Invest Like the Best with Patrick O'Shaughnessy - Alice Bentinck - Building a Start-Up Machine - [Invest Like the Best, EP.285]

Episode Date: July 12, 2022

My guest today is Alice Bentinck, co-founder of Entrepreneur First. Entrepreneur First, or EF, invests pre-company by systematizing the way that talented individuals find co-founders, develop ideas, and scale into companies. They’re an incubator of teams and ideas on a mission to create impactful companies that, without their help, wouldn’t exist. I first spoke with Alice’s co-founder, Matt Clifford, over two years ago and have been fascinated with EF’s model of investing ever since. Please enjoy my conversation with Alice Bentinck.   For the full show notes, transcript, and links to mentioned content, check out the episode page here.   -----   This episode is brought to you by Canalyst. Canalyst is the leading destination for public company data and analysis. If you're a professional equity investor and haven't talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com/Patrick.    -----   Today's episode is brought to you by Brex. Brex is the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest-growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. Ready to accelerate your business? Learn more at brex.com/best.   -----   Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.    Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @patrick_oshag | @JoinColossus   Show Notes [00:02:33] - [First question] - Overview of what Entrepreneur First is today [00:05:57] - How she identifies the people to bring into each cohort and convince them to quit their job to join EF for eight weeks [00:10:10] - Categories of the main types of people who join the EF program [00:12:32] - What she’s learned about negative screening at the first stage of recruits  [00:14:07] - Positive signals she looks for in early admissions  [00:17:46] - What the program itself feels like as a participant [00:21:29] - Reasons partners tend to fail and whether or not EF advises equity splits between founders [00:24:49] - How important the idea is that the team will be working on  [00:28:04] - Exercises she enjoys doing with the new cohorts around social norms [00:30:38] - How the experience looks physically in each city  [00:32:57] - Categories of data collected as the cohorts unfold and making investment decisions [00:36:46] - Ways the companies mature after EF and what kinds of investors fund the next stage of their startups [00:40:55] - Why aren’t there ten EF style initiatives or organizations [00:44:26] - Motivations for the change in their holding company structure [00:46:48] - The love of product and ideas she’s playing with right now [00:51:49] - Cities she has her eye on that EF is not a participant in today and criteria that makes a city desirable for EF [00:54:03] - A piece of software that EF could benefit from that doesn’t exist yet [00:55:30] - The keys to her harmonious relationship with her co-founder Matt  [00:59:01] - National and international impediments that directly impact company building [01:01:36] - The kindest thing anyone has ever done for her

This episode of Invest Like the Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis. Founded by a former byside analyst who encountered friction sourcing, building, and updating models, Canalyst is now used by over 400 institutions, including the largest money managers globally, and by a number of guests on the show. With detailed company-specific models and data on virtually every public company, panelists clients are able to ramp up faster, update models instantly, and incorporate the highest quality fundamental data into any workflow.

If you're a professional equity investor and haven't talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com slash Patrick. That's C-A-N-A-L-Y-S-T-com slash Patrick. Today's episode is sponsored by Brex, the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. you accelerate your business, learn more at brex.com slash best. That's bR-e-X.com slash best. Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will

help you better invest both your time and your money. Invest like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaunacy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

Clients of O'Shaunosie Asset Management may maintain positions and the securities discussed in this podcast. My guest today is Alice Bentink, co-founder of Entrepreneur First. Entrepreneur First, or EF, invests pre-company by systematizing the way that talented individuals find co-founders, develop ideas, and scale into companies. They're an incubator of teams and ideas on a mission to create impactful companies that without their help wouldn't exist. I first spoke with Alice's co-founder Matt Clifford over two years ago and have been fascinated with EF's model of investing ever since. Please enjoy my conversation with Alice Benting. So Alice, I've been looking forward to this one. We've had to push it back

a few times, but actually it's been a good thing because the world of investing in early stage companies has changed quite a lot since the first one of these that we had scheduled maybe at the end of last year. You are one of the co-founders with Matt Clifford of entrepreneurs first. And because it's a very interesting international organization that effectively produces new companies, I'd love you to just start by giving an overview of what EF looks like today, before we get into all the origins and the history and the way you operate, which are all really interesting. Entrepreneur First is a talent investor.

And broadly what that means is that we invest pre-team, pre-ide. So the first money that we deploy is into an individual rather than into a company. Pre-seed investing has become increasingly sexy and attractive over the last couple of years as valuations have gone through the roof. But really, the reason that we do this is because we believe that the world is missing out on some of its best founders. The supply of founders is currently constrained. And largely constrained because of two things. One, a lack of network density in many ecosystems outside of Silicon Valley. And then two, and I think this one often surprises people if they are based in or around Silicon Valley.

The ambition trap of many local cultures, of many of the world's best cities, is that you see many of the most talented individuals caught in careers that may not be the best way to optimize their outcomes. For example, Singapore, you go to the civil service, London, you go into banking. These are very culturally approved career parts for the most ambitious. It's what your peers want you to do. It's what your careers advisors, what your professors, what your parents want you to do. And so, yeah, we tackle these two challenges. So we have a program. It runs in six locations across the world, six countries across the world, across Europe, Asia, and we're also in Canada as well. And the point of this program is to take an individual from the point where they're

considering they're curious, they're just thinking about becoming a founder all the way through to the stage where they're seed funded. So one of the key things that we do is we've built an environment that enables strangers to become co-founders. So you join with between 50 and 80 other individuals and you have an eight-week period to find a co-founder from within that pool. So about 80% find a co-founder of the companies that are then created through those co-founding teams. They go to our investment committee. We invest in about half the companies that are created, and then we spend another three months working with them to get their seed round. So we're an unusual beast in a way because we are a company. We operate like a company.

We've got 120 people working across these fixed locations, finding the people and supporting the creation of the companies, investing and supporting the companies to get their seed rounds. But we also do manage capital. So we have about $350 million in funds at the moment. But one of the big changes we've just made is that our most recent fundraise we did on the balance sheet rather than into a fund vehicle. And I can talk a little bit about why we did that. But we've been going for 10 years in London, which was our first location. But we've backed now over 3,000 founders. We have more than 600 companies in our portfolio.

The total valuation now is about $8.5 billion. So yeah, we've been going for a while. It took us a while to actually perfect this model of talent vesting. we're very well positioned to capture this pre-seed market. As part of the latest fundraise that you did myself, it was fascinating to learn about, I'll call it a factory that you've built now across six cities for doing what you just described.

And I'm really interested in the various stages of the assembly line, if you will, not to overdo the analogy, starting with the people. So if you've got this concept of there's talent that could be sort of unlocked in geographies outside of Silicon Valley, and then you're very good at pairing them up, evaluating them, investing in them. These are all kind of discrete steps. And I'd really love to learn what you've discovered over all these years across all these cities about doing this well.

