculum in the UK, it’s not about building, by and large, for exceptions, but by and large, it’s very theoretical. So we wanna be the place on campus even in your first year that you come and meet other builders and come and build stuff. And I think we’ve learned a lot about how to pull that off in the last three years And I think you know once once we’ve rolled that out, I think that’s gonna make it You know even stronger as an option for people leaving but also gonna mean that we encounter these people earlier, which is great You know, there’s an article in the New York Times last week and it was like how Google hires, you know Yeah, they come out saying they don’t use GPAs anymore and stuff like that And yeah It was just all the different ways of interacting with a team and how they you know Like having the ego but admitting you’re wrong and like all different ways and metrics, you know I don’t think they look at it.
33:35 You probably read that. Is that, were they copying your idea? Well, Google are brilliant at this. I really, truly brilliant at recruitment. We firmly believe, and in fact, we’ve got a couple of people that show it, that there are certain kind of personality types for whom our value proposition makes more sense, at least at that kind of graduate stage.
33:54 But yeah, I mean, Google are definitely the most obvious competitor from a recruitment point of view. Yeah, all right, talk to us about women. Where are they? You said most of your program is men. We have women guests here, but this is a fairly male-dominated industry right now.
34:11 Is that going to change? Why is that? Well, we hope it will change. I was fortunate in that the smartest, most driven, determined person I knew when I wanted to set up EF was a woman. Having Alice, I couldn’t have done this without Alice, and I hope it’s a great role model for women looking at our organization is that, as they graduate, it’s like, well actually Alice has totally built this great organization. I hope that’s what they think. It’s a huge issue for us. It broadly reflects the fact that we’re very technical in focus. And if you look at computer science departments, engineering departments, they are roughly the same ratio as us, maybe a little bit better. 80% male. 80 plus percent male. So out of a hundred applicants that you get, what’s the percentage of male and female? So yeah, it’s not great.
35:03 We probably get about 20-ish percent female applicants by final round. That’s probably down to about 15% and in the cohort it’s probably about 10%. Interesting. And that needs to change? I think it needs to change for a lot. I mean, like the people, we run a program called Code First Girls. It’s a program to encourage young women to learn to code.
35:26 We provide on-campus free coding education for women. College level or? College level, yeah, college level. And we do it because one, I think it’s the right thing to do, but actually more importantly, we’re a talent-based program. We don’t take ideas, we don’t take teams.
35:40 So if we’re gonna say, ah, 50% of the population just isn’t wired for this, like we’re crazy, right? We’re gonna miss out on huge opportunity. So for us, it’s really, really important, just commercially, that we find the brilliant women and for whatever reason right now, partly because of what the skills they learned during university and partly because of mentality and stereotypes around this industry. They’re not applying. And when they are applying, they’re unfortunately not selling themselves as well as their male counterparts.
36:08 And they actually, in many cases, haven’t developed the same skill sets. It’s something that Facebook COO said in her book. She talked about how women don’t sell themselves as much or ask traditionally as much as men do. Which I guess in an entrepreneurial business. Yeah, I was reading, I don’t know if it was that book, but another said, you know, a lot of the time women anticipate that their superior will be fair when they won’t, whereas men kind of force that fairness.
36:37 So we’ll ask and be like, you know what, my buddy over here at this company is getting paid this and I should be getting paid that, rather than being like, oh, if my friend’s getting paid that, then I’m sure it’ll happen. What was the Facebook girl that wrote that book? Shout out some of this. Yeah, she was saying how she didn’t even count her offer Zuckerberg when he first gave with the offer and her husband was like, are you fucking crazy? You’re gonna be doing the negotiations for most of Facebook, and not counter offering your equity piece, and she’s like, oh yeah.
37:01 And so she did, and then they met in the middle. But you know, it’s just for a woman at a high level, it’s just, yeah, maybe it’s just a different mentality, which means that they can be great on teams for bringing completely different things to the table too. Yeah, and I think, you know, it’s also, yeah, there’s lots of studies that show that men and women are objectively the same level of expertise, even self-assess at whole standard deviations different of ability, and that’s huge as a problem.
37:28 For us, though, I really think it’s actually a kind of not to pass the buck, but it really is, we’re not gonna become less technically oriented. In fact, if anything, we’ll become more so, and so it really is gonna come down to skill sets and making sure that women don’t say, ah, engineering’s not for me, women don’t say maths is not for me, or whatever. And there’s some fantastic initiatives going on that I think will have an impact in the medium term. And in the short term, you know, I hope Code First is having a little bit of an impact too.
