This Week in Startups - Bridging academia and job market realities with Extern’s Matt Wilkerson | E1945

Episode Date: May 9, 2024

This Week in Startups is brought to you by… ⁠Equinix. The Equinix Startup program offers a hybrid infrastructure solution for startups, including up to $100K in credits and personalized consultations and guidance from the Equinix team. Go to https://deploy.equinix.com/startups to apply today. CLA. Innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at https://www.claconnect.com/tech HubSpot. If you’re fundraising, be sure to check out the Million Dollar pitch competition from Hubspot for Startups & HubSpot Ventures. Apply now at ⁠https://www.hubspot.com/milliondollarpitch * Todays show: Extern’s Matt Wilkerson joins Jason to discuss the concept of externships and their role in bridging the gap between academic curriculum and job market reality. They delve into the demand for cybersecurity professionals (14:18), the value externships offer in career path decisions (28:43), and the impact and evolution of Extern (37:20). * Timestamps: (0:00) Extern’s Matt Wilkerson joins Jason (4:22) The concept of externships and he problem of student loans and work experience (7:04) Equinix - Join the Equinix Startup Program for up to $100K in credits and much more at https://deploy.equinix.com/startups (8:09) The Extern student experience (14:18) The demand for cybersecurity professionals and the benefits of externships (19:11) The gap between academic curriculum and job market reality (23:58) CLA - Get started with CLA's CPAs, consultants, and wealth advisors now at https://claconnect.com/tech (25:30) The value of externships in helping students figure out their career paths (33:02) HubSpot - Be sure to check out the Million Dollar pitch competition from Hubspot for Startups & HubSpot Ventures. Apply now at ⁠⁠https://www.hubspot.com/milliondollarpitch (34:17) The impact of Extern on students and the job market (46:04) Understanding customers and the evolution of Extern (52:11) The mission of Extern and advice for new founders * Mentioned on the show: https://www.hotjar.com/net-promoter-score * Subscribe to This Week in Startups on Apple: https://rb.gy/v19fcp * Follow Matt: X: https://twitter.com/mwilker LinkedIn: https://www.linkedin.com/in/mattwilkerson/ Check out: https://www.extern.com/ * Follow Jason: X: https://twitter.com/Jason LinkedIn: https://www.linkedin.com/in/jasoncalacanis * Thank you to our partners: (7:04) Equinix - Join the Equinix Startup Program for up to $100K in credits and much more at https://deploy.equinix.com/startups (23:58) CLA - Get started with CLA's CPAs, consultants, and wealth advisors now at https://claconnect.com/tech (33:02) HubSpot - Be sure to check out the Million Dollar pitch competition from Hubspot for Startups & HubSpot Ventures. Apply now at ⁠⁠https://www.hubspot.com/milliondollarpitch * Great 2023 interviews: Steve Huffman, Brian Chesky, Aaron Levie, Sophia Amoruso, Reid Hoffman, Frank Slootman, Billy McFarland * Check out Jason’s suite of newsletters: https://substack.com/@calacanis * Follow TWiST: Substack: https://twistartups.substack.com Twitter: https://twitter.com/TWiStartups YouTube: https://www.youtube.com/thisweekin Instagram: https://www.instagram.com/thisweekinstartups TikTok: https://www.tiktok.com/@thisweekinstartups * Subscribe to the Founder University Podcast: https://www.founder.university/podcast

Building products and services is a whole science to it. But you have to pick the right problem, right? And the right problem at the right time is so powerful. And all these kids or at Columbia who are at these elite schools or even, you know, they're going to, you know, their local college, they're all having the same profound experience. Well, that was an interesting four years. And here's this bill I have to hit every month for my student loan that I can never get out of and bankruptcy won't. get rid of. And what now? And that fear. And to solve this problem, right, to be the painkiller here, you know, to be the medicine, to be the solution, it's just so profound,

it's so important. What you're doing is very important. This week in startups is brought to you by Equinix. The Equinix startup program offers a hybrid infrastructure solution for startups, including up to 100K in credits and personalized consultations and guidance from the Equinex team. Go to Equinix Startups.com to apply today. CLA Innovation takes balance. CLA's CPAs, consultants, and wealth advisors can help you get from startup to where you want to end up. Get started now at cLA connect.com slash tech. And HubSpot.

If you're fundraising, be sure to check out the million dollar pitch competition from HubSpot for startups and HubSpot Ventures. Apply now at HubSpot.com slash million dollar pitch. All right, everybody, welcome back to this week in startup. Sorry, I got a raspy voice. I was at the Knicks game for that Heartbreaker Game 5 at Madison Square Garden. I went into overtime. But good news, I got to go to game four at the 76ers when we had an incredible epic win in Philly. I'm still going on my original Nixon 6, and yeah, I'm not going to be going to game 6.

I got to get back to my family and my business. And I am in the business of investing in great founders, building important companies. And one of the most important things for young people today is to be able to get work experience. We know that getting a degree means less and less to elite employers. So everybody needs to have work experience. Well, how do you get work experience? There's a classic internship. but internships are a burden for employers full time.

The person is there for 10 weeks. You train them up. By the time they get to week 7, 8, 9, 10, they might actually do something useful from your company. And then what happens? They leave. Maybe they go to a competitor. Maybe they take your competitive intelligence and go to a competitor.

It's a pain in the ass. That's why I don't do them except for my friend's kids so I can build up favors in the favor bank from when my daughters need an internship. I'm not kidding. That's how it works, folks. It's an internal system where CEOs, venture capitalists, and elite people use these internships and trade them with each other. I'm just telling you the honest truth. I always call balls and strikes here.

What happens? Yeah, then if you don't got connections, like I didn't when I was an up-and-comer, I didn't get the Condé-Dane-assed internship. I had to start my magazine on my own, Silicon Island Reporter, Cyber Server, shout out my guy, Brian Alvey. Putting all that aside, what if there was a better way? Well, today we're going to hear about externships, and I'm really excited because as an investor, we run this accelerator. We had this company Paragon 1. It was making progress, figuring out product market fit, and Matt Wilkerson, the founder who came to our accelerator during COVID in 2020. He figured it out.