So we'll go in order. How do you identify the right kind of people, the 50 to 80 people or whatever, to bring into each city cohort each year? So what kind of attributes are you looking for? And how do you convince them to leave a job, to change course or change path to come do this with you for eight weeks? One of the strongly held beliefs that we definitely challenge is that you can't turn someone into a founder. I disagree with this because what we're doing is we're not turning people into a founder. We're releasing them from whatever ambition trap. Most people are default employed. They're not default founders outside of Silicon Valley. And so EF's job is basically to raise awareness of why being a founder is the most important thing that you can do with your life. And so we have a

bunch of ways that we dig out these people. So first of all, we have a big team. So we have about 40 people worldwide whose sole job is to find talent. So our job is to go into places where great talent does already aggregate. So if you look at somewhere like Singapore, it's already one of the world's best talent aggregating cities. It's got amazing universities like NUS and NTEU that pull in the best talent from around the region. Again, if you look at somewhere like London, it pulls in a lot of the best talent from around Europe. Even Brexit would stand it. So we go to cities where there's already a very, very strong talent pool. We like cities where there is a very strong university ecosystem, largely because we find the universities are some of the best talent aggregators in the world.

People will move, the most ambitious, will say, hey, I'm not going to settle for my second-rate local university. I am going to move to somewhere that will raise my ambition level. We have very deep relationships with universities that mean that we can understand who, who is coming through their system and who is fighting that system. As they are going through the academic career path, are they the ones that are actually saying, hey, it's not enough just to produce papers. I actually want to get out there and produce and build and get my technology out into the world. In some ways, the technologists are easiest to find those potential CTOs. There's often much stronger trails that they leave behind them, whether it's their commits

on GitHub, whether it's their activity in different tech communities. Often the hardest people to find are actually the potential CEOs. Now, we like CEOs who have lightly technical backgrounds. So maybe they did a computer science degree, but they never actually used it. Maybe they did a bunch of building when they were a teenager, but then didn't keep it going. But if you think about a large part of EF's beauty is making these co-founding teams work. So you need to have co-founders who understand each other's language. And so having that degree of technical understanding from the CEO, we find is super, super important. But finding the CEOs, they often have far more diverse backgrounds, more unusual backgrounds.

So for CEOs, what we find is, rather than trying to find aggregated pools of CEOs, what we're doing is using our talent scouting network, which is both our team and individuals that we then incentivise to find these people and infiltrate different networks to try and help us hunt down these people and get them in front of us. And then our job is to help convince them that actually the opportunity cost in life is not doing the startup. The opportunity cost is not the salary that you're missing by quitting your job. The opportunity cost is if you do what you do.

have a billion dollar company inside you, think about the opportunity cost of not building that and staying in the job where you're waiting for the promotion, waiting for the pay rise, waiting for whatever culturally approved carrot you've been offered. It's as much an art as it is a science and talent preferences change really quickly. So something that might have worked a couple of years ago goes out of fashion, communities change and we need to adapt as well. If you had to categorize the type of people that are coming into the program, into like students, people already working, maybe some different age ranges, give me a sense for where people tend to be coming from. What are the major groups? The average number of years of experience post-graduation is probably about five. We'll take fresh people straight out of university. We'll take people with six to eight years experience as well. But what we find is that EF does work best. Our current product, which is called four, works best for those that are first-time founders and that are at the beginning of their career.

We have probably now about 20, 25% of people that join us that have a PhD, so have an advanced technical background, PhD or postdoc. About 60% of the people that we work with have some sort of technical background and the rest have a very light technical or no technical background. And they are typically at the point where maybe they haven't. And because startups have become much more normalized across many of our locations, maybe they've tried something once. Maybe when they're at university, they tried to start something up.

They tried to find a co-founder. They've sort of dipped their toe, but they haven't really fully committed before joining EF. And I suppose one of the most important parts of EF is that to join EF, you have to fully commit. You have to quit your job. Our promise to individuals that join us is that you're joining a group of individuals who are fully focused on finding a co-founder, fully focused on founding a company. I think one of the challenges that we see in locations where you're joining,

don't have high network density of other potential co-founders is that you find somebody, you have the conversation, you want to become a co-founder together, you start experimenting, and then they get a job or they get a promotion, and suddenly they've gone. And everything that you've been trying to create together is suddenly goes up in flames. So I think, yes, it's probably a just pool of fully committed potential co-founders in the world. Every six months, we have 300 people who join us who have all quit their jobs, but all ready to go, right now. And if you're curious about startups, if you're just at the beginning of thinking of getting started, this promise that you can find a co-founder fast and effectively is like

Can it. Maybe just list the six cities because we're going to reference them a lot. You mentioned London and Singapore. What are the other four? So we're in Europe. We're London, Paris, Berlin, Asia, we're in Singapore, Bangalore, and then in North America, we're in Toronto. As you think about these people, and I love that filter of to join, you have to be fully committed to this idea. What have you learned about negative screening at that first stage? What are the most effective ways that you keep out in addition to saying you have to be fully committed, so the non-fully committed hopefully wouldn't join? What are other negative signals that you've learned about over the years for creating that initial pool? I mean, the simplest question that produces the most effective

answers on commitment is, what are you considering if you don't get EF, if you don't get to join EF? And actually it's the people that list out a long list of a very culturally approved career path next steps that typically don't do very well on the program. Burn the boats mentality, so to speak. You've got to burn the boats. We do believe in activating talent, but that doesn't mean everyone should be activated, nor being ambitious and super smart isn't enough. That doesn't default make you a great founder. We don't believe that everyone in the world should be a founder. But what we're trying to do is make sure that we do screen out those that are.