37:57 Okay, talk to us about London tech scene. You know, we’re obviously here in London. It’s something we talk about, where we are in comparison to the world right now. What’s the biggest beef you have right now with the London tech scene, the biggest problem we’re facing, the thing we need to overcome to get us to the next level or to the top level as a city? Well, I think maybe the same answer to the last segment, I think we need a little bit more self-confidence, really.
38:22 I don’t see major, major barriers, at least at the stage that we work at. You know, like, you know, if I wanted to be bullish, I’d say we have incredible talent, really, at the graduate level, but also, you know, elsewhere. And there’s now definitely getting to the stage where if you look at the larger startups that are either exiting or preparing to exit, you know, they’re starting to throw off, you know, genuinely world-class product managers, genuinely world-class senior engineers who are starting their own things.
38:49 I think in terms of access to capital, I think it’s a fantastic time to be fundraising in London. I think SEIS, the tax break scheme, has made a huge difference at the very early seed level. There’s a proliferation in a good sense of funds, micro funds led by genuinely experienced entrepreneurs, product people, people who’ve been around the block in this sector. And it’s very early days, but there’s encouraging signs from the London Stock Exchange, et cetera, so the exit market is starting to be more hospitable.
39:24 So I think partly we can stop looking so kind of forlornly westward and complaining about how we can’t do what’s out there. And just remember that I think there’s like massive returns to generational turnover in startups. You want angels who have sold companies. You want senior engineers who have scaled companies. You want product people who have shipped to millions, hundreds of millions of people.
39:47 And that comes with time and with generations. But I don’t see any reason why this generation of London tech shouldn’t produce Valley-style generations, three or four generations down the line. And of course, generations, I mean. Sure, start of generations, not human generations. So it’s just a confidence issue to a certain extent.
40:04 And time. I mean, Silicon Valley has many, couple of decades’ head start, right? Three decades’ head start. But I also think that London has a lot of advantages terms of I think we see increasingly that exciting startups tend to come from a fusion of fantastic technical talent and real domain expertise and actually London has some fantastic domains that are not tech out of which you see great startups coming. I met earlier today the guys who run Touch Surgery which is two surgeons who are great surgeons and realised a massive opportunity in how do we teach surgeons using tech and have built a fantastic company that way you know I think FinTech is clearly massive in London fashion music you know this in terms of where is where are the domain experts who are going to really understand these problems I don’t think London has anything to worry about that yeah well it’s a proper urban scene here so you’ve got a bit of everything when it comes to six ten million people so you’re gonna get we’re gonna have someone in fashion on soon and those people wouldn’t necessarily be hanging out necessarily in Silicon Valley so Yeah, I mean I think there’s again like I guess this is somewhat EF century, but like I think there is a big difference in the mentality of kind of tech people Maybe not kind of later in their careers But one thing that really strikes us having spent a little bit of time out in the States I was a grad school there and you know kind of with work since
41:31 I think people get into computer science for very different reasons in the US and the UK One way of thinking about it is that, if you look at the difference between a Stanford engineer and a Cambridge engineer, it’s almost that for a Cambridge engineer, it’s more of an intellectual pursuit, it’s more of a, there’s nothing wrong with that at all, where it’s almost, they’re kind of classic engineers who then have to decide what to do with their lives. Whereas CS at Stanford has almost such a long heritage that you get kind of megalomaniacs drawn to CS because computer science is how you express your like desire to change the world and I almost think that you know we can do that at EF. EF is almost like an institution to make megalomaniacs of computer scientists whereas Stanford is an institution to you know kind of make computer scientists of megalomaniacs and I think over time you know kind of from creating role models if we can get a British Zuckerberg then maybe you get more people applying for CS because they see it as a way to have an impact on the world rather than us afterwards saying hey wouldn’t you like to change the world and actually lucky you can use the skills you’ve already got. Good observations. What did I miss before I hit him with the question? Yeah I guess I think from like a psychological perspective I think you guys are building so much data and so I think it’d be interesting to hear from your perspective maybe you know if you had
42:50 To choose the top one two or three personality traits that you find of the successful teams or applicants of those teams. What would you say those are? We’re obsessed with this question which is fascinating. There’s a great paper that a guy in Stanford whose name escapes me unfortunately wrote on like what are the kind of big character traits that set aside successful entrepreneurs from other people. The number one thing he identified was something he calls personal exceptionalism which is basically the belief that, yeah, yeah, sure, most people have a one in a billion chance of starting a billion dollar company.
43:26 But that’s most people, and I’m not most people. And actually, that finds expression in lots of different ways, and we see that again, again, again in the most exceptionalism. Is another way of saying arrogant or confident? Not arrogant, but I think it’s saying that, sure, sure, sure, those odds might apply to most people, but they don’t apply to me. Now obviously there’s going to be a lot of those people who are wrong, and that’s kind of like…
43:53 Self-awareness. Right. But, you know, if you look at what were the odds against any of the people who’ve really ended up in the universe or whatever through creating companies, they were right. Those odds didn’t apply to them, you know. So they’re dreamers?
