--:-- Sonal: The Olympics just ended, but that doesn't mean our coverage has. Because building a strong nationwide athletics program is a bit like trying to build a strong innovation hub. In that, you know what ingredients might help, but it's not always clear what moves the needle. And just like in athletics, where countries double down on their best sports, like the approximately $50 million grand system that Team USA allocates more to gymnastics over handball, countries also make strategic decisions on where they invest, hoping to create thriving innovation hubs. So in today's episode, we direct our attention to the UK and try to break down which ingredients matter most. This episode was originally published on our sister podcast, Web3 with A16Z. So if you're excited about the next generation of the internet, find Web3 with A16Z wherever you get your podcasts. For now, over to Sonal to properly introduce this episode and guest.
--:-- [Transition to Web3 with a16z Crypto episode]
--:-- Sonal: Welcome to Web3 with a16z. I'm Sonal Choksi, and today's episode is all about innovation around the world at both a systems and a people level. We discuss not only what does and doesn't work in making certain places become hubs of innovation and economic growth, but also discuss what makes entrepreneurial talent, the nature of ambition, and helping people find their path, and more broadly navigating risk, reward, and dynamism in different regions, including London and Europe.
--:-- Sonal: My special guest is Matt Clifford, who's played an important role in the London entrepreneurial ecosystem. I actually had Matt on the OG a16z podcast back in 2015. So we also discuss what's changed since then to now, as well as new ways of funding breakthrough R&D, tech trends of interest, and more. For more context, Matt is the chair of Entrepreneur First, which he co-founded with Alice Bentinck over a decade ago. He's also the chair of the UK's Advanced Research and Invention Agency, or ARIA. And before this episode was recorded, Matt was also the Prime Minister's representative for the AI Safety Summit, which he helped organize at Bletchley Park, the historic home of computing in the UK. And then after this episode was recorded, Matt was appointed by the UK Secretary of Science to deliver an AI Opportunities Action Plan to the UK government. This was just announced a few days ago.
--:-- Sonal: Anyway, it's all fitting and exciting because we recorded this episode live from Andreessen Horowitz's first international office in London, which we opened late last year. For more on our efforts and other content from and about there, go to a16zcrypto.com/UK. As a reminder, none of the following should be taken as investment, legal, business or tax advice. Please see a16z.com/disclosures for more important information, including a link to a list of our investments. Now on to the episode.
--:-- Sonal: Matt, welcome.
--:-- Matt Clifford: It's great to be here.
--:-- Sonal: It's great to be back. We were just saying. Yes, I was about to say. We did a podcast together. You were on this podcast on our last London Roadshow, which was 2015.
--:-- Matt Clifford: It was. It was. I mean, we've been going a while now and we'll probably talk about how the London ecosystem has grown. But our initial thesis, which we remain very dedicated to, is that the world's missing out on some of its best founders. In Silicon Valley, if you're ambitious and smart, it's the most obvious thing in the world to start a company. In Europe, that's still not true. If you go around Oxford or Cambridge or Imperial College, any of these great universities, and you say, what are the smartest, most ambitious people want to do? More and more, it's on the agenda. But it's still probably banking, consulting, big companies.
--:-- Sonal: I don't know how you describe EF or Entrepreneur First as an org.
--:-- Matt Clifford: We call ourselves, the thing we've layered on after a long thought of iteration, is we're a talent investor. We invest in people before they have companies and help them go through that zero to one journey. We're taking people who purely on the basis of who they are, we think we want to make a bet on.
--:-- Sonal: I like that you're saying that you're a talent investor. I mean, VCs and other, actually creatives, anyone would say that's their job is investing in talent. And that's an art, not a science.
--:-- Matt Clifford: Well, I know that Mark and Ben have taken a lot of inspiration in building your firm from talent agencies. CAA was inspired by Michael Ovitz. He was an advisor early on. And we have a sort of similar view that the world's most talented and ambitious people need agents. I mean, that's not quite how we frame it.