And then we get the updates. Magical when a founder sends you an update who went to your accelerator, and they've just crushed it. We're going to hear all about externships right now from Matt. Matt, welcome to this week in startups. Thanks for having me, Jason. Wonderful having you go through the program. And even more wonderful to see exceptional performance, you know, when you send these updates. And our team is extremely, as a fund, we're extremely focused on, hey, we know 80% of the startups from an accelerator, whether it's Y Combinator, Techstarz, or launch accelerator, or a pre-accelerler.

or later are like our founder university. We know, you know, most of those experiments go to zero, ultimately, 80 or 90 percent. And then some survive. The little turtles make it to the ocean and become wise and they survive. And you are one of those great wise founders who's figured out a great business. Tell us about externships and your business. What do you do? Who are your customers? How do you make money? Thanks, Jason. Well, as you've touched on students, they're spending 100 to $200,000 for four-year degree. They come out. If you go on LinkedIn today, you look for an entry-level job. What do you see? 40%, just about 40% ask for three or more years of work experience. So you're an entry-level higher. You're not supposed to have work experience. They're asking for

work experience. And internships are how many college students have, you know, address this problem to date, but the fundamental problem is there's not enough good internships. So the demand for good internships outstrips supplied. And it's really, I think this is one of the most broken marketplaces that hasn't been solved. If you think about work experience as a market. And as you mentioned, internships are difficult to scale. They favor students who already have social status or social capital. And they're time consuming for employers to run. So to fix this problem, we created essentially a new form of work experience. It's called the remote externship, can talk about how that's different from an internship, but on the face of it, it's a short

online project-based work experience, and instead of having a company just work with one to two interns, they can now work with 100 to 200 externs for less time than working with those innings. And we've now served over 25,000 students with multi-week externships, but 40% of those have come this year alone. So we've enrolled over 10,000 here to be. And who is your client? How do you make money? Yeah. So to date, we've mainly worked with large corporates.

So as a company, you can launch a externship for free. It's cookie cutter. It's more of a constrained experience. But we also have large corporates like Home Depot, National Geographic, PWC, AT&T, and many others who pay for a premium enterprise experience. So about $100,000 kind of starting contract value comes out to about $2,000 per extern. And for that, we will take care of everything, recruiting, training, onboarding, supporting the students, and also giving them this more custom targeted approach to students they want to engage with.

Okay, cloud computing has revolutionized startups over the past decade. You know that. But the reality is, hey, a fully cloud-based solution is not right for every startup. Sometimes a hybrid solution is your answer. Like if you're working with sensitive data, that can't be trusted to cloud, or if you need to connect to multiple cloud providers at once, or maybe you just want a much more cost-effective solution.

In that case, you need to check out Equinix. Equinix metal will give you direct access to physical servers, but you still get all the benefits of the cloud, so no need to rack and stack your own servers. No, Equinix provides on-demand infrastructure in over 25 major cities. And here's the best part. They have an amazing startup program for you. The Equinix startup program offers personalized consultations and guidance from the Equinix team.

And of course, you'll get up to $100,000 in startup credits. So here's what I want you to do. Head to Equinix startups.com to apply. And when you apply, James from Equinix is going to reach out to you directly. That's Equinix Startups.com to apply, EQ-U-I-N-I-X startups.com. Okay. So you have some pretty great clients listed on your website, Meta, AT&T, HSBC, the Home Depot, Pfizer, Hugo Boss. How do they run a program?

If you can pick one that you've done a case study on that you're allowed to talk about, I know people consider you an arms dealer. You're like a secret weapon for them to beat their competitor. So I'm not sure, you know, I see some quotes on the client page from AT&T and other folks. Can you run us through how one of these high-profile companies uses your software? And maybe if you could show the landing page or what it is here, for those of you who are not watching, we will sportscast it, which means we'll describe the product demo as we do it. So don't fear.

But if you do, and you're so inclined to go to YouTube this week in startups, search for the channel and subscribe, hit the bell to get alerts, and you can listen to this. And man, you got a great domain name, Extern.com, yeah? Yeah, it was, it took a number of months to secure it. it, but definitely worthwhile. Let me start off by showing you the student experience. That's going to merge in a company experience. Yeah, the student is in a marketplace.

You've got supply. You've got demand. Exactly. Demand side, in this case, is the extern, the student, and supply side is the externship of the company. Am I correct? Exactly. That's really how we think about it.

Even though we today monetize with the company and the future where we want to go is actually building this marketplace model. And so there's a free version on both sides of the marketplace to get that supply and liquidity. But then there's a kind of a premium tier on both sides. So you could see a student saying, I will pay some amount of money to have an externship at this company eventually? Well, actually, a big part of our mission is, as you can see on our website, professional experience anytime, anywhere. And that's for anyone. So we actually want to keep externships free for anyone, where anyone has a shot to do it.

But because the model's evolving, we're running some experiments right now where we might allow students to customize their experience or get additional support in ways that still keep it open and accessible for everyone. But that might have a small fee associated with it to have them have skin in the game? Similar to Duolingo, Coursera, where you can do the free version, but you might pay to say a verified experience or get additional. support. We're running some experiments in that realm because it's still really important for us that this is accessible to anyone. We work with a lot of underserved populations and we just in your low-income background students that didn't go to, again, the fancy school. They don't have that network. As I said in my introduction here, you know, me growing up as a kid from Brooklyn, my dad, a bartender, my mom, a nurse, and my dad obviously a bar owner as well. I don't

sell him short. He owned a bar as well. Beards, shout out to Beards and Beards Cafe. The challenge there is, I didn't know anybody. I didn't even know how to get an intern. I didn't know who Condé Nass was. And then I met all these rich kids and their parents knew somebody at Condé Nass. I wanted to be in the magazine business. They were doing internships at Vogue and Vanity Fair. And I had no choice but to do my own magazines as zines. Turned out to be better because it was, you know, it wasn't pretty, but it was gritty. And, you know, it was better for me, but most kids may not have that. So you'd think hundreds of dollars is the accessibility point.

