Idea Machines Unleashing Talent with Matt Clifford [Idea Machines #14]
In this episode I speak to Matt Clifford about talent investing, how big long term projects can start small, and financial innovations.
Matt is the CEO and co-founder of Entrepreneur First. Entrepreneur First, abbreviated as EF, is a fascinating system. It starts with cohorts of around fifty to a hundred ambitious, talented people who want to start companies but might not even have an idea to build around.
Key Takeaways- The mental model of predictable vs. unpredictable value.
- The idea that hypothesis testing speed predicts success even in projects where you won't see real results any time soon.
- The idea of money as a commodity that fuels innovations
Background on EF (context for some of the podcast)
EF then helps cohort members pair up into teams and get companies off the ground. Matt and Alice Bentinck started EF in 2011 and the history is kind of a crazy story: it started as a non-profit and now has raised a massive fund from LPs. One of the highlights in the story that really put EF on the map was a company named Magic Pony that sold to Twitter for an unconfirmed 150 million dollars eighteen months after starting at EF. There are links to Matt talking more about both the structure of EF and EF's history in the show notes. EF is a fascinating innovation system because it challenges many ideas that have basically become gospel in the startup world - everything from "if someone isn't willing to start a company in a garage with no income they don't have what it takes" to "only founding teams with a long working relationship can succeed."
ResourcesMatt on Twitter (@matthewclifford)
Magic Pony exit referenced in podcast
Matt speaking at Startup Grind about how EF works
Ideas
Capital as a resource like any other
Adverse selection
The best CEO of a deep tech business often doesn't know the best CTO of that business
Predictable value vs Unpredictable value
Predictable market does not necessarily mean existing markets
Basically logic-able innovations
Job as founder is to lay out 18 month roadmaps
Think of VC as a financial product
Providing optionality to the founder
Income sharing, with optionality
The power of finance innovations
Misalignment of incentive between VCs and entrepreneurs because VCs have a portfolio