How to find the right Co-Founder & idea in 90 days | Entrepreneur First’s Alice Bentinck

0:00You see lots and lots of people get stuck in the friend trap And they get distracted into this feeling of comfort and safety because they've found a friend. Now, a co-founder is the most expensive friend you will ever meet. You're basically giving half of your future net worth to this friend. So you need to make a really, really, well, financial business decision. There are a lot of things that can go wrong when building a business. But next to running out of money, the number one reason that businesses fail is co-founder conflict. Well, this is why you have to be so intentional about who you co-found with and actually do your homework.

0:35Choosing your co-founder is arguably the most crucial decision you'll make for your business. And finding someone who's good enough won't be good enough. Turn to your co-founder, give them feedback, and then work out whether you should break up. And literally, usually two or three people at the end will be like, we've just broken up and everyone gives them a huge round of applause. Today, we're joined by the CEO and co-founder of Entrepreneur First, Alice Bentink. Since 2011, Alice has been getting entrepreneurs together to build strong teams with a competitive edge. Now, after helping create businesses worth over$10 billion, Alice shares her advice for finding your co-founder, finding your market edge, and making the most of your first 90 days.

1:24We're here because you are a particular expert at quite a niche thing. I don't know anyone else for this topic. I don't know anyone else that I would go to naturally and think Alice is going to nail it. So I want to know, how do you start a business? What is your personal perspective? How should people start businesses? So I think one of the challenging things is that when you often ask somebody for their advice on starting a business, they've had the privilege starting maybe one or two or three businesses. Or if you're an investor, you have seen from a very high level sort of dip in, dip out perspective, maybe tens or hundreds of businesses.

2:05And what we've done at Entrepreneur First is by working with founders before they even have a company and then working with them in the trenches for the first 90 days, the first 180 days. We've been privileged to the formation of hundreds of teams, hundreds of companies and thousands of different co-founding teams, different combinations. And so I think at Entrepreneur First and I have a very unique perspective on actually what does it take to find a co-founder? What does a good co-founder look like? And there's a huge amount that you can read online about, you know, co-founders and often the advice is I think pretty unhelpful because it's like find someone you have known for a really long time.

2:40And sometimes that works and that worked for me. I co-founded with a friend from my graduate job, worked for you. But what happens if you look at your immediate friends family network and no one springs to mind does that mean you can't found a company and so a lot of what we've done entrepreneur first is try to work out okay well what are those what's the barrier to people actually starting and getting launched in the very early days of a startup and it turns out two things really matter having an idea and having the right idea and feeling that you have the right idea and having a co-founder co-founder a partner in crime someone to work alongside why is it important to have a co-founder the easy answer the answer that often you'll hear is you get more done super productive two people means you you know you you've got emotional resilience and you you've got um twice the pair of hands the really underrated thing about having a co-founder is that when you have two people with two different experiences in life different skill sets different perspectives you can come up with a better idea and there's this this concept of combinatorial innovation Actually, Steve Jobs used to talk a lot about the importance of combinatorial innovation.

3:46Say it slower. Combinatorial innovation. Combinatorial. Combinatorial. Like a combination. A combination. Got it. Two things coming together to create something new. And so when we think about co-founders and when we're helping individuals find their co-founder, what we're really, really interested in is not, okay, you're looking for somebody with X skill set and who's got X experience. What we say is, here are two interesting people. Let's sit them together and have a conversation about, okay, well, not with any preconceived ideas, not with any kind of agenda. If we were to work together, what could we create?

4:21How could we combine? Okay, how do your skills and my skills combine? My knowledge and your skills combine? I think that's where you get some of the most interesting ideas because those are the ideas that are differentiated, unusual. You know, it's very, very hard to come up with an idea in a vacuum by yourself. For lots of people, you need to talk through ideas and have a sounding board. But I think that still underrates the importance of just stepping back and saying, blank slate, what could we create? Talk to me a little bit about said blank slate. What is the benefit of having two people on this blank slate?