If you did an experiment like this, I could see, like, if I was a student, I would pay 500 bucks or 50 bucks a month for a service like you're providing, if it helped with a little bit of coaching or whatever. That's compared to the 50 to 250K they go in debt is a pit. Yeah, I mean, look, if we wanted to, and there are, you know, if we wanted to just charge for that access, of course, you know, where we could, we'd be flooded still,

but I think something in that kind of $100 range, you know, maybe $100 to $200, even as low as 50, I think we'll probably have different skews over time, right? You're charging $100 for everybody? Yeah, that's kind of the zone where we're coming in on. It's so affordable. It's literally, you know, if you were driving an Uber, three hours of work,

if you were working at a fast food restaurant in New York City at the minimum is $20 or $25. Now, it's about three or four hours of work. If you can't do that, you're not serious. You know, and so I think skin in the game is so important. And it's not like payola. It's just to have a membership and get verified, right? And make sure you have good people in the system.

Yeah, and that's a big thing as we- I really do like that idea of like a base payment. Well, as we grow, you know, again, we got 10,000 extra in year to date. by the end of this year, we want to be in kind of the 50, 60,000 number of externships, given the rate we're going. We, you know, at some point, we want to be able to distinguish the students for the employers. Yes. And so that verification.

Serious level, right? How serious they take it. Like maybe even doing an onboarding where, you know, for $100, their accounts verified, we know it's a real person. But for $500, you'd do an interview with somebody on your. site who helps them make a professional video where they answer seven questions and they just get a one hour or a half hour onboarding mentoring session, you know, like superhuman does when you go use their software. And for 500 bucks, they get some value out of that. And plus the employers know,

hey, these are the, you know, verified accounts. And then these are the verified plus accounts where, you know, we did an interview. But let's, let's see the portal. Yeah. I think it's really great to show it. Sure. So if you're a student today, you can come to extern.com. You can go to explore externships and you'll see the current externships that we have. So we work with startups, medium companies, large Fortune 500s. And a lot of the categories of work we've started in have been marketing, BD, product management, data analytics, finance and consulting. Later this year, I want us to launch cybersecurity.

That's an area I'm really excited about. There's a lot of demand, obviously, for cybersecurity professionals. but we actually are working with some industry experts here who have said, the reason people aren't getting jobs in cybersecurity after getting a degree or a certificate program is because they don't have work experience. And nobody wants to give them that chance that they don't have the experience yet. So yeah, so you go to Xtern.com, you then click on a program that you like. So let's say I'm actually going to switch here.

That was interesting. You could pick a company like Snap or AT&T or you could pick more. marketing or development or whatever. That's kind of interesting. So you can pick what you want to do as a career or you can just pick a company that you have an affinity for. I love that. Yeah.

And, you know, right now it's an application process. So we accept today only about 10% of the application. So the 25,000, we've had about a quarter million applications of people that want to apply. Now, when you apply, we don't look at school, GPA. We just look for indicators of, are you, do you have a curiosity and determination

to finish the externship. There's a little video interview that we do today. And then once you get accepted, you onboard to our platform, we make sure we onboard, we educate you on like, what is this experience going to be like? Because it is a little bit different

from an internship. How is it different? Pause the video for a second. Let's pause on that question. Internships, you show up at an office, you do your 10 weeks, you get out. Externship is something different going on here. What is going on?

That's different. Well, the first thing is, from the student's perspective, it's just more accessible, right? You know, you don't start from home remote. Exactly. And it's more flexible. So I can do, we run externships year-round. So it's not just, I got to wait for the summer. I got to go to a certain city.

There's a lot of friction with that. It's asynchronous and it's remote. Changes everything compared to an internship. It's remote. We run them year-round, except we try to avoid, you know, student holidays and federal holidays. And then it is asynchronous. So there is a live component where you engage with the companies in a Zoom session like this. It's kind of like they're doing a guest lecture.

But then outside of that, you're doing the work in your own time. When you, you know, evenings, weekends, you know, students are busy. They might have another job or internship. And then you submit your work when it makes sense. There's some collaboration with students as well, you know, online as well as live, but you're submitting your own work. And the training component of it is, you know, today what we do is, in the example I'm going to go through is with HP's corporate internship, sorry, corporate venture capital program.

And we've worked with them for about three and a half years now to help students go through deal sourcing externships. So they'll, so we'll break down. all the components of, okay, well, first of all, like, what is venture capital and how does it work and how should you be analyzing companies? And they may have certain sectors that they want to do market mapping for. So we'll break down, all right, how do you actually go into research, how do you analyze a market, how do you analyze the company, how do you analyze the problem they're solving, the solution, the team, all those pieces. So for this example, I was a VC associate for three years, so I did the first version of it. Oh, yeah, where you're an associate

to be at TCV, technology crossover ventures, big growth equity firm now. But I, but we bring in, since then, we brought in experts. So for all of our programs, we work with industry experts to help us work on the curriculum and not just build curriculum for curriculum safe. Our requirement is we don't want to build any training unless it's directly relevant to doing the work. So, this is a super point that I want to pause on. Because, you know, when this week in startups, the podcast we're on right now is at its best, is when the founder and I are having a really good dialogue about what the important components

of the business and why those create product market fit and alignment. And I just want to pause here on product market fit. I think what you've done here is brilliant. When you're in school, you learn things that are academic and, hey, maybe a little history, maybe a little English, that's great. You become a well-rounded liberal arts person. And then you might have some computer courses or marketing courses, but we all know that the gap between what you're learning in a marketing, PR, growth, analysis class,

even at the elite universities, is some number of years back from the market, right? And the market moves very quickly. So what you learned as an associate at that venture firm and what they're teaching, even at an elite, Stanford or Harvard or Columbia, Columbia used to be elite, I don't know what's going on there now. But at these elite universities, quote unquote, elite universities. I don't know. What do you think the delay is between what they're teaching and how much the market has changed? Because things are very dynamic in the world right now. AI, distributed, whatever. Give me your best estimate as the distance between curriculum and reality, classic university, even an elite one, and actually what people are doing at the job.