--:-- Sonal: It's really fascinating because you said you're not an agency, neither are we, because actually the model obviously was talent focused, but it was more about a network and network of networks, which is how we used to think a little bit. I mean, I don't know if that was ever formally how it was described, but at least from my perspective, I used to think of a16z when I joined in the early days, which is now a decade ago, as a network of networks. And that was where the Ovitz model came in, which is how do you sort of give back, continue cultivating talent. So in that way, growing people even before they want the thing or even helping them so it's not transactional.
--:-- Matt Clifford: Exactly. And a lot of what we talk about is our team's job is to go out and find extraordinary people who are still figuring out what to do with their lives. My co-founder, Alice, and I, we started our career as management consultants. We were at McKinsey. And in many ways, it was a really great experience. But if you say, why did you end up there? It wasn't because at six years old, I was running around the kitchen being like, "Mommy, mommy, I want to be a management consultant." It was just the path. It was what people did in whatever it was, 2008 when I graduated. So our view was if you really want to move the needle on increasing the supply of great founders, you can't wait for them to figure out that that's the obvious path. You have to create a path. And that's what Entrepreneur First has been about from the beginning.
--:-- Sonal: One of the things that we think about a lot is the nature of ambition and how it's very culturally determined.
--:-- Matt Clifford: Oh, let's talk about that.
--:-- Sonal: Well, what I mean by that is, it's not like all ambitious people have the same vision of how to realize their ambition. That's absolutely true. And so it would be the craziest thing in the world to try and force people to be entrepreneurs. We have quite a big team now around the world and they go out and they find people who are clearly extraordinarily talented, but at the very start of their journey. We typically focus on people early in their career, sometimes while they're at university or equivalent. Their job, obviously, is to help them think about startups. And if they want to build a startup, bring them into our community and help them do that. But their job is not to push where it's not right. It's to genuinely be almost like a career counselor, like someone whose interest is shared with the person. One of the things that we believe, if you like our theory of change, is that if you can actually intervene at a point where people are trying to figure out how to maximize their impact in the world, and you can show them this path of entrepreneurship and show what's possible, then that will increase the supply of great founders and then great companies in the world.
--:-- Sonal: So I do want to pick up a little bit on two threads. One about this, what you said about the nature of ambition, something you think about a lot, but also what you said about this culturally determined aspect of it. And that to me suggests some of the structural context, the surrounding context that supports entrepreneurship beyond the individual. So let's split it up into the people and then the surrounding kind of context and ecosystem.
--:-- Matt Clifford: On the surrounding context and ecosystem, one kind of obvious thing, this is something we talked about a lot in the early days of the a16z podcast. I recorded a lot of episodes with Iranian entrepreneurs and various people around the world. And it was really fascinating how the risk tolerance is very different culturally in different regions. One thing that I think is so cliche, but it is true for a reason, is unique about Silicon Valley: there is a tremendous tolerance. I don't want to say the word failure because I hate veering into failure porn. I think that's the wrong way to go. Failure sucks always.
--:-- Matt Clifford: I hate when people are like, "Failure Friday" and "failure this." Yes, of course, normalize talking about it, recovering, repairing, but don't glorify failure for God's sake. Everyone wants to succeed. But what's really interesting about it is that there is this forgiveness and recovery and resilience, whereas in certain cultural regions and areas, there's almost a punishment or a feeling of self-hatred if you don't succeed. This is even beyond individual level. I'm talking about culturally.
--:-- Sonal: So I think there's two things. One is attitudes to failure. But I think it's also what is valued, what is esteemed. The really special thing about Silicon Valley is this idea that if you're in Silicon Valley and you tell someone you're a founder, that immediately has a set of connotations that are almost exclusively positive. It's very legible. People know what you mean. People can read that as a sign that you are ambitious.
--:-- Matt Clifford: That's right. When we started Entrepreneur First, there was this slight sense that if you said you were a founder, that was a euphemism for you were unemployed.
--:-- Sonal: So actually, I think the cultural meaning of entrepreneurship is one of the biggest sources of leverage you have. Just making it so that this is a thing that smart, capable, ambitious people do. It's a vehicle for changing the world. It's such a powerful idea. To give you a really concrete example, because the UK and the US are similar enough systems that it really resonates. The first international office we opened was in Singapore. And in Singapore, the number one career path for the most ambitious people is to go be a civil servant. As a result, the government of Singapore is probably one of the most effective and efficient.
