a16z Podcast - Building Innovation Hubs: The UK & Beyond

Episode Date: August 14, 2024

This episode from Web3 with a16z Crypto, is all about innovation on a global scale, exploring both ecosystem and individual talent levels. We examine what works and what doesn’t, how certain regions evolve into startup hubs and economic powerhouses, and what constitutes entrepreneurial talent. We also discuss the nature of ambition, the journey to finding one’s path, and broader mindsets for navigating risk, reward, and dynamism across various regions, with a particular focus on London and Europe.Joining us is Matt Clifford, who played a pivotal role in the London entrepreneurial and tech ecosystem since 2011, is the Chair of Entrepreneur First and the UK’s Advanced Research and Invention Agency (ARIA). Before this episode was recorded, Matt served as the Prime Minister’s representative for the AI Safety Summit at Bletchley Park. Recently, he was appointed by the UK Secretary of Science to deliver an “AI Opportunities Action Plan” to the UK government.This episode was recorded live from Andreessen Horowitz’s first international office in London. For more on our efforts and additional content, visit a16zcrypto.com/uk. Resources:Find Matthew on Twitter: https://x.com/matthewcliffordFind Sonal on Twitter: https://x.com/smc90 Stay Updated: Let us know what you think: https://ratethispodcast.com/a16zFind a16z on Twitter: https://twitter.com/a16zFind a16z on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.simplecast.com/Follow our host: https://twitter.com/stephsmithioPlease note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

The Olympics just ended, but that doesn't mean our coverage has, because building a strong nationwide athletics program is a bit like trying to build a strong innovation hub, in that you know what ingredients might help, but it's not always clear what moves the needle. And just like in athletics, where countries double down on their best sports, like the approximately $50 million grant system, the team USA allocates more to gymnastics over handball, countries also make strategic decisions on where they invest, hoping to create thriving innovation hubs. So in today's episode, we direct our attention to the UK and try to break down which ingredients matter most. This episode was originally published on our sister podcast, Web3 with A16C. So if you're excited

about the next generation of the internet, find Web3 with A16Z wherever you get your podcasts. For now, over to Sonal to properly introduce this episode and guest. Welcome to Web 3 with A6 and Z. I'm Sonal Chuxi, and today's episode is all about innovation around the world at both a systems and at a people level. So we discuss not only what does and doesn't work in making certain places become hubs of innovation and economic growth, but also discuss what makes entrepreneurial talent, the nature of ambition and helping people find their path, and more broadly navigating risk, reward, and dynamism in different. different regions, including London and Europe. My special guest is Matt Clifford, who's played an

important role in the London entrepreneurial ecosystem. I actually had Matt on the OGA6 and Z podcast back in 2015, so we also discuss what's changed since then to now, as well as new ways of funding breakthrough R&D, tech trends of interest, and more. For more context, Matt is the chair of Entrepreneur First, which he co-founded with Alice Bentink over a decade ago. He's also the chair of the UK's Advanced Research and Invention Agency, or ARIA, and before this episode is recorded, Matt was also the Prime Minister's representative for the AI Safety Summit, which he helped organize at Bletchley Park, the historic home of computing in the UK, and then after this episode was recorded, Matt was appointed by the UK Secretary of Science to deliver an AI

Opportunities Action Plan to the UK government. This was just announced a few days ago. Anyway, it's all fitting and exciting because we recorded this episode live from Andresen Horowitz's first international office in London, which we opened late last year. For more on our efforts and other content from and about there, go to A6NZ Crypto.com slash UK. As a reminder, none of the following should be taken as investment, legal, business, or tax advice. Please see A6NZ.com slash disclosures for more important information, including a link to a list of our investments. Now, on to the episode. Matt, welcome. It's great to be here. It was great to be back. We were just saying. Yes, I was about to say you, we did a podcast together.

You were on this podcast on our last run in Roadshow, which was 2015. Yeah. And you were one of, that was a very first time we met in person. It was. I mean, we've been going a while now and we'll probably talk about how the London ecosystem has grown. But our initial thesis, which we remain very dedicated to is that the world's missing out on some of its best founders. You know, in Silicon Valley, if you're ambitious and smart, it's the most obvious thing in the world to start a company. Right.

In Europe, that's still not true. If you go around Oxford or Cambridge or Imperial College, any of these great universities and you say, like, you know, what are the smartest, most ambitious people want to do? Yeah, more and more it's on the agenda, but it's still probably banking, consulting, you know, big companies. I don't know how you describe EF or entrepreneur first as an org. We call ourselves, the thing we've layered on after a long thought of iteration is we're a talent investor. We invest in people before they have companies and help them go through that like zero. to one journey. We're taking people who purely on the basis of who they are, which

we want to make a bet on. I like that you're saying that you're a talent investor. I mean, VCs and other, actually, creatives, anyone would say that's their job as investing in talent. And that's an art, not a science. Yeah, yeah. Well, I know that Mark and Ben have taken a lot of inspiration in building your firm from talent agencies. Yes, a CAA. That was inspired by Michael Ovid. Exactly. Exactly. He was an advisor early on. And, you know, we have a sort of similar view that almost like the world's most talented and ambitious people need agents. I mean, that's not quite how we frame it. It's really fascinating because you said you're not an agency, neither are we,