look, there's obviously some exceptions when you get into certain programs and you talk to certain professors and deans, but in general, on average, it's way apart. And you just see this. Give me a number of years, man. Matt, give me a number of years in your estimate because you're doing this everything. I think that it's, you know, it's on average is probably five years old because five years. Because you, well, first of all, the curriculum, it, it, curriculum is sort of dictated by these communities. committees, right? That are, you know, they try to absorb certain things, but obviously you have textbooks, you have homegrown curriculum. And it just to steer the ship at these large

institutions takes a really, really long. Right? You've got to go through academic sense. Am I right? Is there an academic senate? Yeah, there's a whole academic senate process. Now, we've, we've had, and by the way, there's some early adopter universities out there. We've had some early conversations with how do we integrate externships into their curriculum. And even the ones that want to do it have said, well, it's going to take a year just to like get through the Senate process. And we said, you know what? We're going to come back to that. It's important. We do want to get externships integrated. But first and foremost, we're going to build this marketplace out. I'll just get it to the students. You don't need

the universities. They're going to slow everything down. They're going to muck everything up. Just route around them. Go direct. Exactly. That's what we go straight to the students. We don't even market through universities. No, it's a waste of time. You know, these guidance counselors are so disconnected from reality in nine out of ten cases. We've just established on average five-year gap. What you're doing is just perfect. But now I'm thinking, even if you hire an expert, like if you came to me and said,

hey, Jay Gowl, you do investing for a living, can you help us with the curriculum? Yeah, I can really help. But then, you know, one venture firm might have a different philosophy from another. So, you know, so if it's Goldman Sachs or if it was, you know, some. hedge fund, it was Tiger Global, and they wanted to do this, they might say, you know what, Jake House method, early stage, mine's late stage. So when you make that perfect curriculum, then what you're telling me is you then go to the Goldman Sachs, the HSBC, the SNAP, and you say, hey, how does this vibe with your system?

Is that right? Yeah. So it's a little bit iterative, right? So we, you know, we work with companies right now. We understand what are their needs. But what we're finding is for certain categories of work, the needs are. the needs are consistent. So let's just take, for example,

even within deal sourcing, there might be a component of, now, not all of our, some of our VC externships have a component where they talk to the startup, some don't. But if you're going to go talk to a startup,

that's customer discovery. You've got to be really good at running a customer discovery interview. Turns out that skill set can be applied to a lot of places. Product management, obviously, if you're a startup, you need to do customer discovery well, should start with the founder,

but at some point, you might need to, talk to hundreds of customers or small businesses. While time is money, you've got to move quickly. So how could I leverage a team of students to learn about how to do customer discovery, right? It's important for them to learn if they are interested in product and build a process for them. And this, by the way, is where LLMs are perfect.

So this is where we're going, actually, is we're running experiments around, you know, Today, we have a team supporting students and helping to answer questions. We promote students to TA's teaching assistant, so they help other students. But the next step is if we're going to go from 100% or sorry, 10% acceptance today, we want to accept 100%. And what that really means is enroll. Enroll 100% to start the journey. We need to support those students.

And what better way is this example you mentioned where you might have different perspectives on how to do deal sourcing from different firms? those experts we can bring together, you build a prompt around, hey, here's how to do jobs to be done for customer discovery. Here's how to give them some examples. So funny, you mentioned that. I just had Bob from the rework group with the jobs to be done framework on the pod. So you guys bring that up as well. All right, everybody, welcome back to the program.

Stephen Estes is with us again. He's a principal at CLA, professional services provider. They specialize in CPA, tax consulting, and wealth advisory. His areas of expertise lie in VC-backed startups, VC funds, high-growth startups with complex tax issues in multi-state and international filings. Welcome back to the program, Stephen. Hey, thanks, Jason. Appreciate it. All right. Give us an overview of how CLA works with startups.

What kinds of companies do you like to work with? Is there like a specific zone where you like to engage with startups? One of the great things about CLA is that we're nimble enough to work with two startups, right? So whether that's a Ced round or Series A company, but then on the flip side, we're large enough. that we really have the depth of expertise that's needed to help companies when they become multinational entities with a lot of tax complexity or audited financial statements, consolidated corporations, M&A, due diligence, whatever it is, right? So we can truly take them from incubator all the way to IPO and then really kind of come

alongside some of the founders with our wealth management platform also after the exit. So I think CLA is really unique in that regard. There's not a lot of firms out in the U.S. that can really operate with that sort of breadth and scale at helping companies at early of stage and also being able to help partner with them as they become really large and complex. All right. You need a trusted advisor. Tax is accounting.

You don't want to play games of this stuff. Get it right. Get a great partner like CLA. Go to CLA connect.com slash tech and let them know. Your boy, J. Cal sent you once again, CLA connect.com slash tech. Now, I'm looking at this. Again, when this weekend startups is at the best, we're talking about the business.

We're doing a little brainstorming and doing a little ping pong back and forth here, maybe a little pickable. I'm wondering, hey, you put all this work into creating how to do discovery, product discovery, you have this one on how to source. Could we not take that? I'm using the word we because we're investors in the company and we are on the journey together. That's how our firm launch looks at it. So we, could we not take that module and say to people, we're going to teach this module and we've got a teacher associated with it. This module is, you know, $500. And there's a collection of modules here.

And together, they're $3,000. There's 10 modules. So you can take one for 500. You can do the collection for $3,000. And as you do those, we put these badges on your page. And there's a teacher who's going to check your work. And we do them rolling. So, you know, like, sourcing is going to happen, you know, the first week of the month.

This one's going to be saying with. And then we pay those teachers. And so I don't have to wait to be at a company. and just grab that scale and put it on my page, put it on my LinkedIn, and get a certificate. What do you think of that idea? That must have come up. Oh, it's come up.