44:08 No. No, not… I don’t even know what that means still. It means that you believe you are a personal exception to the rules. It means that you are saying…
44:18 Psychopath. No, I think it’s more that you, you know, you can consider it a matter of like probability, right? It’s like I have a one, you know, people in general have a one in a million chance of being successful at this, but that’s partly because they’re not me. I’m not saying that about myself. I’m saying this is what these guys are saying, right?
44:37 That’s about how. I think that kind of personal confidence, I think, yeah, because you give up a lot to try to start something. The opportunity cost is huge for these people. If you just break down the opportunity cost to a fixed number, generally just on a piece of paper it’ll be released, right? So you have to think you’re going to succeed.
44:56 If you do a rational calculation of like, I could go make 100k a year at Goldman or I could do this, and you basically try and work out how much this is worth by timesing an exit value by some probability, you have to have a kind of irrational view of what that probability is to make it add up. But actually, that’s irrational overconfidence. I don’t know, but it is a huge thing. And we do see that a lot. And I think the most important thing is, I’m being a slight facetious about people as they come in making that calculation, but it’s more when you hit a setback.
45:31 Do you say like, oh, maybe I’m not all I thought I was? Or do you say, oh man, can’t believe I’ve hit the setback. Must be doing it wrong because obviously I’m gonna succeed. Because if you don’t think you’re gonna succeed, if you don’t really believe you’re gonna succeed, how do you not read the countless setbacks that you encounter as evidence that you should give up? So it says rational people need not apply on your?
45:53 I think, yeah, I mean, broadly I think that if you, if you are like a real odds calculator and you’re just gonna run the numbers, it doesn’t make sense for you, it really doesn’t. And so that’s quite a nice filter. Yeah, that’s good. And you’ve got a way of finding those people by asking questions. We have a test that we’re experimenting with.
46:12 It’s like a, it’s probably like sell it to the U.S. Army. So one of my really good friends from grad school, he works for a big firm, Corn Ferry, so a huge firm. And his background is in psychology. And so he sort of works, he does a lot of things for him.
46:30 But one of the cool things is he sort of pre-interviews a lot of CEOs and a lot of entrepreneurs. Because they do executive hires, right? Exactly, right. And so, you know, the cost of hiring the wrong CEO is really expensive. And so I talk to him all the time about successful personality traits and I think it’s a fascinating topic.
46:50 This paper identifies a few others which, to be honest, we’ve not seen as strongly, but it’s interesting. So one of them is dichotomous thinking. So this guy argues that successful entrepreneurs tend to kind of lack nuance in how they evaluate ideas. It’s either this is the best thing ever or it’s a piece of shit. like and that kind of makes I mean it kind of makes sense right is that you’re like well I’ve got to do this idea because it’s the greatest thing ever and that kind of almost breeds the irrational optimism that makes you keep going when you when you’re not sure that you will and that’s quite interesting as an idea sounds like I’m Steve Jobs but yeah we always ask everyone that’s sitting there a few questions at the end so I’m gonna hit you with them if you If you give the young 20-year-old Matt Clifford a phone call and give him a bit of advice, what would you tell him?
47:42 That’s a great question. When did you start at McKinsey out of curiosity? I started at McKinsey in 2009. So you would have been? 23.
47:51 I’d been to grad school so I was 24. So you’re already long gone. So the 20-year-old you? Well, I kind of like where I am so I’d be, I’m really enjoying myself so I’d be really go to give myself any advice that would push me wildly, of course. I’m sure there’s lots of ways I could have been richer, but…
48:11 Would you have advised him not to go for the glory job at McKinsey? Because that’s kind of what you’re telling these young grads to come up with to your company. I think if you’d changed it to a 15-year-old, Matt Clifford, I’d have probably said, don’t stop coding, because I did. And that kind of meant that actually I would never get into hands up. I kind of, I went to MIT as a grad student. I did a lot of statistics and data stuff and I think it gives me just enough tech credibility to kind of get by but like I was one of those massive geeks who at 13 was like making stuff in Visual Basic and I totally gave it up in favor of much more kind of cool things when I was 15 and that really meant that you know by the time came round to actually doing a degree and applying for jobs, I couldn’t have done EF. So I guess by the time I was like 21 I was pretty set but I definitely, I’d say this to any 15 year old now, it’s like you’ve got like six years before you have to even seriously think about whether you might want a job.