because actually the model obviously was talent-focused, but it was more about a network and network of networks, which is how we used to think a little bit. I mean, I don't know if that was ever formally how it was described, but at least from my perspective, I used to think of A6 and C when I joined in the early days, which is now a decade ago as a network of networks. And that was where the Ovid's model came in,

which is how do you sort of, you know, kind of give back, like continue cultivating talents? So in that way, growing people even before they want the thing or even helping them, so it's not transactional. Exactly. And a lot of what we talk about is our team's job is to go out and find extraordinary people who are still figuring out what to do with their lives. My co-founder, Alice and I, you know, we started our career as management consultants. We were a McKinsey, and in many ways it was a really great experience. But if you're saying, like, why did you end up there? It wasn't because at six years old, I was running around the kitchen being like, Mommy, Mommy, I want to be a management consultant. You know, it's just like, it was the path.

It was what people did. That's right. Whatever it was 2008 when I graduated. And so, you know, our view was if you really want to move the needle on like increasing the supply of great founders, you can't wait for them to figure out that like that's the obvious path. You have to create a path. And that's what entrepreneur has been about from the beginning. One of the things that we think about a lot is like the nature of ambition and how it's, It's very culturally determined.

Oh, let's talk about that. Well, what I mean by that is, like, you know, it's not like all ambitious people have the same, like, vision of how to realize their ambition. That's absolutely true. And so it would be the craziest thing in the world to try and force people to be entrepreneurs. You know, we have quite a big team now around the world. And they go out and they find people who are clearly extraordinarily talented. But at the very start of their journey, we typically focus on people early in their career, sometimes like, you know, while they're at university or equivalent. And, you know, their job, yes, obviously is to how.

help them think about startups and, you know, if they want to build a stop, bring them into our community and help them do that. But their job is not to push where it's not right, is to genuinely be almost like a career counselor, like an actual, like someone whose interest is shared with the person. And so, you know, one of the things that we believe, like, you know, if you like our theory of change is that if you can, like, actually intervene at a point where people are trying to figure out, like, how do I have this talent, how I maximize my impact in the world and you can show them this path of entrepreneurship and show what's possible, then actually that will increase the supply of great founders and then great companies in the world.

So I do want to pick up a little bit on two threads. One about what you said about the nature of ambition, something you think about a lot, but also what you said about this culturally determined aspect of it. And that, to me, suggests some of the structural context, the surrounding context, the surrounding context, the surrounding context, the surrounding context, the surrounding context, the one kind of obvious thing. This is something we talked about a lot in the early day in the 860s podcast.

I recorded a lot of episodes with like Iranian entrepreneurs and various people around the world. And it was really fascinating how the risk tolerance is very different culturally in different regions. And one thing that I think is,

it's so cliche, but it is true for a reason, is unique about Silicon Valley, is there is a tremendous tolerance. I don't want to say the word failure because I hate veering into failure porn. I think that's the wrong way to, It's like actually...

Failure socks always. Oh, my God. Well, I hate when people are like, failure Friday and failure this. Like, yes, of course, normalize, talking about it, recovering, repairing. But don't like glorify failure, for God's sake. Everyone wants to succeed.

But what's really interesting about it is that there is like this forgiveness and recovery and resilience that whereas in certain cultural regions and areas, there's almost like a punishment or a feeling of self-hatred if you don't succeed. This is even beyond individual level. I'm talking about, like, culturally. Yeah, totally.

So I think there's two things. One is attitudes to failure. But I think it's also like what is valued, like what is esteemed? And, you know, I think the really special thing about Silicon Valley is this idea that if you tell, if you're in Silicon Valley and you tell someone you're a founder, that immediately has a set of connotations that are almost exclusively positive. Yeah. It's very legible. People know what you mean. People can read that as a sign that you are.

That's right. When we saw an entrepreneur first, there was this slight sense that if you said you were a founder, that was a euphemism for you were unemployed. Yeah. And so actually, I think the cultural meaning of entrepreneurship is one of the biggest sources of leverage you have, just like making it like, this is a thing that smart, capable, ambitious people do. Yeah.

And it's a vehicle for changing the world. It's such a powerful idea. And, you know, to give you a really concrete example, because I think like, you know, from the UK, in the US, like, we, you know, you know, similar enough systems that it really resonates. But, you know, the first international office we opened was in Singapore. And in Singapore, the number one career path for the most ambitious people is to go be a civil servant.

As a result, the government of Singapore is probably one of the most effective and efficient. That's so interesting. I didn't know that because it's actually the opposite in so many other places. I've just been serving in government. And actually, the people have been amazing. But I would say, like, as a result, the cultural value of entrepreneurship in Singapore, It's just been very, I think it's been harder that to sort of like create this sense that like, if you say you're a founder, you're doing something that's as like legitimate, as prestigious as your friends that have gone off to be, you know. Yes, you know, we should talk for a second about why entrepreneurship for a minute because it seems like an obvious thing.