We've definitely talked about all sorts of ideas around monetization. I think that, so I need to answer that in two ways. The first is we want to go to this model where, again, mission, 100% of students can give it a shot. Because you might have a student that doesn't have that $500, but they're super talented, they're super hungry, they're super motivated. We want to give those students a chance to just plow through, prove that they've got

what it takes and keep leveling up, keep getting verified. Because if we go to now a Goldman Sachs or Morgan Stanley, you know, in the finance world or we want to go to, let's say a crowd strike, you know, when we're talking about doing a cybersecurity externship, they're going to want to know, right, who are just the genuinely like great students and talent, not based on what school they're. went to, but hey, maybe they did five, six, seven extranhips now in a short, way shorter amount of time. They're optimizing for most motivated.

They, yes. And not, and skill. So this combination of the skill plus the grip. Yes. Now, this is something that we're shifting. Like the mindset traditionally is, well, just go after the top 20 schools, right? We're saying, no, no, no, no, no. This is the new way is look at who, first of all, we've got to, we're bringing

this kind of training and experiential aspect of students. They graduate. They go to work for a year. Then they're like, ah, this isn't what I wanted to do. Now I'm going to leave. And companies are like, oh, everyone's not sticking around. Well, because they didn't have the chance to figure out what they really want to do. Got it.

And so we're bringing that forward while you're in college do eight externships. You have a killer resume. And you actually know what you probably want to do because maybe the first four were just test runs of, okay, not what I thought it was going to be like. Now you've built this verified skill set with a real work experience, not a simulation, not a course, because employees have been engaged here. And now when you apply to a job, if I'm in a recruiter, I look at this and I say, ah, you've got verified work experience through Extern, who I trust, because they're actually

monitoring and you're getting structured training. Now I have more faith to bring you in when I would have never caught you before. Got it. Love it. Genius. And we can still, again, there's still a revenue model on top of that. But what are these? What is a great candidate worth to your elite employers? You know, the top 20% of employers, if they were to look and say, hey, you brought me somebody for, you know, had done these modules.

You know, in the venture private equity, you know, investing space. You brought me these people in cybersecurity. Those are really well-paying jobs. It was a six-figure jobs out of the gate. So for those people, if you bring somebody who does get employed, what is that worth in a dollar amount to that employer? Well, we know that if you look at an internship, which does translate to a full-time hire, we know that it costs anywhere from four to ten grand to support. On the upper end is where you're talking about software engineers. and then for a full-time hire,

just to hire them, the recruiting costs can be basically the same amount. Like if you were skipping the internship, you go, it's going to be in close, you know, close, you know, 5 to 10K, call it, depending on the company in the field. That's what to say, it's got to be 10K. If you fully bake it with the attention it takes from the company

to do the work that you're doing. If you're adding that in, so this is why the internship is better, because when we look at the internship costs, it's the cost to recruit. which is what I was talking about for full-time, but for internship, it's cost to recruit and then costs for an employer or employee to support the student. So when you bake that implicit cost in, yeah, it's easily 10K,

some could even be more than that. So, but, you know, we've, and even on that point, you know, we spent a lot of time exploring how do we sell into large recruiting budgets and HR budgets? Because our early customers, the big corporates we work, with the budgets have come from more kind of a good, recruiting adjacent budgets, employer branding, corporate social responsibility, and they want to run maybe a pre-internship

program, for instance. But the typical company we went after, we would have deals. I mean, I would cold email CEOs at Fortune 500s. I cold email Jamie Diamond, Michael Dell. I don't know if they read the email, but their team followed up. We would get on phone calls. and ultimately, a managing director would say, we want to do this. We've got budget, we're going to do this, but HR would pause it or block it. And it was happening enough where I thought, why is this keep happening? And I talked to some HR experts and I got some back channeling that said,

when they hear that we do all this work, they hear that we're kind of taking a chunk of their kind of thiefdom away. Got it. Okay. So that's political and you got to route around them and you got to make them advocates because, yeah, you're taking their five to them. But that's okay. You know, it's like arms dealing. We'll get there. We'll get there. It'll be, I think when we build the marketplace eventually, we'll get big enough, you will have to recruit on extern because we'll have the best talent that's been verified. I mean, having a profile page for each person, you got to get the namespace nice and tight so I can be extern.com slash Jason Calacanus. You got profile pages for these folks? No. For the students? Yeah. Not yet, but that's definitely on our road map.

When we get there, you can showcase. It's number one. If you have a paid account, you have the $100 account, you get to make a page, extern.com slash your name, and it can't be slash a slash your name. It's got to be extern. It's got to be extern. com slash so they can remember it and send it. That becomes a thing, and you tell people you put that in your bio,

you put it on your LinkedIn page. You still have a LinkedIn page. It just has all your badges, your skills, etc. I'm so excited about your business. All right, calling all seed stage and Series A startups. You've been working so hard, tirelessly, and you've locked in the perfect pitch. You're pumped and ready to raise your next round.

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Apply now at HubSpot.com slash million dollar pitch. That's HubSpot.com slash million dollar pitch. How does a company deploy this? What does it cost for them, ballpark, to get involved, to create a course? give me the current pricing because there's a lot of big companies who listen and I know Michael Dell I could forward an email onto him and just check in with him on this but the first thing they're going to ask is how much and how do you charge is it like a platform fee or is it per externship that's created with the curriculum this has got to be at least 50, 100K right,

to get up and running because you can't do this at a quality level I think for less than minimum of 50k I would think a minimum of 100k but it pays for itself after five people come join the company. Yeah, so we do have this kind of base version that's free, but it's very constrained, it's very restricted. And the goal of that is if you meet certain requirements of jobs that we want to see on the platform, we want to bring you in to build that market liquidity. But if you want to target a certain group of students, you want to give them more support, you want to kind of this additional custom experience that most big enterprises want, yeah, it's basically about 100 grand to get going.

And that's because we want to bring a big enough cohort of students in. There's some startup cost. But for the company, all that it takes is we just need, step one is give us some goals for a project. You don't even have to have it fully flesh out. Most people, they don't have the time to do that. We'll do that. Yeah, you got to do all that.