are dabbling that are trying to do it because it has become cooler or more sexy or something. Sexy, yeah. I think when you look at the big risk of the app is that we build insecure or shaky co-founder relationships. And so our selection process has to be super robust to ensure that only the most motivated, only the most active of the pool that we are screening. We're screening about 35,000 applications over the life cycle of the fund. And one of the most important things is just making sure that those that get in are fully,

fully committed to founding a company at the point where they join us. In addition to commitment, what are some of the other positive screens? What have you learned to scan for in candidates and really favor when it comes to admissions? We're lucky now that having done this for 10 years, we can see how the lead signals that we used to evaluate have been translated into results. There's a couple of things that just consistently have reliably shown us who's going to be a top performer in their cohort. The first is that people who believe that they can do it and believe that their odds are different to their peers. It's not a slum dunk that they will then be

the top performer in their cohort, but it is necessary for them to succeed. So we call this having high personal exceptionalism. So it's an individual who just believes that their odds are different. It shouldn't be conflated with overconfidence. It shouldn't be conflated with arrogance. Often these individuals are some of the most comfortable and some of the most high-growth mindset people I meet, that for whatever reason, they believe that their odds are different to the rest of their peer group. So this idea of high-person exceptionalism can be reasonably hard to evaluate. The great thing about EF is that before we invest, so we invest after about 14 weeks, before we invest, we've collected about 200 data points on every individual that has been through the program. Selection is

important for us at the point where we're doing interviews, but actually we're able to select the entire way through the program before we invest. The other things that I would say, that I'd pull out would be often the most interesting individuals in the F have these deeply obsessive personalities. Now, it often doesn't matter what they're obsessed about, and they're often reasonably plastic in how they think about their obsession, as in, if you ask them in the past what they've been obsessive about, there could be four or five different things that seem really disconnected, but to be a successful founder, you need to be basically fully obsessed and fully absorbed by your startup. And so having previous examples of that is a very, very strong

indicator for us. A lot of founders or a lot of investors look for outliers. I'd say the same is true for us. We've tried, because, you know, we've got this large team of individuals, many of whom were involved in selection. We've had to think very hard about how do you actually codify what an outline looks like. And so during our selection process, one of the things that we're constantly asking is how and where have you outperformed or done something differently that your peers wouldn't do. As one of the first questions is, who's your peer group? How would you define your peer group? who do you compare yourself to? And then by understanding that,

and then getting them to articulate where they have outperformed, I think this is where the personal exceptionism comes in as well, that sort of self-belief. Some individuals find it very hard to articulate how they might have outperformed compared to their peers. You hear people respond and say things like, there's no way I could have built something

that my peers couldn't have built. Like, surely, we're all the same. And then the good ones, like, well, there was this example, and there was this example, and there was this example. And then the media ones, they give you one example,

and then you've got to kind of push the second and third, but they can get that. For some things that we actually actively don't look for and that I think are very, very hard to assess during a selection process. It's something like determination. Of course, founders need to be determined. But how do you compare different examples of determination, some of which are self-driven. I climbed Mount Kilimanjaro. And some of which aren't, such as I escaped a war zone. These are previous examples we've had how you meant to compare those. We actually talk about drive to achieve rather than determination. How is this person demonstrated that they have pushed aggressively to make various achievements happen. They've had that innate drive to make things happen to themselves. Determination, when we used to ask, we used to have a question or application form that was, show us an example of time.

It's been exceptionally determined and it's just impossible to compare the different answers. Once people are there, what are the next steps? So you've got someone in, let's say, Singapore, they're with all these other people that are like them in terms of what they're trying to achieve. And one of the things you're trying to do is match people and you've got eight weeks to do it. So what does the program itself feel like to a participant? Honestly, EF feels very, very intense. One of the things that I love about EF is that often when people join, they say, wow, I didn't think I'd find other people like me.

And I definitely didn't think I'd find other people like me in such high volume. So having an opportunity to interact with 50, 60, 70 other people who are as ambitious as you, who are as motivated, who are as unconventional, if you like, is a real magical moment for many of our customers that join us. EF can feel very emotional. Largely, this is the first time that most the people who have joined us have failed, failed significantly. And yes, failure is baked in. So you join on day one. You join with, let's say, 50 other people. And by the end of that first week, you need to be in your first co-founding team. So within five days, you need to go through this sorting process where you're basically sorting, search.

evaluating and choosing who you might want to co-found with. The reason we put such tight deadlines on this is because what we've found is counter as opposed to pop your belief, which might say that time and space leads to better ideas or better co-founding relationships. What we've seen time and again is that the early stages of startup creation is more like the creation of a diamond. It's this intense moment of pressure that leads to something great. The reason why this works so well with team-building and ideation is that you only know if it's a good team, you only know if it's a good idea if you test it. If you don't test it, it's basically just conjecture. And it's very, very easy because it is such a human process,

the co-founding process and the ideation process, to be honest. Because it's such a human process, it's very easy to get stuck in the talking loop where you are talking, you're agreeing, you are having a wild time together, just kind of enjoying each other's company. Now, that's how you find a friend. That's not how you find a co-founder. And if a co-founder is going to be one of the most expensive decisions you ever make in your life. Assuming you're successful, you give away half of your company to this co-founder. It's literally nothing more expensive that you could do. You're really need to treat it like a hiring process rather than like a friendship development process. I mean, one of our strong beliefs is that your best friend is not your best co-founder. So many, many,

I think a lot of the conventional wisdom is around, okay, well, if you want to find a co-founder, find someone you've known for years, if not decades. You should have grown up together. The reason we don't believe that is fully optimal. Yes, there are many examples of where that has worked beautifully, but the reason why we don't believe that is optimal is that how likely is it that your best friend is ready to go at the same time as you, has a complementary skill set, is interested in the same ideas as you. And I suppose one of the things we have found when we have worked with teams that have known each other for a long time is that there is often a huge amount of baggage that comes from having that pre-existing relationship. It can often be quite hard to shake off.

When we think about building these co-founding teams, what we're saying to the people that join us is, this is your chance not just to find a co-founder. It's about finding the optimal co-founder, the right co-founder to you. And many people, when they join us, they have a preconceived idea about who their co-founder should be based on the press, based on watching the social network, based on whatever it may be. It's only beginning to test other people within the cohort that they understand who the right fit is for them. So typically people go through two or three co-founders in an eight-week period. They're typically working with them anywhere from 24 hours to four or five weeks. So it's a very, very fast iterative process. When you think about what causes them to

fail most commonly, I'm curious what that is. And I'm also curious how often it's not 50-50 at the end of it, meaning CEO emerges that takes 70% of the equity and a CTO takes 30 or something like that. And whether or not EF guides that decision or just lets the chips forward they may between the founders. Well, the equity question is reasonably simple. We recommend all teams split 50-50. Unless there is a real significant reason as to why it should be different, our push is always to see equity is forward-looking, not backward-looking. So even if you've come in with an idea, you've spent four weeks, four months, whatever, working on, it's not sufficient to change the equity division. We often use the example of me and Matt. Matt is my co-founder. He started

working on EF a month before I did. It would have been very easy for him at that time to say, hey, you know, I've actually made some progress. Why don't we do an unequal equity split? I probably would have accepted that. It's 10 years later. Would I accept that now? No, that would be a real thorn in all the side. So co-founders are expensive, but one of the things that we push is that if you aren't willing to give somebody 50% of your company, are they the right co-founder? So if you're looking at a 30, 70% split, for example, are you sure that person should be a co-founder? Maybe they should be a first employee. Do you think they are disposable? If you think they are, then, okay, well, maybe Hartham is a first employee where you do have a different