--:-- Matt Clifford: That's so interesting. I didn't know that.
--:-- Sonal: It's actually the opposite in so many other places. I've just been serving in government. And the people have been amazing. But I would say, as a result, the cultural value of entrepreneurship in Singapore has been harder to create this sense that if you say you're a founder, you're doing something that's as legitimate, as prestigious as your friends that have gone off to be civil servants.
--:-- Matt Clifford: We should talk for a second about why entrepreneurship for a minute, because it seems like an obvious thing. Like, what are we talking about? This is a show with a startup focus. We're both startup-focused cultures. But actually, it's not obvious. If I were telling a policymaker, I think they know this. But the reality is startups represent innovation. They're an engine of growth. They create jobs. They're generative. They're not extractive. They're not just taking the stable, what you already have, that's established. They set you up for the future. There are so many layers of why this matters. So to your point, I have to ask you this then. I don't want to be stereotypical, but of course there's going to be some generalizations just to understand this. But my impression of London, I'm born and raised in the United States, but my grandparents settled in London in the 70s before I was born. And the impression I got culturally is that there's a kind of, I don't want to say classist, but very much a credentialist society. You care very much about what school you went to. And I think that could be true in some ways of Silicon Valley, but people kind of don't really care what school you went to or what you did. Would you say that is true today? Do you think that's evolving? And I'm bringing this up because you mentioned this point about what value certain words and concepts signal. So I'm curious for your perspective there.
--:-- Matt Clifford: One of the essays that I wrote early on in EF that was trying to talk to this, I called "Don't Be a Badge Collector." I think I probably wrote that about the time I was first on the podcast. I think it held up pretty well. What I was saying is that I think there is a cultural temptation, let's call it in the UK, to be like, "I'm going to work really hard to get into the best university I can, so I can get the best graduate job I can." One of the biggest risks for smart people, I think, is that you get into a mode where success is measured by whether you make your boss look good. And their success is measured by whether they make their boss look good, and seeing all the way up. What you're actually doing, to your point about startups being a positive sum game, there's a risk in a lot of career tracks that, I'm not saying you're not creating value, but your actual goal is to win the upward political battle within whatever bureaucratic structure you're in. I don't want to say political, I mean small "p." This can be in big corporates, it can be in whatever.
--:-- Sonal: I think what's beautiful about startups, and the reason I've spent more or less my entire career helping people build them, is that they are ultimately all about what you can do for other people.
--:-- Matt Clifford: That's a fantastic way of framing it.
--:-- Sonal: You only succeed if you build something that is so valuable that someone else will pay for it. You cannot win in any other way. There is no boss to look good, to make it look good. There is no grading scheme that some teacher is going to tell you got an A on. It comes down to this very stark thing: Did you do something for someone else that they thought was so great?
--:-- Matt Clifford: That's right. They wrote you a check.
--:-- Sonal: And it is not people pleasing, because often you're going against established convention. You're often butting your head or punching through an industry that is not accepting a new way of doing things. I'm thinking of my former partner, Martin Casado, and the enterprise team. When he was doing software-defined networking, he was punching against very established old school methods for what networking looked like. That was very hard work. So you have to literally punch, you're completely going against all conventions. The bar is so high to actually prove that value.
--:-- Matt Clifford: I do think, sometimes, one of the challenges we face today is that if you are smart and ambitious, it's now so easy in some senses to find a comfortable path that is about making your boss look good all the way through a career and acquiring money and influence and prestige, but actually maybe never really doing something that creates an enormous amount of value.