4:52How do you take blank slate into ideation process the way you do it? Well, a blank slate is very unhelpful. You need some constraints. And again, what the research shows is more constraints means you generate more ideas and their better quality. And that feels counterintuitive. It feels like, you know, the blankest of all blank slates would lead to better ideas. So what we encourage founders to do or potential founders to do is to work out what their starting point is. And if you want to understand who your co-founder should be, the first thing you need to understand is yourself. Who are you? What are you good at?

5:25What have you done in the past? And so we call this your edge. What are your edges? And we talk about having market edges. So markets or industries you might have had exposure to. Technical edges. So this is usually because we build software companies. it's usually what different technologies you're able to build in and catalyst edge and this is more sort of a fuzzy thing about um are you the sort of person who is idea generative able to push forward content concepts able to sell and so then it's saying okay with my selection of edges which is sort of my personal competitive advantage how do my edges intersect with your edges so you might have a okay to give you a very real example we had um this amazing woman Sasha Hacco there's actually a brilliant Netflix documentary about her work with um Stephen Hawking on on black hole theory um and she came to EF having just finished her physics PhD um and she met and that was that's her technical edge she met James and James had been working at Facebook and he'd been working on um detecting harmful content uh on Facebook and when you think about you know physics PhD and that sort of market edge, how do you then combine them?

6:36What are the opportunities? And actually what they created was a company called Unitary, where because of Sasha's background in physics, she was able to think and create an alternative way, a new way of detecting harmful content online. And their product has beaten all of the major players to now win contracts with, I can't name the companies, but as you can imagine, with the major social media companies to do all of their harmful content detection. And it's because it was two individuals who probably wouldn't have met, who probably wouldn't have immediately looked at each other and said there's a natural fit here.

7:06But they worked through that to come up with something that was distinct, differentiated and really valuable. How do you detect the type of people that you want in this pool to meet? Because your job is essentially to put co-founders together. Random individuals from around the world with different skills. And I know that you've been met with quite a lot of skepticism that that's a good process because it sounds extremely random. So how do you make it work? Well, I think just on the skepticism point, because I think it's worth pulling this out, we have this framing of a co-founder of convenience.

7:44We think a lot of people end up with the convenient co-founder, that you're going to start a company and you turn around to the person next to you and you go, you'll do. And the challenge with that is that you end up with, and we see this when teams come to us, you often end up with one co-founder that's much stronger than the other or worse you end up with two people who are actually fundamentally interested in different things who are trying to make it work because they believe they don't have any other option if you look at what online dating did for marriage i believe processes like entrepreneur first can do that but for co-founders so instead of having a very small constrained pool so previously most people met their life partners through work or through friends of friends or maybe at a bar um and now the number one way that people meet their life partner is through online dating and partly because it exploded the option set it you know increased optionality for who you could actually partner with i think that's why um products like entrepreneur first and these sort of talent investor products that bring together groups of people to co-found together uh it's not just about finding a co-founder it's about finding the optimal co-founder for you and so yes we're very obsessive about screening and who we actually let into that pool um and we've been i mean we spend a lot of time talking about this uh uh in the company because largely the people that i want in that pool are the ones that give me fomo i meet them and i genuinely feel scared there's like something goes in my tummy and we're we're trying to codify that into something that is you know easy for for us to articulate and largely there's a couple of things there's all the obvious things like high intellectual excellence you know good problem solvers it's not about being super academically smart but it's about having the smarts to be able to constantly solve problems every single day.

9:22It's about skills. So we like people who do have technical skills or who know how to work with people who are technically skilled. It's about being able to challenge convention, have bias to action, generate followership. But there's a couple of things that I think are harder to explain that you sort of get a taste of when you meet someone in person. One of them is personal exceptionalism. And founders are often perceived to be arrogant or overconfident. But I think that's too easy an explanation of what's happening. The best founders that we see have really high personal exceptionalism. And largely what that means is they believe their odds of success are better than other people's.