relationship. I mean, when we look at what makes teams fail, there's a very, very clear, singular reason, although it's often not clear to the founders. And this is why the EF environment methodology is so important, because most people joining EF, maybe they've experienced one co-founder in their life. We've seen thousands of people make hundreds of teams, and we have a very, very clear idea very quickly about which teams are going to work and which teams aren't. And they're really clear indicator is productivity. We have an internal mantra, which is productivity as traction for teams. The teams that are making decisions on a daily basis that are moving way faster than you would expect, who are developing and disproving hypotheses super, super fast, those are the teams

that will succeed. The teams that won't succeed in, I was in one of our locations recently as the teens were all kicking off and sat down with this pair of co-founders who had been working together for a couple of days and they were so excited about each other. Perfect on paper, perfect in real life, loved each other, thought it was going brilliantly. But then I asked them about the idea. And one of them told me about the idea. And they got super excited, really, really excited. And I was like, oh, but how does the CTO fit into this? How does it put with their background? The CTO was like, well, I could try and manipulate my background so it's sort of fitted in here. And I was like, okay, well, this doesn't sound like the best fit in terms of ideas. What other ideas do you have?

The CTO told me his very exciting, brilliant idea, and the CEO looked slightly crestfallen. Thinking about productivity, if you are a highly productive team, you can get the idea that you want to work on, which is just your initial hunch. It's just the beginning point. You can get to that in 24, 36 hours. It doesn't need to be a long protractive process. If you are a team like the one that I'm talking about, you feel like you're being productive. You feel like you're doing the right things because you found somebody that you really gel with. But ultimately, if you're not able to make progress on the idea very, very fast, it's not going to work.

You bring me to the all-important concept of the idea itself. And it sort of maybe flies in the face of what one would normally think about from the outside looking in, which is like somebody has an idea and they go pursue it. In this case, that's not what's happening necessarily, although I'm sure it does happen this way, that someone comes to EF with an idea and they try to find a co-founder to develop it with. Tell me everything you've learned about this process. How important is the actual idea itself or what the team is going to be working on? Because based on everything we've talked about so far, it sounds like talent and trust or chemistry between teams is almost more important than the idea itself. Is that true in your experience? Ideas are really important.

I don't want to downplay the fundamental role, the idea plays and whether the startup succeeds or not. But I suppose the bit of conventional wisdom that I would strongly, strongly challenge is that. the way that a startup comes about is that somebody has an idea and they build a team around them. Yeah, you can build startups like that, but definitely works. But that's not what we've found to be optimal. What we found to be most exciting and to build the most interesting companies is where you see the idea as a product of the co-founded relationship. So what I mean by that is you bring two individuals who are open-minded, but also incredibly clear about what they can bring to the table. And then you get them to ask each other the question of, how could you.

we work together? Where do our backgrounds intersect? What do I know? What can I do? What skills do I have? What behaviours do I have? You tell me what you have as well. And let's see where they might intersect. So the idea is the product of two people's backgrounds, experiences and skills coming together. And the reason why I love is why I find it so exciting is that whenever you sit by yourself and try and come up with an idea, you are constrained by the markets you know, by the skills that you have is very, very hard. to imagine beyond that. As soon as you start interacting with someone else, where you come in with the openness of mind to open up your background and skills to what they might be able to create, you're basically in this moment of combinatorial innovation, where the combination of what you two

can create is way more powerful than what anyone individual can produce alone. And I think that's why people find EF so addictive when they first join, because they come in often thinking, yeah, my ideas are really great. I'm just going to sell my idea. I hear what EF says. I'm just going to sell my idea. I'm pretty stuck on it. I think it's so. it's the right thing. And then they come in and they very, very quickly back away from whatever idea they thought they were going to end up working on because they just didn't realize what was possible. Those interactions with a co-founder, we have this framework that we use called Edge, which is basically to find a co-founder and to develop an idea, you need to know where you have

advantages. What are your personal competitive advantages? These are your edges. It could be in the technology, it could be in a market. It could be certain behaviors that you have. The more that you understand yourself and the more that you can use that language to then communicate that to your potential co-founder, the faster you can then get to this point of combinatorial innovation. So this is definitely one of the things that I find most exciting about what we do and why, at the core of the F, what we're doing is creating companies that otherwise wouldn't exist. We're bringing together individuals that wouldn't otherwise meet each other. They're then coming up with ideas that just couldn't have existed because they wouldn't have met

each other. Are there any other exercises that you enjoy most doing with the various cohorts, things like this concept of finding or delineating your edge? Is there anything that's really stood the test of time that you've done across a number of years or a number of cohorts during the actual eight-week span that we haven't talked about? Well, I suppose we've talked about the people in the cohort. We've talked about methodology. I suppose the final bit is social norms. And so this would basically be the three ingredients to making a cohort successful where you turn these into the which tells plenty strangers into companies. The social norms around EF are interesting and basically regardless of where you're located, whether you're in Singapore or Paris or Toronto, there are a bunch of

social norms that stand. In life, it's hard to have difficult conversations with people. It is hard to say to somebody, I don't want to be with you. It's hard to break up with the co-founder. What we've done at EF is basically when every cohort joins us, we create new social norms, a new culture that is EF specific. The primary thing that we focus on is how to do to have difficult conversations with your co-founder. And the reason we do this is because we want individuals to get into and out of teams as quickly as possible. So we want to get you into a team before you feel ready.

And then we want to get you out of a team the moment that you begin to have doubt. So one of the things that we do is the first weeks of the program, we sit down and as a big group, as a cohort, and we teach them how to have difficult conversations with their co-founders. And then live, they will sit in their pairs and they will have difficult conversations with their co-founders. And then at the end, we say, who's ready to break up? And a bunch of teams will put up their hands. And they get a massive round of applause. And so it's beginning to show that actually the process of breaking up is a positive thing rather than negative thing. And the speed that you do it should be celebrated. And, you know, there's a lovely social norms that have been developed by the cohort that we now push to every cohort. So I can't remember which cohort it was a number of years ago that they broke up. One of the co-founders put on slack, hey, I just want to say, you know, why Patrick was so, great. He was really good at this. I was really interested in this. It didn't work out

for us, but I highly recommend them. And got, you know, covered in emojis. And then everyone else started doing it. And it's just a lovely reinforcement of this is a social norm that is new and it is difficult, but it is the right thing to do. Because the opportunity cost of being the wrong team with the wrong co-founder is so

insanely high. Team building EF is only eight weeks long, which feels like a recently long period of time, but actually when you're in it is incredibly short. So for us, making sure that velocity of team building, making sure that speed of entry and exit into a team as fast as possible. This kind of social norm really supports that. How does this look physically?