--:-- Sonal: It seems, now that you say it, so obvious, but it's really not. Just a pause on the idea: when you're doing a startup, you're building something that other people want and need. That's a really profound idea. On that note, it's also very fascinating because of the economics of startups. Usually if you're working for a company, you were talking about you and Alice being at McKinsey, consulting. People think they're making good money, but you're really captive to your salary. You're not actually, the wealth is not generative. One thing that I find really powerful about startups is that startups are the ones that innovated on the idea that employees can have a share of the returns on the work they do. So even though you might be building a product for customers and consumers that people want, if you succeed, it can also go to nothing, obviously. That's a very real risk. But if you succeed, there can be very real gains for the people who put things in, especially for those that took a risk early on. I don't know how the options and economics work in UK startups, but that is, I think, a defining feature of Silicon Valley in the early days. So I just wanted to point that out because it's actually resonant to what you said about not only pleasing people and being captive, but you're also helping other people and then actually creating value for the employees, too. They're always increasing the size of the pie for everyone in some form. So, not to be cliche, but that's very true.
--:-- Matt Clifford: In a way, I think there's a really important ethical point here, which is that founders can make a lot of money, but they only get to capture value that they create. That's right. And I think that is actually a really important idea. We focus mainly on people early in their career when we're working with founders. And I just think that idea really resonates with people. They would like to be successful, but they want to do it within a framework where they feel they created something.
--:-- Sonal: Of course. Otherwise it's just gambling.
--:-- Matt Clifford: Or extraction.
--:-- Sonal: Extraction, exactly. It's value add versus value extraction. It's funny because it's also, I want to get at all political, but just in terms of capitalism, stakeholders, people having a voice and empowerment. I saw this list, it periodically makes the rounds on Twitter, of the most wealthy families in Europe. That list of the top five has not changed over centuries.
--:-- Matt Clifford: Which is crazy because that just means there's generational wealth passing along.
--:-- Sonal: Whereas the United States, that list is, granted, it's a younger country, but at the same time, it's like the list is changing constantly. The top 10 wealthy people, the top five wealthy people. Again, it's not about the money. I don't want to make that the focus, but just pointing out that when you think of this dynamism, this thing that a culture can change to be advanced, add new value. Startups can be generative. It's just really interesting to me because a lot of those people are startup made. Most of those people are not access to old money.
--:-- Matt Clifford: Again, not wanting to be political, but the thing that I think is non-partisan and everyone can agree on is that the thing we need is positive sum games.
--:-- Matt Clifford: Different people have different views on how we tax wealth, but the bit that everyone can agree on is that what we want to reward in society is people that are creating valuable things. We don't want to reward extraction. One of the beautiful things about startups is they can't extract, they have to create. I think there's just something very valuable about that and very powerful that I see people across the political spectrum sort of get in behind.
--:-- Sonal: Yes, I agree. On this note, though, we're talking about the structural context right now before we move to the individual. So let's add a little rigor to what does an ecosystem mean? I know that can be very buzzwordy. I've studied entrepreneurial ecosystems for a very long time, covered them for a very long time, as you know. Including interviewing all these different people throughout the world who are experts in this, like what an ecosystem means. A couple of themes emerge. One, you obviously need talent. You need really strong universities and research ecosystem. You also need, for the people that hate to admit this, government support. So the other thing is, there's a really important balance between top down and bottom up.
--:-- Matt Clifford: Totally.
--:-- Sonal: On the bottom up side, you obviously need communities of entrepreneurs because there have been, as you know, many experiments, including planned cities, planned innovations, where people are trying to do these centrally planned top-down innovation initiatives. They never work. Ever. There have been many, many, many over the years and not one has worked. Some argue Singapore, that's a different, unique, complex case. And I don't know if it's as entrepreneurial. It's a successful nation state. But that's a separate thing. So that's one aspect. Secondly, on the top-down side, you obviously need enabling conditions like respect for property. In the U.S., we talk about respect for property rights. It can include respect for intellectual property. It can include support such as funding, like DARPA in the United States, which funded the internet, things like that. Supportive pro-innovation policies. So the bottom-up side is a community, the top-down, and then obviously the talent that comes in the form of universities because universities are drivers of research and innovation. So now, on your point about this science and technology side, talk to me about what you think is happening uniquely in London, because we're sitting here.
--:-- Matt Clifford: You mentioned DARPA. My sort of side hustle, side from Entrepreneur First, is I'm the non-executive chair of ARIA, which is a new government-backed, or government-funded R&D funding agency based on DARPA, basically.