Like what are we talking about? This is a show, the startup focus. We're both startup focus cultures. But actually it's not obvious because I mean, if I were telling a policymaker, I think they know this. But the reality is like startups represent innovation. They're an engine of growth. They create jobs. They create their generative.

They're not extractive. They're not just taking the stable what you already have that's established. They set you up for the future. I mean, there's layers and layers of why this matters. So just to kind of hit on that. But to your point, so I have to ask you this then. I don't want to be stereotypical, but of course there's going to be some generalizations just kind of understand this.

But my impression of London, I'm born and raised in the United States. but my grandparents settled in London. This is in the 70s before I was born. And the impression I got from culturally is that there's kind of like, not I want to say classists, but very much a credentialist society. Like you care very much about what school you went to.

And I think that could be true in some ways of Silicon Valley, but people kind of don't really care what school you went to or what you did. Would you say that is true today? Do you think that's evolving? And I'm bringing this up because you mentioned this point about what value

that certain words and these concepts signal. So I'm curious for your perspective there. You know, one of the essays that I wrote when we're early on in EF that was trying to talk to this, I called Don't Be a Badge Collector. I think I probably wrote that about the time I was first on the podcast. But I think it's held up pretty well. And, you know, what I was saying is like,

I think there is a cultural temptation, let's call it, in the UK, to be like, I'm going to work really hard to get into the best university I can so I can get the best graduate job I can, so I can, one of the biggest risks for smart people, I think, is that you get into a mode where success is measured by whether you make your boss look good. And their success is measured by whether they make their boss look good and seeing like all the way up, what you're actually doing. To your point about, you know, you mentioned like stants or a positive some game,

there's a risk in a lot of career tracks that I'm not saying you're not creating value, but like your actual goal is to win the like upward political battle within whatever, bureaucratic structure you're in, right? And when I say political, I mean, small p. I mean, this can be in big corporates, it can be, you know, whatever. I think what's beautiful about startups and the reason I, you know, I've spent more or less my entire career helping people build them is that they're ultimately all about what you can do for other people. That's fantastic way you're framing it. You only succeed if you build something that is so valuable that someone else will pay for it. Yes. You cannot win in any other

the way. There is no boss to look good, to make it look good. There is no, like, grading scheme that some teacher is going to tell you you got an a on. It's like, comes down to this very start thing. Did you do something for someone else that they thought was so great? They wrote you a chat. That's right. And it is not people pleasing because often you're going against established convention. You're often budding your head or punching through an industry that is not accepting a new way of doing things. I'm just thinking of my, my former partner, Martin Casado, And the enterprise team, when he was doing software-defined networking, he was punching against very established old-school methods

for what networking looked like. That was very hard word-based. And so it's like you have to literally punch, like you're completely going against all conventions. The bar is so high to actually prove that that value is. And, you know, I do think, I sometimes think, you know, one of the challenges we face today is that if you are smart and ambitious, it's now so easy in some senses to,

find a comfortable path that is about making your boss look good all the way through a career and acquiring like money and influence and prestige but actually maybe never really doing something that creates an enormous amount of value you know I mean it seems now that you say it seems so obvious but it's really not like just a pause on the idea when you're doing a startup you're building something that other people want and need that's a really profound idea. On that note, it's also very fascinating because of the economics of startups, because usually if you're working for a company, you were talking about you and Alice being at McKinsey, consulting. People think they're making good money, you know, but you're really captive to your

salary. You're not actually, the wealth is not generative. And one thing that I find really powerful about startups is that startups are the ones that innovated on the idea that employees can have a share of the returns on the work they do. So even though you might be building a product for customers and consumers that people want. If you succeed, you know, it can also be go to nothing, obviously. That's a very real risk. But if you succeed, there can be very real gains for the people who put things in, especially for those that took a risk early on.

I don't know how the options and economics work in UK startups, but that is, I think, a defining feature of Silicon Valley in the early days. And so I just wanted to point that out because it's actually resonant to what you said about not only pleasing people and being captive, but you're also helping other people and then actually creating value that for the employees, too, they're always increasing the size of the pie

for everyone in some form. So, I mean, not to be a cliche, but that's very true. You know, in a way, I think there's a really important sort of ethical point here, which is that founders, yeah, they can make a lot of money, but they only get to capture value

that they create. That's right. And, you know, I think that that is actually a really important idea. And I find, you know, again, we focus mainly on people early in their career when we, you know, when we're working with founders. And, you know, I just think that idea really resonates with people that, you know, they, yeah, they, of course

they would like to be successful, but they want to do it within a framework where they feel they, like, create something. Of course. I mean, it's like, otherwise it's just gambling. Or extraction. Extraction. Exactly. It's like value ad versus value extraction. Yeah. Exactly. You know, it's funny because it's also, you know, I want to get like political, but just like in terms of capitalism, stakeholders, people having a voice and empowerment, I saw, all this list, it periodically makes this round on Twitter of, like, people like the most wealthy families in Europe, and that list of the top five has not changed over centuries, which is crazy because that just means it's generational wealth passing along, whereas the United States,

that list is, I mean, granted, it's a younger country, but at the same time, like, it's like the list is changing constantly, like the top 10 wealthy people, the top five wealthy people, and again, it's not about the money, I don't want to make that the focus, but just pointing out, that when you think of this dynamism, this thing that a culture can change, be advanced, add new value, startups can be generative. It's just really interesting to me

because a lot of those people are startup made. Like most of those people are not access to old money. Right. And, you know, I think, again, no wanting to be political, but, you know, actually the thing that I think is non-partisan and everyone can agree on is that actually the thing we need is positive some games.