49:10 Like in six years you can be pretty good at coding and like when I see the opportunities available to the guys who are just extremely strong technically coming into EF like they have opportunities that I never would have had with my skill set so keep coding keep coding keep coding what what course were you at MIT I did I did a whole bunch it’s a complicated story I was a had a scholarship that allowed me to basically do what I wanted which is very lucky so I did a bunch of stuff in maths a bunch of stuff in statistics things in economics but mainly mainly didn’t apply statistics okay course 18 then Mass all that stuff. Okay. Gotcha. Um, second part of that question is what’s the best advice you’ve ever received business or personal?
49:53 Um well, um, I Think I think it varies a lot depending on whether you I mean I think the best advice that I’ve received I pass on to our startups is just Focus relentlessly on doing one thing really really really well and for a startup. I think that’s completely crucial The number of times our teams fail or slow down just because they get distracted is enormous and it’s one of those things that sounds incredibly obvious and yet it’s so difficult to live versus you know to know like oh I know I’m into focus but you live focus so that strikes me as you know kind of extremely important on the stop side on a personal side I think like write stuff down What would be the best advice like lists of things to do just just thoughts thoughts ideas like the way I see it is like, you know, you you have a kind of finite lifetime and most of it is kind of Lived experiences in your head and if you don’t like have any record of what you’re thinking you kind of lose a lot of that Lived experience like dreams. They just go. Yeah, so I’m I’m totally how long before you download everything Well, I mean that but that’s quite I mean like so I was about to say I’m a compulsive Evernote user So after every meeting I have, every book I read, not quite every article I read, but anything significant, I immediately try and write down a summary synthesis in Evernote.
51:22 But Evernote’s slogan, I think, is everyone’s digital brain, right? So I’m sure they’re thinking hard about exactly that. Yeah, yeah. But write stuff down. It’s amazing how often Evernote’s really cool because when you type a note now, it tells you, it kind of suggests other notes that you’ve written that are interesting.
51:39 The number of times I’m writing a note about a meeting and it brings up a note about another meeting I had two years ago. I gotta read. And it’s like, oh wow, yeah, like, I need that thought right now and it’s so, it’s incredible. That’s bio-acking right there. See, I gave up on Evernote a while back.
51:55 I tried it and hated it and just, it didn’t work for me and so I actually, old school, I have like a little pad that I keep in my pocket all the time and I’m writing stuff down all the time. But I’m gonna give Evernote a chance. I think you feel like you have to like, maybe this is just like a kind of personality fall, but I have to like set myself really straight limits. So I said to myself, I’m only going to make three bullet points after every meeting. And so it really forces you to like condense it.
52:19 Cause my problem is I used to want to keep a diary obsessively. Cause I just like, I just had like recording things and problem is I’d start writing these diaries and it took me like an hour and I’d written like a thousand words. And it’s like, I just can’t keep this up. Whereas if I tell myself you’re only allowed three things, I’m much more likely to do it. And the computer can analyze those three things much better than you.
52:36 Right. thousand-word diary. And I say it’s a good way to like crystallize your thoughts by writing things down. And they say, some people say you actually writing it by hand is even better than that. I’m sure that probably is true.
52:48 Yeah, I’m sure it’s true. It improves retention so much, just thinking about what you want to remember. I remember like learning French as a kid. Right. Yeah.
52:57 I’ve always had to revise that way. Yeah. Matt, I love this story. I love this whole idea. You know, it’s really, it’s really innovative in a scene where that word is used too much.
53:07 This really is so thanks so much for coming on How do people get in touch with you if they want to find out more about you or apply for next year? Well, we are entrepreneur first dog that UK or googlers. We come up. I’m Matt entrepreneur first dog that UK and on Twitter. I’m Matthew Clifford Fantastic. Um silicone real if you’re listening to us on iTunes, we are on YouTube. You could come watch us Come check us out a YouTube channel silicone real or on Twitter If you want to help us out, we’d love help. So send us an email at hello at silicone real calm we’ve got some people that are really helping us out with videos and things like that and yeah if you also want to be a part as far as a sponsor on the show come contact us our inventory is going quickly but it’s a great way to get in touch with the scene and people that are constantly looking at this place from all over the world so there you go episode 35 it’s a wrap yeah episode 35 fantastic going strong thanks for having me yeah yeah and guest guest suggestions please hit them up we’re looking for amazing you know stories great companies great people great investors all types of stuff so hit us up with ideas we get every get them every now and again and keep them coming because I’m there responding most of the time to Twitter and following up so it’s it’s fantastic yeah you’re all over that Twitter account as we say on Silicon real it’s about the people thanks for your story Matt all the
54:26 Best thank you I can’t wait to talk to him in like three years and yeah she’s success stories of the amount of companies so that’s fantastic thanks so much for coming in and all the best. Thanks a lot.