That's the whole point here, Matt. It's like they just want it done. And only got to do is find one champion in one important vertical, cybersecurity. comes to mind as like those people are rare, you know, like elite developers in a certain vertical rare. And so once you get the rare thing, like, and big impact players, man, it just, yeah, I think if the salary is over 100K, that's where you got to focus. Yeah, we're focused on where, you know, one, given where AI and generative AR are going,

you know, what skill sets do you need to have for that future? But also, what are the skill sets that generative AI is not going to replace? and how do we double down on making sure you're really good at that? For instance, students learn in college, I got to write 20-page essays and just I've got to fill up space with words to make the professor happy. And then they show up on an externship and it's like, you've done all this work. Now the top students have to synthesize that in three minutes. And that's new.

I mean, that's new for most people, but especially students to really think about how do I synthesize how I'm communicating? So, yeah, it's both the kind of the technical hard skills and soft skills. You know, I just think like when I hear your business and you're in the thick of it, I almost like to open the aperture up a bit. Because you're in the weeds. You're standing right next to the elephant, so you see a big gray wall. And I always try to get founder to step back 10 steps and then see what you see.

You may see the trunk and the whole picture of like an elephant or maybe a herd of elephant. Very different, right? when you're looking at it from here. Oh, yeah. For people who are watching. I'm showing me, I'm showing like a six by six inch piece of the elephant. So let's step back a second. From first principles, what is extern.com actually doing for the student?

What is it actually doing? I want to hear you answer that. It's taking that despair away of I've sent out 50 job applications or internship applications. my friends are getting internships. I know I need to get something. My parents are hounding me. And I'm not hearing anything back. Okay.

I want to pause right there. This is so important. You've identified because you talk to these customers, right? The students are your customers. Ultimately, they have fear. This is very profound. And so everything, that's one group, they have fear. And the fear is manifest.

from their parents' pressure. And that parent pressure is because they want the best for their kids and they want their kids to be safe. And they have parents are part of this equation. What an incredible discovery we just made in having a really first principle discussion. I'm trying to teach a lot of founders in our portfolio about thinking from first principles and stepping back from the gray wall and seeing the elephant and then seeing the herd and then seeing the serengette. So now we pause for a second.

The parent has a fear for their child. being secure in the world, in an ever-changing world, a dynamic world, and the student has a fear, and they have peers, and they have peer pressure. So there's anxiety, there's fear, there might even be shame, confusion. And what this does is our solution at Xterin.com, our solution, lowers anxiety and gives them a plan. And it helps them have a strategy. And, you know, if you want to reduce anxiety, if you want to reduce fear, the first thing you must do is define reality. Great leaders define reality. In this case, a parent might be a leader, or you might be a leader, an educator might be a leader. The reality is the market is changing. The reality is there's

competition in the market, not just from the students on your left and right, but students around the world. Low-paid workers in Manila can, or, you know, people living in Canada, Portugal, lower cost of living. They're competing for these jobs because there's a lot of remote jobs. So once we define that reality, and that you overpaid, the other reality, you overpaid for your education. Right. And you've got a student loan. $200,000. And it does not get you the job. You made a mistake and it's broken. Okay, so now we've defined a very scary reality. But if you define reality, and it's just such an important thing for people to do in their lives and for founders understand, and I'm taking this from your profound insight of fear. Just so well done, Matt. If we

market this as the world's changing. What you did in terms of getting an education does not get you a job. It used to. It doesn't anymore. Let's just take that as table stakes in reality. So then how do people select to give a job to somebody and make them safe in the world? They do it based on their skill. And the skills are ever-changing. They're dynamic, but the good news is they're learnable. And they're actually easy to learn if you come to Xtern.com. We've defined this ideal customer profile, and the parents are part of this.

So now, if we were to manifest this into a landing page, it would be a picture of two parents sitting with their kid and just a little blurb. We spent $200,000 on this degree. but we still don't have a job. What do we do? Now, imagine how profound that messaging is, right? And then imagine, I'm a parent, I'm a parent, I have three daughters. I see that ad.

I'm like, you know what? Extern.com's right. And this is really first principles-wise, I think you nailed it. What's the second reason your customers tell you students that they've had a great experience and what your product did for them? What's a, is there another cohort? And we're trying to find here in this dialogue, Matt, the constellation of reasons. Because what we just did is a constellation of fear, anxiety, confusion, the parent, the student, everything.

And give me another constellation in your mind of a, of a situation and a collection of circumstances. Yeah, as I do that, I'm actually just going to share, you know, on LinkedIn, we don't ask students to do this. But they, you know, when they're done, we just have so many raving fans. Some of them become ambassadors and they want to share. Because what we've done for them is we've now given them a pathway and a jumpstart. We've solved this what I call the experience paradox. You need experience to get experience. And so now they have a story.

They have confidence. You know, it's one thing to, yes, having this experience on your resume, you get, you know, interest from employers. But the other thing people don't realize is the confidence, being able to go into an interview, speak confidently about a real work experience that you had, that changes the game. So I think confidence. This is the moment in time on completion. This is a different moment in time. So contextual reasons, when we're thinking about building startups, I want everybody to understand when you're building a startup, your customers have different life moments. You know, if you're looking for a mate versus having cohabitated with your mate to having had a child or a dog first,

then a child, and then have the child with school. These are all different moments in your life. So this is a different moment. This is, I've completed an Xtern.com ship. And here I am. And now I've gone from fear to confidence. This is super profound. What happens next in that moment of confidence is they share it.

Why are they sharing it? It's because they're proud. And it's because they want the world to know that they're available for work with the skill, I think. Am I right? Is that why they're sharing it? Well, there's that. And then on the ambassador side, they want to be leaders in their student community. They grab this opportunity and they know that as an ambassador, they could potentially bring other friends in.

Okay. So this is super profound. I have confidence. I have a skill. And I want to be a leader. I want to be a leader. And I want to be the top of my class. And there's something in this competition with peers that came up in both situations.