Oh, 100%. You know, the thing, you know, like different people have different views. on, you know, like, how we tax wealth and, you know, but the bit that everyone can agree on is if people, what we want to reward in society is people that are creating valuable things. We don't want to reward extraction. And, you know, one of the beautiful things about stops is they can't extract, they've got to create. And I think there's just something very valuable about that and very powerful that actually I see people across the political spectrum sort of, you know,

kind of get in behind. Yes, I agree. On this note, though, we're talking about the structural context right now before we move to the individual. So, let's add a little rigor to like, what does an ecosystem need? Because I know that can be very buzzword. I've studied entrepreneurial ecosystems for a very long time. Cover them for a very long time, as you know. And, you know, including like interviewing all these different people throughout the world who are experts in this, like what an ecosystem means. And a couple of themes emerge. One, you obviously need talent. You need really strong universities and research ecosystem. You also need for the people that hate to admit this, government support. So the other thing is,

there's a really important balance between top-down and bottom-up. And on the bottom-up side, you obviously need communities of entrepreneurs because there have been, as you know, many experiments, including planned cities, plan innovations, like where people are trying to do these centrally-planned top-down innovation initiatives. They never work, ever. There have been many, many, many over the years, and not one has worked. Some argue Singapore, that's a different, unique complex case, and I don't know if it's as, quote, entrepreneurial.

It's a successful nation-state, but that's a separate thing. So that's one aspect. Secondly, on the top-down side, you obviously need enabling conditions like respect for property. Like in the U.S., we talk about respect for property rights. It can include respect for intellectual property. It can include support such as funding like DARPA in the United States, which funded the Internet, things like that, supportive pro-innovation policies. So the bottom-up side is a community, the top-down, and then obviously the talent that comes in the form of universities because universities are drivers of research and innovation. So now on your point about the science and technology side, talk to me about what you think is happening uniquely in London because we're sitting here. Yeah. Yeah, I mean, so you mentioned DARPA, you know, my sort of side hustle, side entrepreneur first is I'm the non-executive chair of ARIA, which is a new government-backed, well, government-funded R&D funding agencies based on DARPA, basically. So what is Arias stands for the advanced research and invention agency. I know what you're talking about. Okay, yeah. So it's being given, I guess he's

U.S. terms about a billion dollars to basically fund breakthrough R&D that might otherwise not get funded. So really trying to take some of what worked at DARPA, in particular this idea of like this program manager-led model of empowering brilliant scientists with visions to just go out and build the networks and coalitions of researchers to realize that vision in a way that's like all about actually a lot of things we've already been talking about. It's about ambition. It's about incentives. It's about alignment, all these things. And, you know, one of the things that's been really striking to me in the sort of roughly year that we've been up and running is, one, just the depth of the scientific talent across the whole UK. So not just London or not to start

from Cambridge, but, you know, truly across the whole country. Two, like, it's almost like too strong a word, but like the yearning for something like this. Wow. Well, when you look at, you know, like, why does ARIA need to exist? You know, we, We do a ton of great science in the UK, and actually, you know, I'm lucky to have been involved in a lot of the science funding organizations that exist. But I think one of the challenges is that with scale comes, you know, a sort of more bureaucratic approach, right? So if you're trying to run science funding for a whole country, of course you need to,

like, show value for money for taxpayers and, you know, you need to sort of have a lot of process. But the consequence of that, it's not a UK thing. This is a global thing. And, you know, people like Patrick Carlson and others have written about the challenges of where science has got to. I think of it as a career ambition and incentive problem. So if you go talk to, like, incredible postdocs across the UK, across the US, and you say, like, what's your most ambitious idea? And they tell you.