And we don't have to go too far into what you did during COVID, because I think going forward, hopefully it'll be more normal like it was pre-COVID again. But how does each city run? Like, is there a team that runs each city? What do they do during this period of the cohort? Is it in like a specific building? What is the actual experience of it physically? So we have offices in all-law locations.

the offices are largely a gathering spot for the cohort, particularly in the early weeks of the program, where because we want individuals to get into and out of teams as quickly as possible, there is a spot that if you aren't in a team for whatever reason, you can go and hang out there, meet other individuals. We are big, big believers in person. We did EF remotely during COVID.

It did actually work way better than we thought it would, but there was some impact on team-building outcomes. But largely, I would kind of compare it to online dating in that with online dating, you do your sorting or search online. But as you do your testing in person, be very rare, weird to commit to the marriage if you've only ever done online testing. I'm sure that happens, but very rarely. And the same is true with EF that ultimately we don't really mind where the founders go and test

their relationship, wherever they go and work. But we do want them to do that in person. The key role that the office plays is that we talk about having a liquid pool of founders. So at any one point in time, there'll be a group of founders who aren't in a team. And actually, the important role that the office plays is having a space where those founders can have those serendipitous interactions where they jump into each other, have the opportunity to talk about how their edges, how their backgrounds might intersect and have the opportunity to form teams. I mean, he has this amazingly robust that even across cohorts, across locations, and even during COVID, we typically hit about 80% of people finishing the eight-week period in a co-founding team. The other 20% they leave at that point. But I think one of the nice things is that often they leave because they've just done eight weeks of going through this pretty intense process.

And for some of them, it's very clarifying. Actually, I don't want to do this. Actually, it's not the right time. I don't want to commit to someone right now. And I think the great byproduct of BF is that even if you don't find a co-founder, even if you don't end up building a startup, it is this intense life experience that changes the way you think about what you can do your career and how startups might fit into that. So now we can progress a little bit towards the investment portion of what you do. Ultimately, I think EF is so interesting as a business because much like accelerators, let's say, in the U.S., that actually start operating at a later stage when there's already a founder and a company,

so you're sort of as early as you can possibly be. But you end up owning significant equity stakes in businesses that are created as a result of your platform. And I think everyone involved with EF would ultimately agree that if there's enormous enterprise value, it's going to come from several or many. of the companies becoming huge, successful, publicly traded or acquired companies, something like that. You said early that you invest sometimes in up to half of them, have equity stakes as a natural byproduct of the platform, and that you gathered 200 data points along the way. So what are you doing now shifting from the connecting piece of EF to the investing piece? What are you doing as the

cohorts unfold to collect that data? What are sort of the categories of that data? And then how do you ultimately make those investment decisions at the end as to whether or not EF's going to participate in the company? We've always seen EF as a machine we're building rather than a fund. The reason why these data points are so important is A, it enables us to make better investment decisions, but B, it also means that no single individual at EF is making the investment decision. We believe in the power of the machine.

We want to make the EF machine, the EF product, as strong as possible, rather than relying on me or Matt or any one of, we do have GPs because of the funds that we manage, but the GP decision, the general partner decision, is sign off rather than a deciding factor. So we start collecting data about the individuals we work with from the point where they first apply. And often actually before that, we often have reasonably long-term relationships with the individuals that we work with. I remember one guy who's now running one of the biggest companies in our portfolio who I spent two years having coffee with him, trying to convince him that actually the internal intrapreneur thing that he'd been offered in his company, wasn't the best route, you should come and join

EF. So actually, by the time he applied, I knew her really well, and I knew what his strengths were and where his weaknesses might be. So we collect a bunch of data points during the selection process, and then that feeds into this first product, which we call Form, and that's where the teams are built. Every week, the individuals are checking in with someone from our team, and the companies are checking in with someone from our team as well, our venture partners, who are all exited entrepreneurs who do the advisory work at EF. So by the the time that they reach our investment committee, which is 14 weeks after the program starts, so some startups might be as young as six weeks, the oldest will be 14 weeks old. We're going in

with a huge amount of information about the individuals and their backgrounds, but also how they performed during the program. How productive were they? How stable are their teams? And we're pretty transparent with our customer about this is what we do because we feel we have a duty of care to our customer as much as to our investors and LPs that if we invest in you, we're going to want you to keep running that company. So if we don't think that it is the right co-founding team, if we think there are cracks in that co-founding team, or if we think you're wasting your time on a market or area that doesn't make sense,

it's actually in your interest for us to have all of that data so that we can say no, investment committee. And the opportunity cost of being trapped in the wrong startup is really high. So come back and do EF again. I think what I love is that by the time we do investment committee, which we have an investment committee process, each startup meets with three individuals for half an hour, ask a bunch of questions. Really, what we're doing is signing off what we've learned about these individuals during that

14-meat process rather than coming up with an independent investment decision. I do not envy funds that have to make a decision based on one or two interactions with the founder they've only just met. It terrifies me. We're very lucky that we're investing in individuals that we have a deep relationship with. Now, once that happens, how do these companies mature from there? I know that one of your key focuses, you were just all over the U.S. meeting with tons of U.S.-based investors. What kinds of investors tend to fund the next stage of these businesses?

Because they're in cities that aren't Silicon Valley or anywhere in the U.S., I don't know what the exact percentage is, but some huge percentage of early stage or seed-stage venture dollars are probably U.S.-based. What is the linkage there? What are your ambitions there? And how much does it matter sort of who funds the next, based on the outcomes that you've observed, two funds the earliest stages after they graduate from EF? Typically, companies leave us three months after our investment committee. So the startups are anywhere between three and six months old.

And at that point, they're looking to raise their seed rounds. We're lucky that we have some great relationships with the VCs and our local ecosystems. But one of the things that we are keen to do is to support our companies to tap into US capital. So if you look at the time it takes to raise a seed round, in Singapore, it wouldn't be unusual for it to take six to nine months to actually close the term to you can get money in the bank. Now that's a massive cost for founders, a massive cost in having your CEO spending the majority of their time for six to nine months, just trying to close funding round. One of the things that I've been spending a bunch of my time on is I've just spent the last couple of months in San Francisco meeting with early stage investors to try and understand, what does it take to support more US-based and Bay Area investors to find and see and get access to these incredible deals that may not be based right under their nose?

The world has changed during COVID. I think this moved to, you do your Zoom and then you get in the room, has changed things so that founders who aren't based in the valley aren't disadvantaged in the same way that used to be. And I was amazed at the openness to international investing and how many of the investors I spoke to about 70 pre-seed investors, preceding seed investors, and how many of them had done deals in Europe, Asia, Africa, Latin America in the last couple of years. Now, I think that has been largely driven by the crazy evaluations they were seeing locally, and maybe that will temper it a little bit going forward.