--:-- Sonal: So what does ARIA stand for?
--:-- Matt Clifford: ARIA stands for the Advanced Research and Invention Agency. It's being given, in U.S. terms, about a billion dollars to basically fund breakthrough R&D that might otherwise not get funded. Really trying to take some of what worked at DARPA, in particular this idea of a program manager-led model of empowering brilliant scientists with visions to just go out and build the networks and coalitions of researchers to realize that vision in a way that's all about, actually a lot of things we've already been talking about. It's about ambition, it's about incentives, it's about alignment, all these things. One of the things that's been really striking to me in the roughly year that we've been up and running is one, just the depth of the scientific talent across the whole UK. Not just London or not just Oxford and Cambridge, but truly across the whole country. Two, it's almost like too strong a word, but the yearning for something like this.
--:-- Sonal: When you look at why ARIA needs to exist, we do a ton of great science in the UK. I'm lucky to have been involved in a lot of the science funding organizations that exist. But I think one of the challenges is that with scale comes a more bureaucratic approach. If you're trying to run science funding for a whole country, of course you need to show value for money for taxpayers and you need to have a lot of process. But the consequence of that, this is not a UK thing, this is a global thing. People like Patrick Collison and others have written about the challenges of where science has got to. I think of it as a career ambition and incentive problem. If you go talk to incredible postdocs across the UK, across the US, and you say, "What's your most ambitious idea?" And they tell you. And then you say, "Cool. And so you're working on that?" They're like, "No." You're like, "Why not?" They say, "Because I need to get this next publication, which needs to get this many citations, because then I'll be able to get my next grant. And if I do that, then one day I'll be able in 10 years to get my own lab." And you're like, "Wow, this is crazy." We have some of the greatest minds of their generation playing a bit like the making your boss look good game.
--:-- Matt Clifford: This is the making the grant makers happy game.
--:-- Sonal: That's exactly the same thing. I'm so glad you brought that up because this is important. So I want to break down a little bit more about what you're saying. A lot of people have tried different forms of how to fund R&D and do it in a way, an industrial R&D is what you're talking about, and in a way that's efficient. A lot of the lessons learned here are fascinating. One, you mentioned the concept of a program manager. For those that don't know, DARPA had this famous model where they had program managers. It's quite fascinating because one example is Regina Dugan, and she went to Google later on. I remember being at Xerox PARC when her group funded, and this is public, advanced manufacturing initiative and reconfiguring manufacturing and all these different things. There are so many different interesting things about it. First of all, many of these initiatives can be very multidisciplinary, which universities are not well set up to do, where people are very siloed in their departments. Having these grants can sometimes be like umbrellas for different disciplines to come together, including across multiple universities.
--:-- Matt Clifford: I was going to say multiple universities and sometimes even different sectors. Like universities and startups.
--:-- Sonal: That's right. And nonprofits or whatever. One example was back in the day we did content-centric networking. It was various types of things. So that's one interesting thing. The second thing, this is a very little known fact that people don't know about this model. I remember being fascinated by this when I was working with my colleagues helping them out with some stuff at SRI, who were thinking about this, which is Stanford Research International. They very famous for getting lots of research grants and different things. It's fascinating because most people when they think of government funding and program managers, they think of it as a one model where government gives money, program manager allocates it, someone has a strong point of view, and it goes A, B, C, D. It's actually much more nonlinear and interactive than that, where you actually have smart scientists informing the program managers for what proposals they want to see. Because actually the word in the grant making business is if you're bidding on an RFP, request for proposal, by the time it comes out, you're too late. You should be shaping what proposals are coming out in the first place. And that is a two-way dialogue between government and universities.
--:-- Matt Clifford: That's a big part of how ARIA is working and planning to work. But hopefully in an extremely transparent way, which is to say, "Here is an area that we're excited about where we think there is a thesis. Before we make grants, before we do an RFP, we want to workshop this with people that have a really broad range of views on it."
--:-- Sonal: That's right. So that we know what are the things we should be looking out for.