And then you say, cool, and so you're working on that? They're like, no. You're like, why not? Like, you know, if they're, and you're like, well, because I need to get this next publication, which needs to get this many citations, because then I'll be able to get my next grant. And if I do that, then one day I'll be able in 10 years to get my own lab. And then, you're like, wow, this is crazy. We have some of the greatest minds of their generation playing a bit like the making a boss look good game. This is the making the grant makers happy game. That's exactly the same thing. I'm so glad you brought that up

because this is important. So I want to break down a little bit more about what you're saying because a lot of people have tried different forms of like how to fund R&D and do it in a way, an industrial R&D is what you're talking about. And in a way that's efficient. And a lot of the lessons learned here, which I think are fascinating. So one, you mentioned the concept of a program manager. For those that don't know, like DARPA had these famous model where they had program managers. And it's quite fascinating because like one example is Regina George, you know, and she went to Google later on. But I remember being at Xerox Park when her group funded, and this is public advanced manufacturing initiative and like reconfiguring manufacturing and all these

different things. And there's so many different interesting things about it because one, there's, first of all, many of these initiatives can be very multidisciplinary, which universities are not well set up to do, where people are very silo in their departments. And so having these grants can sometimes be like kind of these umbrellas for different disciplines to come together, including across multiple universities. Yeah, I was going to say, multiple universities, and sometimes even different sectors. That's right. Universities and startups. That's right. And nonprofits or whatever, yeah. Totally. Like one example was back on the day, we did like content-centric networking, like, it was like, you know, various types of things. So that's one interesting thing. The second thing,

this is a very little known fact that people don't know about this model is, and I remember being fascinated by this when I was working with my colleagues helping them out with some stuff at SRI who were thinking about this, which is Stanford Research International, and they're very famous

for getting lots of research grants and different things. It's fascinating because most people when they think of government funding and program managers, they think of it as being as a one-way model where government gives money, program manager allocates it,

someone has a strong point of view, and it goes A, B, C, D. It's actually much more nonlinear and interactive than that, where you actually have smart scientists informing the program managers for what proposals they want to see because actually the word and the grant-making business is if you're bidding on an RFP request for proposal by the time it comes out, you're too late.

You should be shaping what proposals are coming out in the first place. And that is a two-way dialogue between government and universities. And that's a big part of how ARIA is working and planning to work is that but hopefully in an extremely transparent way which is say here is an area that we're excited about where we think there is a thesis before we like make grants

before we do an RSP we want to like workshop this with people that have like a really broad range of views on it so that we know like you know what are the things we should be looking out for you know I mean it's again there's a risk of a cliche but you know so much of the challenge of this stuff is you don't know what you don't know and that's exactly right

across, you know, like disciplinary boundaries. There's a lot of academic literature that suggests that surprise is the key to scientific breakthrough. Right, right. Surprise comes when you have a different knowledge base or perspective. Oh, yeah, yeah. At X.S.B., who's John Sealy Brown, you used to manage it back in the day, used to always say it's at the interstitials, like at the edges and like these kind of in between industries.

I mean, I do think that surprise or serendipity is very important, but I want to be careful that we don't glorify like innovation as like this aha eure eureka moment when it's many little things that can come together incrementally and I actually think but tell me if I'm wrong when you say surprise you also mean this emergent quality that you don't know what you said what you don't know what you don't know and it can actually come up bottom up because you're not top down saying like you can say we know this is an interesting area you may even have a loose hypothesis thesis but you don't have it so opinionated and targeted that you're literally veering into central planning which is where I would say places like China fail.

Toe, when I'm too much surprised, I'm talking about almost exclusively a bottom-up phenomenon. Like, what happens when the biologist talks to the computer scientist about a problem that has a rough with the same contours and they never realized before the biologist, you know, and then you're like, oh, and that can be an incredibly productive thing. Well, you were appreciating to the choir because whenever I used to give tours, that wasn't my job, but because I was the head of editorial at Park, I did give like these muckety mucks, like the tours, every now and then, and it was funny because one of the messages, it's so true, because they'd always ask, like, how did this one place, not just once, not a one hit wonder, repeatedly

create one innovation. And these are we're talking world changing innovations, Ethernet, you know, like, I can't even say, the GUI, like, there was endless list of things that they did, lasers, like, and the big part of it had to do with this multidisciplinary thing and putting them in the same thing. But here's the other thing that people don't know. And this ties what we're talking about. It wasn't just you put a bunch of smart people from different disciplines and one building and go, hey, collaborate, the founder of Xerox Park gave them a mission. And the mission was to build the office of the future. It's a very simple mission, broad enough to enable all kinds of innovation, yet specific enough to provide a funnel so it's not like

crazy town where people are like, oh, I want to build a sneaker that like rolls down the hallways and I can skate through the, you know, blah, blah, blah, you know. Yeah, yeah, totally. 100%. I think that idea of mission, I mean, that's the other bit that, you know, Ilan, our CEO, Aria has, I think one of the reasons I'm so happy he's doing that job is that just the sense of mission he has about what we're trying to do. It's just so palpable. That's powerful. How did Ariya come about? Like, did the government approach you guys? Did you guys approach the government? How did this come about? Yeah, the government created this by act of parliament early in 2022 and then ran an open process

to hire a CEO and a chair. And, you know, I had been, probably because of my, because of, well, mainly because of the work I've done at EF, I'd been very interested in this idea of like, how do you do institutional innovation? Because it's not the same as VC. It's not interesting.