But I think there has been a realization that the quality of talent outside of the US building companies is fantastic. And there's actually a real advantage to investing in companies where they are based locally, largely a talent advantage in the talent war in the US and the Bay Area is so vicious, both in terms of salaries and retention. And that problem is you're at a far greater advantage if you stay in London or stay in Berlin or stay wherever your local network is, where talent is much cheaper and much stickier. So it was a real benefit to both US investors and to our startups to say, hey, US investors, if you want your capital to go further and if you want to access startups that are much more reasonable

valuation, start looking outside of the typical startup ecosystems. And for our startups, having that link in the early days to the US, we've seen it does great things for their series A, having a local US fund that can provide signal for the series A, but also in terms of giving them access to the Silicon Valley mindset. The Silicon Valley mindset is unbelievably powerful. I think it's one of the things that YSE has done so well, where they very much basically transplant a Silicon Valley mindset into all these international companies that come and join YC. And really, we want to do something very similar at a much, much earlier stage. So for investors listening to this, I would encourage them to think about what would it take for them to start investing internationally?

London gets a lot of noise. Toronto is a very well-known ecosystem. But places like Paris, where the talent is unbelievable. The talent put there is so deep, so rich, but it's still a relatively untapped ecosystem. same with somewhere like Singapore, where you really do get the best of Southeast Asia all coming to one country and city state. And there's relatively little competition there in terms of early stage investors. There's masses and masses of opportunity. We're very excited about making this happen. I think it would be much better for our customer, much better for their long-term prospects. But I also think there's a big opportunity there for US-based investors.

My next question maybe has a bunch of sub-components to it, which is why aren't there 10 EFs? It strikes me as very odd. If you just look at it from the perspective, let's say, of a California-based early-stage investor, that a big input into their success is finding great companies, getting in at a good price, and then watching them grow. And we all know it's happened to U.S.-based prices. I'm curious what the average, maybe discount is the wrong word, but that's what it is. For the same stage, what average price or valuation an investor is paying, let's say at seed for a company. And I'm even curious between, say, London and Paris, or you pick the two countries. It's something different that not everyone is less picked over at a cheaper price.

It just strikes me as odd that you're the one EF. There aren't one of these for every single city. Why aren't there more EFs out there? And what am I missing in that? What seems like sort of an obvious opportunity set expansion for U.S. investors? Just answer your question about valuations. So Angelist has an amazing data set on valuations. I think it was showing that 2021, 2022, a 17th. fifth centaile startup would be raising pre-seed post-money valuation at something like $15 million. If you look at most EF locations, that'd be more like $5 million. For Seed in the US, Angelus is saying it jumps to something like $30 to $40 million.

In most of EF's locations, it'd be more like $10 to $15 million at Seed. And those would still be considered very good valuations. Why don't more investors do this? Well, for a long time, this was seen as a very, very counterintuitive model. taking individuals, building teams from scratch, taking people without firm ideas, evaluating individuals on their behaviours rather than on their idea. All of this stuff was seen to be very counterintuitive. I think now a lot of this is becoming more status quo.

And we are saying lots and lots of investors rush to proceed as a way of getting around the crazy seed prices. We're not even preseed. We are one stage before that. To do a pre-seed deal, the company has to invest and do one stage before that. And that one stage is the really difficult bit. it is operationally incredibly intense. It's interesting to see a couple of companies now trying replicate the EF model. The bit that they reliably struggle with is, okay, you can find the talent, you can have the capital,

but how do you actually get them into teams? And there's so much, we have a very strong methodology. There's a lot of nuance in that methodology. There's a lot that you have to get right to create a dynamic where strangers turn into co-founders. And it seems to be something that others have really, really struggle to replicate. I think you also have to be in company building mode rather than AUM building mode. Yeah, a VC model does work very well for the kind of thing that we're doing. And we've used a VC model.

We used a VC model for about seven years. We're now coming out of that and going to a company balancing model again. But if you approach something like EF where you are looking to try and optimize your AUM, again, it doesn't make sense to deploy so little capital so early where it's high risk. You need to have a pretty significant fee burden to pay for all the, operational costs. If you can, you might as well try and move but market and take the seed or Series A stage. So where we see barriers, I suppose, is that ESS is a company that is creating a supply of startups that wouldn't exist otherwise. And as a company, we are willing to

upfront invest the operational capital and to take on the operational complexity to make that happen. And I think if you're trying to get into this as a VC, there's a bunch of operational crap there you just don't want to deal with. Yeah, 35,000 applicants. Just that, stat alone sounds daunting and brutal. Maybe talk a little bit, now's a good time to talk about this conversion that you've gone through. And again, just in the spirit of full disclosure, I and my firm, positive some are investors now in EF's holding company structure or corporate balance sheet driven structure, which we're really excited about. But maybe talk about the motivations for the change, what it means. What are you changing from and what

you changing two and why you did it in the first place? We've just raised $150 million onto the balance sheet rather than into a fund. We're lucky that that round was done by incredible investors and founders like yourself. The Collison brothers, the founders of Stripe came into that. Charlie Songhurst, who I know is being on invest like the best as well. Matt Mullenweig, the founder of WordPress, Tavitt Hinckris, the founder of TransferWise, Sarah Leary, the founder of Next Door. Really, it's the coming together of some of the world's best founders to support the next generation. And the reason we made this shift and why we're so excited about it is, first of all, our investors understand that what we're trying to build is a long-term talented institution.

You do that with a product. And as anyone who's listening who is a founder knows or who's been an operational role, products change. They need to be flexible. They need to adapt to different market conditions, to different customer expectations. And a fund structure is pretty rigid when you raise a business. fund, you are three, four years ahead committing to what your operational expenses will be. We were committing in our previous fund to where we did invest the capital in terms of locations.

It's pretty rigid structure. One of the things we're really excited about is we want to make EFs the best place in the world to find your co-founder at every stage of your founding career. The new structure means that we have a lot more fungibility with the capital that we have. We can decide whether we put a pound or a dollar into an investment or into growing EF, changing our product suite, experimenting with new initiatives. So I think we've been very, very lucky to have some amazing LPs that have taken a big risk on a new model over the last seven years. But I says we're very excited with this new model where we can really behave like

the company that we are rather than the VC firm and use that capital to truly delight the next generation of entrepreneurs through expanding, developing and honing the model that we have created. One of my favorite things talking to you specifically is this love of product that you have. And I feel like every time we talk, it always comes back to interesting new ideas or recent learnings of things that you've tried. One that comes to mind is that you came up with this notion of inviting EF alumni back, those that weren't currently in a company, sort of like a second go of it, if you will, like you remember what it was called.