--:-- Sonal: You know, there's a risk of a cliche, but so much of the challenge is you don't know what you don't know. Particularly across disciplinary boundaries, there's a lot of academic literature that suggests that surprise is the key to scientific breakthrough.
--:-- Matt Clifford: Right, right. Surprise comes when you have a different knowledge base or perspective.
--:-- Sonal: Yeah, yeah. At Xerox PARC, John Seely Brown, who used to manage it back in the day, always said it's at the interstitials, at the edges and in between industries. I do think surprise or serendipity is very important, but I want to be careful that we don't glorify innovation as this aha eureka moment when it's many little things that come together incrementally. When you say surprise, you also mean this emergent quality that you don't know what you don't know. It can come up bottom up because you're not top down saying, "We know this is an interesting area." You may have a loose hypothesis or thesis, but you don't have it so opinionated and targeted that you're veering into central planning, which is where places like China fail.
--:-- Matt Clifford: When I'm talking about surprise, I'm talking about almost exclusively a bottom up phenomenon. What happens when the biologist talks to the computer scientist about a problem that has roughly the same contours and they never realized before? That can be incredibly productive.
--:-- Sonal: You're preaching to the choir. When I used to give tours at PARC, people would always ask how that one place repeatedly created world-changing innovations. Ethernet, the GUI, lasers — an endless list. A big part of it was the multidisciplinary aspect and putting them in the same building. But here's the other thing people don't know. It wasn't just putting smart people from different disciplines in one building and saying, "Hey, collaborate." The founder of Xerox PARC gave them a mission: to build the office of the future. A very simple mission, broad enough to enable all kinds of innovation, yet specific enough to provide a funnel so it's not crazy town.
--:-- Matt Clifford: Totally. 100%. I think that idea of mission is the other bit. Ilan, our CEO at ARIA, is one of the reasons I'm so happy he's doing that job. His sense of mission about what we're trying to do is just so palpable.
--:-- Sonal: That's powerful. How did ARIA come about? Did the government approach you guys? Did you approach the government?
--:-- Matt Clifford: The government created it by act of parliament early in 2022 and ran an open process to hire a CEO and a chair. Partly because of the work I've done at EF, I've been very interested in this idea of institutional innovation. It's not the same as VC. It's not an accelerator. How do you do institutional innovation to increase the supply of things you want? EF is trying to increase the supply of great founders. ARIA is trying to increase the supply of scientific breakthroughs through this sort of institutional innovation. I just applied, and slightly to my surprise, I got the job.
--:-- Sonal: I'm not surprised. Ilan was based over near you in Berkeley, running this incredible thing called the Activate Fellowship for deep tech entrepreneurs out of academia. What I find fascinating about you being involved is the other part: once you have these breakthroughs, how do you actually make something of them? There's no shortage of brilliant ideas, but there has to be a system that can absorb and support them. It's not just the classic linear model of university funding. You might start a startup, collaborate with a big company, or a big company can acquire the patent. There's such a variety.
--:-- Matt Clifford: It's interesting you landed on that. Probably the most important structural strategic question we've had to answer for ARIA is, who is the customer? If you think about DARPA, the D is defense. It's pretty important. They've done a good job with the bottom-up side, but they are building things the Department of Defense ultimately wants to be the customer.
--:-- Sonal: The internet was originally invented to be resilient in case of disaster. It became something else, but that's the case.
--:-- Matt Clifford: We are not DARPA. We are ARIA. We don't have a big customer. That was a big, important decision. We are of government, but very independent of it. In the UK, we're a non-departmental public body, which means we're outside government.
--:-- Matt Clifford: The question Ilan rightly asked at the beginning is, we're not going to have a customer, so what is the exit path? We find something great, what do we do with it? The answer is probably not surprising given they appointed an entrepreneur as CEO and an entrepreneur as chair: we think the answer is scientific entrepreneurship. Ilan's answer is we need to make sure the interface between ARIA and the entrepreneurial ecosystem is really porous in both directions.