So, you know, I've always been interested in this, like, how do you do institutional innovation to increase the supply of things that you want? Yeah. And in a way, you know, EF is like trying to increase the supply of great founders. Ari is trying to increase the supply of, you know, scientific breaks.

through this sort of institutional innovation. And so I, you know, I was, I just applied. And slightly to my surprise, I got the job. I'm not surprised. I mean, Alain was based over a nearer Home for You, who's in Berkeley, and he was running this incredible thing called the Activate Fellowship, which is like a deep, sort of deep tech entrepreneurs out of academia. What I think is very fascinating about you being involved is the other part of having these,

when you said their goal was to increase. the number of scientific breakthroughs. The other part half of it is how do you then actually take those breakthroughs and make something of them? Because as you know, there's no shortage of brilliant ideas and things coming out. But there has to be like a system that can absorb and help support and nurture it. And so I think it's fascinating that you're involved because then it's also like, wait, you don't only have to start go through like this classic linear model of university funding X. You may also be able to do a startup. You may collaborate with a big company you could go here you could the big company can acquire the patent there's such a variety yeah

it's interesting that you land on that because i would say like probably the most important structural strategic question we've had to answer vera so far is who's the customer oh so you know if you think about DARPA right the D yeah is defense that's right it's pretty important like I mean every I mean they've done a good job of doing the sort of like bottom up side of it but there is a big like you know like they are building things the Department of Defense ultimately must be the internet was originally invented to be resilient in the case of a disaster,

right? Of course it became something else, but as is the case, but yeah. Yeah, and we are not Daria, we are here, we don't have a big customer. Right. And that was a big important decision. Interesting. Not to be, you know, we are of government, but we're very independent of it. Right.

What we call in the UK, non-departmental public body, which basically means we're outside government. Got it. And so like, you know, the question that Ilan rightly asked right at the beginning is, We're not going to have a customer. So, like, what is the exit path? Like, we find something great. What do we do with it?

And the answer, it's probably not surprising, given that they appointed an entrepreneur as CEO, an entrepreneur as chair, is we think the answer is scientific entrepreneurship. And Alan's answer to this is we need to make sure that the interface between ARIA and the ecosystem, the entrepreneurial ecosystem, is really porous in both directions. I agree.

Both directions is a key word. Yeah. I love that you guys say scientific entrepreneurship, because our tagline, I've said this publicly in talks, our two-word phrase at Xerox Park was entrepreneurial scientists. Right, right. So scientists who are entrepreneurial but are not actually starting startups. Yes. And they have this kind of entrepreneurial mindset. There's a reason they're not in academia.

There's a reason they're not in industry. They're in between. They're really unique interface. So I think that's fascinating. We don't have to talk about this right now, but just one other quick note is, you know, there's also important to make sure process doesn't get. in the way. Because one piece I did edit was Patrick Sue and Tyler Cohen on the fast grants. And one key insight, and this obviously came out of the pandemic, is that sometimes you also have to deploy capital quickly. And sometimes in government process, and there's a good reason

for it, can get in the way of doing that from allocating funding. I mean, that's being like core to how we think about this. How do we get out of the way? And, you know, like, one of the reasons I think Doppas succeeded is like there's very few veto points. Yeah. You know, it's not like you have to get like 12 people to say yes. And we've done something very similar, ARIA. You know, you, the program directors have to convince the land, basically. Yeah. And, you know, my job is the chair of the board is to like scrutinize the whole, but not get into the weeds, not be another veto. That's fantastic. I'm glad you guys are aware of that. So now let's shift back to the individual. We've talked about the structural. You said something incredibly fascinating earlier, which is how

you're obsessed with the ambition and this question of ambition. You also said another really beautiful profound, powerful word, which is yearning, this idea that people have this yearning. And the reason that struck me is because when you talk about how you guys are actually trying to support people early in the pipeline to become entrepreneurs and know that's a path for them, what really struck me is it's fascinating that you even have to do that, that we should even have to do that culturally and societally. Because if you really think about it, children are born creative and are born entrepreneurial, you know, X, Y, and Z, or let's trade on the school thing, let's trade lunches, I'll give you two pretzels for one Kit Kat, whatever it is. It's commerce. Sometimes it's

about building things together on the playground. So I think there's something kind of sad that people lose that impetus. And one question I have for you from your unique vantage point at Entrepreneur First is when you say you try to get people early, what is a sweet spot that when you say like at earlier in their career? Like, is it right as they're in their high school, college? Like, we're in London. We have two tracks. And actually, same in Paris. So we operate in London, in Paris, in Bangalore and in New York. And the two tracks we have is we have a track for people as they graduate from university. Yeah.