Did you notice that, Matt? Yes. And we had this dialogue. In the first one, there was a profound moment of my friends are getting jobs. I'm not. And in this one, I'm getting skills. You guys don't have them. I can be the person to introduce you to this.

I'm the vanguard. I am in the... the bell curve of adoption crossing the chasm style. I'm the vanguard. I am the, what are they call those users in the Clayton Christensen, the early adopters, basically. I'm an early adopter.

I'm a vanguard. I'm a leader. So this is super profound. Your peers in all of this really do matter. One out of fear and shame, and then one out of pride and competition perhaps or leadership. And so that's a different marketing. I think a different landing page.

If we just, I think in landing pages sometimes or I think in TikTok ads. If we just think in two different shorts and TikTok ads, one of them is the parents discussing this with the student and the fear. Other TikTok ad

or short ad, short YouTube video, whatever it is, landing page is, hey, I added a skill and you can too. And when I added that skill, I put it on my LinkedIn

and I got three job offers, pride. maybe a little bit of showing off being part of the vanguard, being an early adopter, being a leader. Really, two different contexts, right? And this is like, you know, part of the jobs to be done, customer discovery framework, you know, that we all talk about at the accelerator and found a university.

Actually, when you went to our accelerator, I didn't have as much focus on this, had the focus very much on fundraising. And I've since added this because the people who didn't clear market didn't understand what we just did. I just want to pause here and just, if you're a founder, get your team together and your co-founders and just watch what Matt and I just did. I had a first principal discussion about what this product is actually doing through the eyes of the customers and people being impacted. And there are five more we could do because there are five other contacts.

Now, the first one might be 60% of the population. The second one might be 20. And then there might be a long tail of contextual reasons, timing, etc. But, you know, this is what makes me super confident in you as a founder, Matt, is that you understand this so deeply. When I ask founders these questions, sometimes they answer a buzzwords, and they talk about their competitors, and they talk about fundraising, and they talk about nonsense and 30 under 30. It's all about understanding of customers, isn't it? It is. And I've been focused on these customers, users, the student pain point for years.

actually three of our leadership team members also. Prior to this, we're working on apprenticeships, job matching. Paragon 1, which was the kind of precursor to extern. We were trying to solve this problem by career coaching. We thought, okay, well, how do you help someone get an internship or a job? Well, career coaching. Let's make that more on-demand, match you with industry professionals. But what I learned there was coaching is a vitamin for a student. It's not the painkiller. because they kept telling us, you know, the coaching is great, but I'm still not quite getting the interviews because my resume doesn't have anything on it or I go into an interview and I don't anything to talk about. And I thought, okay, what if that's it? I mean, how do we just give them

the internship? How do we make that the product? Yeah. So brilliant, Matt. So happy for you and the team over there. What's next for the company? And how can people become involved? Are you hire and any thing here that would be helpful for you. I know you've got too many customers in some ways, so you're dealing with a little bit too much supply side of my understanding. Yeah, so on the, well, starting on the student side, the big goal is by the end of this year, we want to move the product to a place where we can go from 10% acceptance

to 100% enrollment, and then you can start going through Extern Academy, I mean, you can talk to an AI extern career advisor that can match you, and then you can start just doing externships and leveling up. So that's like the big product focus. On the company side, we do have a wait list of companies, obviously for the free version. And so we're being a little selective there, but once we get later in the year, we're going to ramp that back up again on the supply side. We're not making too many hires right now.

We're continuing to try to just stay pretty lean. and we have enough revenue coming in from the enterprise portion right now. So it's really going after this marketplace model, and that's the main focus. So you need to, you need time to build this product, and it's basically what I'm hearing as a founder,

and you need cycles to do that. Yes, but also support the growth, because we enrolled, we had 160% quarter-per-quarter growth in externs we enrolled in Q1, and we're on track to double that number. So supply of students, not a problem.

Economy is a little bit struggling. There's been a bunch of layoffs. So that makes sense to me. But supporting them, yeah. Yeah, because you don't want to take them in here and have them have a bad experience and then churn or become a low net promoter support. You don't want to tractors. We have a 71 net promoter score of students and 90 with companies.

Yeah. And so this is important to measure. And this is another important thing for people listening to this week in startups. If you're going to be a founder and you really want to grow a company, understanding how you're perceived and accepting that. reality is critically important. That gold standard for doing that is something called net promoter score. We'll put a link to it in the show notes, which is super critical.

How have things changed? I'll end on this. How have things changed since you started the company in terms of operating a company, the growth techniques and everything? Because this has been a couple of year journey here. And to how the game on the field has changed in 2024 versus what year to just, I know you went to the, you went to our accelerator in 2020, been super capital efficient, and the company existed before that.

So you've been at this for a number of years. What's changed as a founder in your mind? If you give advice to the young founders, first-time founders listening here, what really matters today and what's changed over the last five or six years? I think that what I've just been learning more and more, and obviously I started by solving this problem of how do you get more work experience for students, is just picking a really hard problem. that at first, picking a really hard problem and then never stop iterate, because I think

if you really break it down, we've done a ton of iterations. Yeah, a lot of pivots. Including a hard, yeah, a super hard pivot and then a lot of little mini pivots. And if you're focused on a problem that, that, you know, as we talked about, causes enough despair when it's not solved, that's hard enough, you, like that, those are the problems that are worth solving. I think it's what's led us to also build and we have an incredible mission-driven team

that has enabled us to get this far. And so I think just, you know, what's changed is there's just more noise, right? With AI, you know, it's easy to launch a startup. It's easy to get something going. But are you working on a problem that's deep, hard enough, that's transformative enough to really matter?

And that's kind of my, that's why I keep doing what I'm doing. Yeah. Well, Matt, well done. It's great to be in business with you. Hopefully, we've been helpful to you. And if I can ever be helpful to you in the future, you have my phone number, I think. If you don't, if they're getting it to you right now. When we met, I mean, we were pivoting, but we were running on fumes.