--:-- Sonal: I agree. Both directions is a key word. I love that you say scientific entrepreneurship. Our tagline at Xerox PARC was "entrepreneurial scientists." Scientists who are entrepreneurial but not actually starting startups. They have this entrepreneurial mindset. There's a reason they're not in academia and not in industry. They're in between. They're a unique interface. One other quick note: we need to make sure process doesn't get in the way. Patrick Collison and Tyler Cowen wrote about FAST grants. A key insight from the pandemic is that sometimes you have to deploy capital quickly. Government process, for good reason, can get in the way of allocating funding.
--:-- Matt Clifford: That's been core to how we think about this. How do we get out of the way? One reason DARPA has succeeded is there are very few veto points. You don't have to get 12 people to say yes.
--:-- Sonal: A 20-person thing, yeah.
--:-- Matt Clifford: We've done something very similar at ARIA. The program directors have to convince Ilan, basically. My job as chair of the board is to scrutinize the whole, but not get into the weeds, not be another veto.
--:-- Sonal: That's fantastic. I'm glad you're aware of that. Let's shift back to the individual. You said something fascinating earlier about how you're obsessed with ambition. You also said another beautiful word: yearning. The idea that people have this yearning. It struck me because when you talk about supporting people early in the pipeline to become entrepreneurs, it's fascinating that we even have to do that culturally. Children are born creative and entrepreneurial. They trade lunches, they build things on the playground. It's sad that people lose that impetus. From your vantage point at Entrepreneur First, when you say you try to get people early, what is the sweet spot? High school? College?
--:-- Matt Clifford: We're in London. We have two tracks, same in Paris. We operate in London, Paris, Bangalore, and New York. One track is for people as they graduate from university. The other is for people in the first five years of their career. They've got a little bit of work experience.
--:-- Matt Clifford: Those two moments are quite special. Along with yearning and ambition, another word we think about a lot is "becoming."
--:-- Sonal: Look at you, I love that.
--:-- Matt Clifford: I'm very influenced by my colleague Arne Schenk, who runs a program called Polaris. He's convinced me that ambitious people have a sense of who they want to become, but often less of a sense of how.
--:-- Sonal: So they know who but not how.
--:-- Matt Clifford: A big part of EF's role is to help people become the person they want to be.
--:-- Sonal: That's so interesting. Marc used to say there are three pools for a startup: product, market, and people. He would say people is the one you bet on most because product can change, market can change, but people are where you find that true north. What I like about what you're saying is you've answered my question precisely. By intervening in college and the first five years of their career, that's the how. My argument was going to be, why not do it sooner? In crypto, we see high schoolers obsessed. They want to learn. It's not for financial reasons. It's building, creativity, expression.
--:-- Matt Clifford: We're the same. We want to engage with people early. What keeps it grounded is thinking about what the community is, what infrastructure you can provide to help people figure this out for themselves. We're not a cult. We're not trying to tell them who to become. How can we provide a peer group that makes people say, "I don't want to be a banker. I don't want to go work in a 100,000-person big tech company. I've found my people who not only validate that sense but can help me get there."
--:-- Sonal: You also need support when you're struggling. It's the feeling that your choices are valid. It sounds so basic. There's so much to figure out because you don't have the structure of a classic top-down company. This reminds me of childhood development. There's a body of work from Judith Harris that says it's not the parents, but the peer group that defines your development most. As you do this work, are there any icons you think people need? In the US, *The Social Network* movie was a moment. It made a huge difference. There's also a capital gap early on where people can get angel funding but not the next phase. I'd argue there's a similar talent gap for building a company: finding early employees but not people who can scale it.
--:-- Matt Clifford: I think that gap is closing, but more slowly because it takes longer for those companies to mature. This is also why ambition should be global from day one. We want a great ecosystem in London, but we're not nationalists. When I think about EF's best companies, the ones scaling fast are the ones that are having to be US companies as well as British companies.
--:-- Sonal: I totally agree. Going back to the structural context, you have a unique vantage point on the London ecosystem. What's working, what's not, and what's really changed since we last spoke seven years ago?