And then we have a track for people in, we don't put a hard limit on it. But, you know, the first five years of their career. So they've got a little bit of work experience. Oh, got it. I think, like, those two moments are quite special moments. Like, as well as yearning and ambition, another word we think about a lot is becoming. Oh, becoming. You know, like, as I'm very influenced by my colleague, Arna Shank, who is brilliant,

who runs a program for us called Polaris. He was on our chat group with us. Yeah, he is. Exactly. And Saloni and some other. Yeah, yeah. And he's really convinced me of this that like ambitious people

have a sense of who they want to become but often less of a sense of how. Ah, so they know who but not how. And so like a big part of ESROL is to try and help people become the person they want to be. That's so interesting. So Mark used to always say in the early days when people would ask him like there are three pools

for a startup, it's product, it's market, it's people. And he would always say that people is the one you met on the most because product can change, market can change, and that can actually sometimes be a lagging versus a leading indicator. But people are where you can really find that sort of, you know, true north, the sort of cutting forward, which the differential that you're looking for in that kind of a business. That's really interesting. So what I like about what you're saying, because my question, you've answered it, is very precise, which is at what point do you kind of intervene, so to speak? And what you're saying is by doing it in college and the early five years of their first job, that is the how. Because they have a sense

of what. Yeah. Because my argument was going to be, like, why not do it sooner? Yeah. Like, in crypto, for instance, we're actually seeing high schoolers. Yeah. They're obsessed. Like, they want to learn. And it's not for financial reasons. It's building. It's creativity. It's like expression. We're the same. We want to engage with people early. And, you know, the thing keeps it very grounded is that it's really about like what is the community or is the infrastructure that you can provide to people that helps them figure this out for themselves. You know, we're not a cult. We're not trying to tell them who to become. But, you know, it's like how can we, you know, how can we sort of provide a peer group that makes people say, actually the way, I don't want to be a banker.

I don't want to go be working a 100,000 person big tech company. And now, I've found my people. I found the people that not only validate that sense, but actually can help me get that. You also need support if you're struggling with trying to figure something out because you're not alone. And it's the feeling that your choices are valid. I mean, it sounds so basic. There's so much to figure out, right? Because you don't have the structure of like a classic top-down company, bottom-up thing. The other quick thing is that this reminds me, again, of childhood development, because there's a body of work that says that it's not the parents, it's nature, nurture debates, but it's actually the peer group that defines your development,

most is a very controversial and very important body of work from Judith Harris in like the aughts. And it was a very important movement in child psychology and development. So just on this note, so as you do this work, and we were talking about how hard it is to have this like, you know, this, when it harness people's ambition. Are there any icons you think that people need? Because in the U.S., the social network movie was a moment. I think it made a huge difference. Right, like the Zucks. Because the other thing is this capital gap early on where people can get angel funding, but not like the next phase. I would argue that's a similar thing. I'm a talent game for building a company where you can find like the early employees, but not the

people who can scale it. I think that's still the gap. That's still a gap there. I think it's closing, but it's closing more slowly because it just takes longer because you need those companies to have matured and exist. But you know, I think this is also why this like idea of ambition should be global from day one. Like, yes, we want this to be a great ecosystem in London, but we're not nationalists. That's a great point. You know, when I think about EF's best companies, the ones that's scaling fast. They're the ones that are embraced, having to be U.S. companies as well as British companies. Yes, I totally agree. So going back to the structural context, before we go more into people, because I do want to drill with you on

the talent side more, but on the more structural ecosystem context. So, you know, we talked like, again, over seven years ago, very exciting. You've come a very long way, very proud of the work that you and Alice and your team have done an entrepreneur first. But like, you also have a unique vantage point given your work into the London ecosystem and the tech ecosystem. So, What are your views on what's working, what's not working at a high level? And then what's really changed? I mean, if I think about it, it's kind of fun that we're doing this again after seven years. Well, you know, it's so funny because, and I think this is a thing that a lot of entrepreneurs wrestle with.

I remember when we started, we were so convinced we were too late, we left our jobs in 2011. And it took a little bit of iteration for you have to become what it is now. But, you know, I remember in 2011, we were like, maybe we're just, you know, maybe this ecosystem is saturated. Yeah, yeah. I just look back now. I'm like, I think there was like one organization describing itself as a seed fund. When we do demo days today, you know, you get like 2,000 people.

You know, so the ecosystem has grown massively. Yeah. And, you know, I think that's true like every layer of the stack, if you like. You know, I think the talent, you know, we already talked a little bit about how an attitude is of what young talent has changed. But also the proliferation of angel investors, seed funds. And then the bit that I'm excited about more recently, and I guess, this is sort of a, sort of you guys coming here and opening an office is a good example. Yes.

Is that for a long, long time, people talked about, like, the capital gap in the UK system. Yeah, you could raise a seed round, maybe a series A, but, you know, series B was really hard. And, you know, like, there's a way to go, but both in terms of, like, local firms growing up and, you know, kind of building reputations and track records, but also, you know, the sort of most famous and storied American firms coming in. Coming here, I think that's a huge net positive for the ecosystem. Yeah, so that's more a difference of degree, though, than kind. Like, in terms of you're saying there's more investors, more capital available, more people doing things, more entrepreneurs. Would you say there's any differences in kind?

I think the difference in kind I would most point to, and it's going to seem like I'm obsessed with this theme, but it's just about ambition. I love it. I like that obsession. I'm on board with that theme. I remember when we got started in 2011, one of the things we heard, there was some really ambition stops. you know, back then, you know, in fact, I remember that when we recorded our podcast seven years ago, whenever it was, longer eight years ago. Yeah, who knows at this point?