So we were, you know, we were at that time, we were down to like three people. We had, you know, the original idea hadn't been working, but we knew there was something in this new direction of, at the time we were calling it virtual internships. And so we just kept plowing through. And so, yeah, your investment was, you know, came at a great time because I think you and your team saw the vision as well.

The business we're in is squinting, I tell people. You got that great founder and they're pointing. And they're saying, you see that? And I say, what? I said, no, right there. And they're pointing to the horizon. They cross this great wide ocean. And I say, I don't see it. And they say, squint a little hotter, right there on the left. Pass that wave. That's where we're going. Say, tell me about where we're going. And they tell me, and I say, oh, and then I stop squinted. I see it. I got it. How the fuck do you get there? And they say, uh, I don't know. And I say, great. Let's, let's chop it up. let's talk about it because there's got to be a way to get there.

And what do we need to get there, right? And so once we under, I find when we understand the founder's vision truly, then we can get to planning. Then we, and this is why these conversations and just stepping back, stepping back and opening the aperture, you know, and I'm trying to train my team to do this more and more. And the reason I had this dialogue with you is I'm cutting this and I'm sending it to my investment team.

Literally while we're talking, said, take this. I want it in the investment team room immediately. And I want them to have a discussion about it at the investment team meeting, which we do on Tuesday and Thursdays. Because this takes a level of thoughtfulness what we do as the earliest stage investors. And people don't know the technique to do it. And it's like slowing down, what's the problem? And you said it perfectly, Matt.

when you said, like, pick the right problem. Building products and services is a whole science to it. But you have to pick the right problem, right? And the right problem at the right time is so powerful. And all these kids or at Columbia who are at these elite schools or even, you know, they're going to, you know, their local college, they're all having the same profound experience. Well, that was an interesting four years. and here's this bill I have to hit every month for my student loan that I can never get out of

and bankruptcy won't get rid of. And what now? And that fear. And to solve this problem, right, to be the pain killer here, you know, to be the medicine, to be the solution. It's just so profound. It's so important. What you're doing is very important. And, you know, it didn't start that way, right?

You were triangulating around problems. And then over time, what the great founders do is find them the most. important one. You know, Travis is like, getting that cab when it's raining in Paris and I need to get somewhere and I'm frustrated. And if I don't get my ride to that location, I'm not going. Like a very profound, simple thing. And then how many people have that experience? Well, if you lived in Brooklyn with the boroughs, you have an experience every day. It's hard to get a cab. So, you know, profound experience. And Vlad had it at Robin Hood. Like, how do you get young people to trade stocks? How do you get young people to invest in their future? Like, get, get

rid of the $35 fee to trade a stock and give them one free stock in their account. And they just kept thinking about that mission. How do I get people to become educated about finance? And a lot of dipshits, Professor Galloway, whoever, derided Robin Hood, oh my God, these young men are gambling, whatever. You know, like, okay, sorry, Professor, let's step back for a second. They could gamble on any number of sports games or in casinos, but what a little trick to get them to gamble on stocks, gamble, because then they learn investing.

And if they lose their money on a stupid, you know, meme stock, then they say, well, what's after meme stocks? What aren't meme stocks? Right?

You know, the best way to be good at poker is to know, like, what are the mistakes that people make? And poker is a game of eliminating your stakes so you're not exploitable so that you have a chance, to beat the exploitable players, right?

So, profound and important what you're doing. I'm really excited more so now after our conversation than ever to be in business with you. So, you know, any way we can be helpful, just always ask. You know, we got a 21-person team here and we want to go to work with you on this. Always good for a tweet for my team. And it's been a great hour with you, Matt. Congratulations on this.

You can find out more at X-T-E-T-R-N. am I right? X-T-E-R-N. Great domain, man. When you told me your idea and you asked me, if you think of this domain, I was like, buy the domain,

I don't care of it cost a million bucks, I'll give you them bucks. I don't know what the $1.000 cost. But literally if it cost a million bucks, I would rally the fundraise to get that. Great domain name, headphones.com, my friends over there,

some guy told me he was listening to this big startup, so he heard my conversation with com.com, inside.com. he had like a terrible domain name to sell headphones and nobody trusted him and then he found the guy who owned headphones.com and he built this gigantic business. I'm not an investor in it. Yeah. And just the great domain name and great branding built trust. It's so amazing.

This is such a better name than Paragon one. I know. No, people, give me a start. I've been wanted to change that forever. People were mistyping it. Long, hard to spell. Yeah. What does it mean?

Exactly. Extern. I mean, I was able to negotiate it for 50 grand. I mean, Oh my God. Yeah. I would add as I would have, I would have,

I would have, yeah, but you know, I was like, let me see what I can do. It, yeah, it was,

I couldn't believe I got it for that much. Great job. We'll see you all next time on this week in startups. If you want to be like Matt and be in business with us, go to founder. That's our pre-accelerate. That's for people, you know,

earlier than Matt starts. Then we have the launch accelerator. That's for people who have, you know, a couple of customers, tens of thousands of revenue a month, maybe even 5K a month, something like that product and market. And then we do direct investments. You can learn more at launch.co. And we have the liquidity summit coming up. That's only for GPs and LPs.

You can go to liquidity pod.com slash summit. There's 10 tickets left or so tapping it at 125 people, I think. So 10 tickets left if you're an LP or a GP or an angel investor, or a high net worth individual interested in going. We turned down half the applications because it's service providers and founders and founders trying to raise money. This event in Napa, January 2nd to 5th, learn more liquidity pod.com slash summit. I'm there for all three days.

Some of the besties are coming, Jamath, Freiburg, Gavin Baker, just tons of amazing speakers. And then an All-In Summit is happening in September. I cannot help you with that. I am not the CEO. I do not run it anymore. I am just a pretty face on the pod. but $7,500 a ticket, and I think it's like basically sold out.

I'm sorry, but they will be doing a small number of scholarships. We're doing a bigger event on All In. When we hit a million subscribers, I think Chumat's going to do something in Vegas, he said. So, you know, that's going to be super accessible ticket price. We'll see you all next time on this week's Starbucks. Bye-bye.