--:-- Matt Clifford: It's funny. When we started in 2011, we were so convinced we were too late. It took iteration for EF to become what it is now. But in 2011, there was maybe one organization describing itself as a seed fund. Today, at our demo days, we get 2,000 people. The ecosystem has grown massively at every layer of the stack. The talent attitude has changed. There's a proliferation of angel investors and seed funds. The bit I'm excited about more recently, and you guys opening an office here is a good example, is that for a long time people talked about a capital gap in the UK. You could raise a seed round, maybe a Series A, but Series B was really hard. There's a way to go, but with local firms growing up and storied American firms coming here, that's a huge net positive.
--:-- Sonal: That's more a difference of degree than kind. More investors, more capital, more entrepreneurs. Would you say there are any differences in kind?
--:-- Matt Clifford: The difference in kind I would point to is about ambition. When we got started in 2011, there were some really ambitious startups. Michelle You, one of the founders of Songkick, was super ambitious, but they were unusual. Most 2011 London startups were trying to get bought. Their exit strategy was to be quiet, not grow to massive scale. That's not a criticism. It's about what sort of ambition the ecosystem will support. The difference in kind is that we now have people truly trying to build global category winners from London. We're not there yet. Daniel Ek has done amazing things at Spotify. There are extraordinary European success stories. But we're still pointing to things that happened a little while ago. I do think that 10 years from now, we'll look back and say the early 2020s was a pretty special time to build globally ambitious companies from Europe.
--:-- Sonal: I'm so glad you brought up crypto. It goes back to the earlier point about positive sum games and incentives. Crypto bakes these things in structurally. There are many ways to align different parties to build things. This could be a very unique time.
--:-- Matt Clifford: One exciting thing about crypto from a geographic perspective is that it's natively global. It's not about looking to a domestic market and then expanding. When I think about two crypto companies we've invested in together — Andreessen Horowitz and Entrepreneur First, Jensen and Aztec — these are people trying to build infrastructure for a different world. They're not building it for London or the UK or Europe. It's inherently global.
--:-- Sonal: MC Lader, COO of Uniswap, was saying how it's a unique type of product launch because you're instantly global. Most other times, you land and expand in one market, then another. It doesn't go that way.
--:-- Matt Clifford: I think it plays to London's strengths. We've been investing in crypto companies for a long time. We started the London Bitcoin meetup in 2014 with Imperial College. When you go through hype cycles and winters, it's easy to get discouraged. But what I find exciting is that the investments we've made in founders that worked were all the ones trying to fundamentally build real technology. At the height of a boom, you get a lot of froth. Some of that felt pretty extractive.
--:-- Sonal: Yes, of course it did.
--:-- Matt Clifford: But I look at Jensen and Aztec. These are engineering-led companies. They're building incredibly hard products, and that gives them the right to win. Europe hasn't been that good at the hype. In some categories, hype helps a lot. But what I'm excited about is that we are really good in London and the UK at science and technology, at doing hard engineering tasks. For the future of crypto, we still need a lot of fundamental new technology to make this work.
--:-- Sonal: This is a big reason why I came to the crypto team full time, because of the R&D side. It's phenomenally engineering focused. There's always frothiness in every cycle, and that's okay. It creates buzz that brings in talent and capital. Then the few people stay through every cycle and more people build. We're in a phase right now where the building and the products are phenomenal. My last question: given that this is an art, not a science, what are the qualities that make someone a good entrepreneur? What is the formula or filter you use?
--:-- Matt Clifford: I don't think there is a formula. But being exceptional is more of a habit than we sometimes admit. When I'm interviewing a 21-year-old who has never worked anywhere, I'm always asking: what have they done? However unrelated to starting a startup, what did they do on their own volition, without anyone telling them, where they went above and beyond and something happened? That idea of agency in the world is probably the single most important thing.
--:-- Sonal: That's a fantastic note to end on. Ambition, yearning, becoming. I love the line you said about ambition as global. We're here in the UK, I'm from Silicon Valley, but we're talking about a global phenomenon. Thank you so much for joining this episode, Matt. It's so great to have you back.
--:-- Matt Clifford: It's great to be here. Thank you.