And the success right there was quite high. So you had another way to sort of leverage the platform that you've built and the network that keeps growing and expanding to produce yet more companies. So just walk me through what your product hat feels like to wear. Like, why are you so interested in product? What are some of the ideas that you're playing with right now? One of the things I love is this feels like something that can't be a product. Turning strangers into co-founders, how can you create a structure that reliably does that?

I have to say, for the first three years of the F, it really wasn't clear that we could do that. It took us a while, quite a while to hone that. When I think about the best startups in the world create a behavior explosion, they create a new kind of behavior that didn't exist before. And then you just see the platform, the product, the startup enables an explosion of behavior that didn't exist. I think EF can do that for how startups are created. And the analogy I use is, if you look at something like online dating, match.com, what came out in 1995, still around today. But in 1995, online dating was very different from 2022. online dating.

1995 online dating was for individuals who maybe seemed to be a bit weirder. It was definitely something that was socially frowned upon. It was seen as a suboptimal way to find somebody to spend the rest of your life with. That was what you were looking for. 2022, it's become the default way to find a partner. It's become the optimal way. Why would you waste your time sitting in a bar, waiting for somebody to come on hitting you or hitting from somebody in a bar when you don't even know if they're available?

It feels like the most crazy use of time. I strongly believe that we will see the same shift happen with co-founders. Right now, finding your co-founder through a program like Entrepreneur First, it's a bit weird. Yeah, people think it's strange. And what, you couldn't find your own co-founder, you couldn't find somebody. I think what is really powerful is over the next 10 years, however long it takes the shift to happen, I believe we can get to the point where your best friend turns around to you and says, hey, we should co-founder company together. And you go, actually, I think I'm going to join

EF because I really want to find the right co-founder for me. And I want to have the opportunity to experiment with different people because I believe that's the optimal way to find a co-founder, not the alternative way to find a co-founder. If EF can be the creator and owner of this new behavior explosion where more people can find the right co-founder for them, that enables them to get to the best possible outcome, that enables more people to become co-founders, because they finally have that option. Like what happens if you don't know somebody you've been brought up with since birth who can be your co-founder who's ready to go right now and interested in the same ideas? It basically means you're out of the market being a founder. So if ESF can be the owner of

this behaviour or explosion, we can basically own that pre-seed talent investor market. I think that's super, super exciting. Now I think there's a bunch of different products that you could provide to people so that at the moment we are focusing on early career, first-time founders. But actually, finding a co-founder is something that you experience throughout your co-founding journey. I very much think that for most people who take up the founding journey, they see it as a career path. It's not that I do one company. It's this is my first company. And this is my second company. And, you know, I'm building on, there's a great book by Ali Tamasev called Superfounders, which basically looks at what are the indicators that somebody might end up being a billion dollar founder. One of them is that they've

had a reasonable success in the past. And we want to be part of our customers' founding journey, the first time round, the second time round, the third time round. And so as you were saying, we're building a bunch of products and testing a bunch of products this year to enable people to find their co-founders in different ways. So using the EF methodology, selection process, frameworks that we know work and we know succeed, but in different formats. You might not want to do a 14-week program if you've already founded a company once. A lot of the content might be irrelevant to you. So as you were mentioning, we're doing this program called reform. It's test at the moment, it's for our alumni to meet each other and experiment with co-founding teams. We've got some great

teams coming out of it. We've got one called Meta Voice that was actually two individuals from one of our previous programs that joined up with an alum who left EF six years ago, five years ago, something like that. It's a really cool product where they are building real-time on-chain voice NFTs. So if you're pseudonymous, for example, you can participate on every part of the internet, apart from vocally, because you would be displaying what your voice was. And they can generate a voice, or they have a product that generates a real-time depiction of your voice in whatever you choose your voice to be,

and that is an NFT attached to you, which is pretty cool. That company wouldn't have existed otherwise. So, yeah, I'm very excited about different ways to help create and generate companies that wouldn't exist otherwise, largely through the medium of helping people find the right co-founder for them. You started getting into it a little bit earlier

talking about the preference for cities that have strong educational ties or great university systems, what cities do you have your eye on that EF is not a participant in today? And what are the criteria by which you stack rank those cities beyond just having top universities there? One of the questions for us is, what is the right number of EFs to have? You know, what is the right number of EF locations to have? We want EF to be accessible to anyone who could be a globally important world-class founder. And there's different ways you can do that. You can do that through relocation and we've had some great success relocating individuals from a region to one of our hubs. But one of the things we're looking at the moment is what are the regions where we don't

necessarily have an easily accessible EF hub. I think there's still more that we can do in Asia. It was interesting being out in the US for a couple of months and just hearing how the view of Latin America has changed so much in the last couple of years. Latin America seemed to be the location that everyone was suddenly putting capital into, whether it be in Colombia or Brazil or Argentina. So I think there's something interesting happening there. And then it's interesting to see more noise around Africa, whether it be Nairobi, Cape Town, or a variety of different places. When we think about growing EF, there are various ways that we can think about doing that. One is we can grow geographically, but it could be that we also just grow existing sites and think about

growing our product suite. So how do we offer different products to individuals at different stages of their career that enable EF to grow, enable us to catch more value from our customers? without actually opening new sites. As an operating company, without a software product, we have to think very carefully about how we scale. It can be very easy to scale very fast, but actually so much of EF is about effectively delivering playbooks, about understanding the nuance in delivering those playbooks.

And that is pretty hard to scale. It's not an easy model to scale. One of the things that we're looking at is we've got some shorter form versions of EF that we can use to test new locations. So we're pretty excited about rolling that out over the next year or so. and using that as a way to understand where we should be going. If you could snap your fingers and have the perfect piece of software built to capture or take over some part of the EF process that exists today that's not in software,

what would it be? Well, the most powerful thing that we did in the last couple of years is building an internal data and insights team. So we actually have pretty good tooling across most of the company. the really hard bit is the human bit, and I just don't know how much you can digitise that. So we've done a bunch of experiments in the past, and we have a bunch of automations that nudge people into teams. One of the most important things with team building is having clarity about who is and who isn't

in teams. We have a really simple Slack automation that basically lets everyone know when a team gets together, when a team breaks up. That stuff is really useful. But actually, a lot of the labor-intense work that we do is, EF is a very emotional people process. And we did actually do an experiment once a couple of years ago where we tried to strip out as much for that as possible. And it didn't really work. There's only so much that you can capture from digitally inputted information, often to really