One of my fellow guests on that was Michelle Yu, who's one of the fans of songcake. Yeah. Now, that was one of the first, like, real first generation London startups. I was super ambitious. But they were unusual. You know, like most 2011 London startups arguably were sort of like trying to get bought. That's right. That was their exit strategy.

It was to be quite, not really grow big and at massive skill. Yeah, no, and that's not a criticism of those founders. I think it's a lot about, like, what sort of ambition will an ecosystem support? That's right. And so the difference of kind that I would point out is that I think we now have people who are truly trying to build the global category winner from London, from the UK. Now, we're not there yet, you know, we're still, you know, it's amazing what, you know, Daniel has known at Spotify and, you know, but, you know, in general, we're still.

still, oh, ad yen, you know, like, there's, there are some really extraordinary European success stories. But, you know, I think there's still, we're still sort of pointing to things that, that happened a little while ago. Yeah. I do get the sense, and, you know, maybe, you know, crypto is an area where this might happen, where, you know, I do think that 10 years from now, we'll look back and say, you know, the early 2020s was actually a pretty special time to build globally ambitious companies from Europe. I'm so glad you brought up crypto, because when I think of crypto. This goes back to the earlier point about the positive sum game and the incentives. It's really about incentive mechanisms and incentive alignment. And that's actually the beautiful

thing about crypto is it bakes these things in structurally. So there's a lot of ways to align different parties of people together to build things. So I kind of agree with you that this could be very unique time. Well, I think one of the exciting things about crypto from a geographic perspective is that it is sort of like natively global. It's not one of those things where you look to a domestic market and then expand. That's exactly right. And, you know, when I think about two of the crypto companies that we've invested in together, Andreessen Horowitz and Entrepreneur First, Jensen and an Aztec, and then what you see

is like, these are people trying to build infrastructure for a different world. Yes. But they're not building it for London or the UK or for Europe. It is inherently, you know, global. Yeah, we had MC later, C-O-O of Uniswap on. And she was saying how this is a really unique type of product launch because you're instantly global when you, most other times you used to have, like you're saying, these regions, you would land and expand in this market, then that market, grow in this market, it does not

go that way. I think it also plays to London's strengths in a lot of ways. And the other thing that I observe now, you know, we've been investing in crypto companies that, yeah, for a long time. I think we started the, like, London Bitcoin meetup in, like, 2014 or something. Oh, you do? With Imperial College. But, you know, we, one of the things, I'm sure you have seen this, you know, with a, with

probably a better vantage point than almost anyone. But, you know, when you go through these, like, hype cycles and then winters, it's easy to get discouraged. But, you know, one thing that I find so, like, exciting and moving from a talent investor point of view is when I look at, like, what are the investments we've made in founders that build in this space that have worked? They're actually all the ones that were just trying to fundamentally build real technology. Oh, interesting.

As opposed to... Well, what I mean is, like, you know, I think at the height of a boom, you do get a lot of throth. And I have to say, like, some of that felt pretty extractive. Yes, of course it did. But, you know, I look at Jensen, I look at Aztec. And I'm like, these are like engineering-led companies. You know, like they're building incredibly hard products. And that's what gives them the right to win.

Yes. And I do think, like, Europe's not that good or hasn't been that good at the hype, frankly. And so in some categories, hype helps a lot. But what I'm really excited by is, like, I think one of the things that we are really good at in London, in the UK, is like science and technology, you know, like actually doing hard engineering tasks. And I think that, for me, when I think about the future of crypto, I think, like, we just still need a lot of fundamental new technology to make this world. This is why I'm in the space. This is actually a big reason why I came to the crypto team full time because of our R&D and research and development side. It's so technological, the depth, that expertise.

For those inside, it's phenomenally engineering focus, and I love that kind of building. And I agree with you. And there is, as you said, there's always a frothiness in every cycle. And that's okay, because sometimes that creates the buzz that then brings the people that's in talent, crowds in capital. And then the few people stay through every cycle and more and more people build. And we're in a phase right now where the building and the product, things that are happening are phenomenal. So my last question for you is, what would you say, given that this is art, not a science, but I'm going to make a little science. Antific for a moment are the qualities that you see that make someone a good entrepreneur or what

kind of in your talent game, like what is the quote formula or filter that you use? I didn't think there is a formula, but I think that being exceptional is more of a habit than sometimes we admit. And what I look for when I'm in, if I'm interviewing like a 21 year old who's like never worked anywhere, never. Yeah. I'm what I'm always. asking is what have they done however unrelated to starting a startup that they had to do on their own volition without anyone telling them where they went above and beyond yeah and something happened like that idea of agency in the world that's pretty powerful I think it's probably the single most important thing I think that's a fantastic note to end on it's ambition yearning becoming and I love the

line you said about ambition is global because we're here in the UK. I'm from Silicon Valley, but we're talking about a global phenomenon. Thank you so much for joining this episode, Matt. It's so great to have you back. It's great to be here. You know, I'm going to be able to be.