understand and assess how a co-founding team is doing. Eugenie to speak to them in person, or at least on team. We did actually have a very long conversation at one point, Matt and Matt, my co-founder and I about should EF be a software business or should it be a people business? Software can be our infrastructure. It can be our backbone, but it can't be the product. If you think back to your and Matt's now fairly long co-founding relationship, it's probably pretty important that you're encouraging others to do this and that you've done it yourself. What has been the key? And I'm curious what stands out about the earliest days? He told me to ask you about your first office and where you got the furniture and ask you about carriage driving

and some other fun things. What have been the keys to your relationship with Matt over the years, lessons that you think are portable to other co-founding teams? I mean, I feel very lucky, and I have been co-founders now for 10 years and had a pretty harmonious decade together. I think if anything, because EF is such an unusual business, the fact that we have two very chunky parts of our business, one which is very operationally complex, which I run, and one which is the investment side of the business, which Matt runs, there is so much to do within the company. And it's very easy for us to have clear ownership. I think that has made it pretty easy to have two highly ambitious, reasonably A-type personalities

working together for such a long time. I mean, the early days of EF were such a scrappy, intense time. I think we were both coming out of you. We met at McKinsey. We met our first day of working there. And when we left, I think it took us a little bit of time to shake the shackles of being a consultant. We spent a lot of the early days of EF making PowerPoints. I don't know if anyone ever read those power points or whatever happened to those. But then the biggest challenge we had in the early days is for three years, no one would fund us. So for three years, we were a not-for-profit, a registered not-for-profit. We also tried to incorporate as a charity. But Matt and I had to do everything. And fitting out of first office was haggling to try and get a free space that was

condemned that was about to be knocked down. The furniture we got from another building that was condemned, and we managed to convince Zipfan basically to give us a free membership that we'd get a free van to pick up the free furniture. And as we were shipping that furniture from old office to this new place, we managed to end up on the scene of, do you know who Robbie Williams is? He's like a massive pot star in the UK.

Yeah, sure. We managed to end up on the scene of his music video where we managed to drive right onto the set and I was driving. I'm not a very confident driver, don't love it. We just ended up having about 20 people shouting and screaming at us with Robbie Williams. You know, like, what is this?

Matt and I are very clear. on a couple of things. One is that we talk about the idea being a product of the co-founders. EF is a product of us. Neither of us have software backgrounds. EF is not a software company. And there is a cost to that. I'm sure if we spent 10 years building a different company, possibly with different people, maybe we would have created far more value. And we say this very openly to people coming through EF because there was like, EF always says, you know, find somebody with complementary skills and then you and Matt are very similar. And we are, but like, it has dictated the kind of company that we could produce. We've been very, why, I still feel

very lucky about is that 10 years in, our mission is as enduring and as exciting to me. I can't imagine doing anything else in my life that would be more exciting than helping the next generation of entrepreneurs to come through and meet their level of ambition, whatever that might be, meet their potential. The product that we're selling is genuinely life-changing. When I look at the outcomes of our alumni and what they've achieved and gone on to do and what they thought they were going to do when they, at the beginning of early stages of thinking about applying to EF, is genuinely transformed their lives. And I think I'd find it very hard to now build another startup that didn't have that same sort of monumental impact on the customer. And I think Matt and I've just very aligned

on our addiction for that and love for that. I was thinking recently about the amazing conditions in the US specifically that have allowed for so much company building. And when you really dig into them, things like property law or rule of law, consistent standards, so much of it is predictability, like lack of major uncertainty of the environment in which you're going to build. the business, some reliable things that you can count on that are outside your business, like property rights or something. What do you think are the most important, like natural, international impediments to company creation and growth? So if EF wants to effectively foster more great enduring company building all around the world, what are the impediments that maybe

you don't directly control? We're working very hard on the things you can control, and that's great. but what are the things beyond what you can control that keep you up at night or you think serve as roadblocks to the best case outcome here? Very simply, the biggest competitor that EF has is the status quo. The status quo is so strong. It's status quo of how people spend their lives, what they expect in their careers, how they think about what they want to achieve with their lives, is very, very strong. What Silicon Valley has done so brilliantly is because the culture that, there is so homogenous and so defined, if you transplant an individual there, you can very

quickly change their perspective on what the status quo of their life is going to be. It's really hard to do that in these sort of multi-industry cities that we're in, where actually most people aren't starting startups. Most people are waiting for their bonus. Most people are waiting for that promotion to get to partner a consulting firm or a bank or whatever it may be. So when we look at who rejects EF's offer, the most common reason to reject is to stay in the status quo. Now, what you could say is, well, we didn't want those people anyway. They weren't any good. Like, if they didn't want to be a founder, then they're not for us.

But I think that is too closed a mindset. It undervalues how strong status quo is. If you think about the mindset shifts that somebody has to go through, they spend the first 25 years of their life being told that life will look one way. And then suddenly EF comes in and it's like, hey, no, your job doesn't matter. It sucks being an employee. You want to have real impact in the world? Actually, you need to do this other thing. That's a very hard mindset shift for somebody to go through very quickly.

Now, we are seeing it change. If you look at somewhere like London, becoming a founder is becoming more of a aspirational, default aspirational career path. But most people are still default employed. And that is still our biggest challenge. Well, obviously, as an investor, I'm incredibly interested in what you're doing. But even if I wasn't, I'm just always been so fast. I'm fascinated talking both to you and Matt about what you've built so far, the clear success that it's shown by any measure.

Companies created investment returns in those companies and so on. And I'm really excited for what it might mean for the world in the future. I just think it's such a neat concept that is so nuanced, as you'd described, you know, when others have tried and failed where they failed as often in the area of nuance. It's been really fun spending time today, getting to know EF in a little bit more detail than when I talked to Matt about it. I really appreciate your time. I ask everybody the same traditional closing question. What is the kindest thing that anyone's ever done for you? One of my first managers in McKinsey,

I definitely had huge imposter syndrome when I first joined. And McKinsey is very good at throwing very young graduates into situations. They're definitely not qualified to do. We would be walking into meetings and she would just say, cool, you do this one. Remember, and it would absolutely terrify me. And then afterwards I remember saying to her, you know, be really great if you could just give me some time to prepare.

And she was like, no, the beauty of this is that you need to do it on the fly. And it felt horrible at the time. It was really uncomfortable, but I will forever be grateful to her because I think that ability to conquer imposter syndrome, think on your feet, forming your feet has been a vital skill for the rest of my career. Yeah, a shout out to all the managers out there

who really genuinely try and push the people that work for them to greatness. I think I'm going to steal that method. Love it. Very unique yet. I've never had that specific one before. Alice, thanks so much for your time. A real pleasure. Thanks for having you.

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