10:00And that may sound like deep arrogance. I think in some ways it's just really, really high self-esteem. They back themselves. They back themselves. And now this isn't sufficient to succeed, but it really is necessary. If you don't believe that, it's not going to happen. And so partly what we're trying to assess when we meet people is do they have really high personal exceptionalism um do they have this sort of innate belief they are different to others and that they have a better chance of success than others um whether you think you can or think you can't you're right exactly exactly that uh and so you know magical things happen when you bring together a very carefully screened group of people and um uh i remember you know we meet some people who do have reasonably high opinions of themselves and i remember one of them saying um my concern about entrepreneur first is that i'll never meet anyone who has the potential and ability as I do.

10:49And, you know, a week later, he came back with his tail between his legs, because everyone in the room thought that, which is kind of an interesting dynamic. But as you say, yeah, it really is necessary. If someone's watching this, and they don't have access to EF, how would you say they find a co-founder? Because what you're doing is making a great, clear statement of how important it is to have one. So if you're watching this, and you want to start a business and you're inspiring someone to be like okay I need someone how do they do it what are the practical steps? So your network is super important but I think it's being quite expansive about what is the network your friends are in your network your family is in your network anyone you've ever worked with the person you just met at a meetup is you know all of these people are in your network and so intentionality about finding a co-founder is super important I think it is really easy to fall into that co-founder of convenience confidence mode because you just haven't put the work in and I'm a big fan of quitting your job and starting a company I know that uh obviously there's financial constraints connected to that um but I think people often wait and they say oh I'm not going to quit my job until I have everything right everything perfect until I know it's it's the the perfect moment I believe you have a much better chance of creating that perfect moment by fully committing your time to uh those very early days finding a co-founder and developing the idea imagine if you spent four weeks trying to find a co-founder all of your time trying to find a co-founder so imagine if you're going out all to your network and you're asking for introductions so who from their networks your secondary degree connections imagine you're going to meetups and you know you're hustling to meet the the leader of the meetup the organized the meetup and you're saying to them okay let's go go for coffee let's build a relationship oh well who do you think is interested in founding a company right now and so being very intentional about that and using and working your network and if you have an idea of the space that you're interested in there are more and more easy ways to meet people who are in the same uh the same space as you the next really important bit is you you don't know they're the right co-founder for you until you start working together and we see lots and lots of people get stuck in the friend trap where they get on really well they both like climbing they love a bit of yoga on a saturday morning they both love a you know a almond croissant whatever it may be and they get distracted into this feeling of comfort and safety because they've found a friend.

13:07Now, a co-founder is the most expensive friend you will ever meet. You're basically giving half of your future net worth to this friend. So you need to make a really, really, well, financial business decision about whether this is the right person for you. Is this person going to double your chance of success, at least? If not, don't work with them. And so our push is, you know, the way we work at EF, but I think you can replicate this outside of the entrepreneur first, is you have to run a work test. so the way we we structure it is spend two hours talking getting to know each other then try and commit immediately to a belief a shared belief and in those two hours of first talking to each other talk about your edges what your skills are don't talk about um uh you know your your preferences or whatever talk about what you're good at and then based on that try and come up with a shared belief what do you think the future could look like how do you think your your edges could intersect and how could that lead to some sort of big picture belief?

14:03From that, you need to create a hunch about what that could look like today and then get working on it. And so that process can also sort of be done in about 24 hours. And then you're working on it and every 24 hours, every 48 hours, you're sitting down and saying, how do you think this is going? Have we been productive? And ultimately, the only thing that matters is your level of productivity. So what are you getting to at the end of the day? And again, with productivity being really, really clear on what that means fake productivity feels wonderful we booked 40 customer meetings great okay well what you've learned is that you can book meetings have you actually learned anything about your idea or the secret you're trying to generate no productivity is we're going out we're meeting customers we're talking to people and we're gathering learnings we're we're creating hypotheses we're challenging and updating those hypotheses but ultimately the best co-founding teams from day one are really really productive and the worst ones I think you know you when you're in a bad team and you keep making excuses for it you say Dan's great perfect co-founder for me yeah we haven't we haven't quite aligned on a on a belief yet we're not entirely sure what we're going to work on but I think just another couple of weeks another couple of ideas and we'll get there or you hear people say like oh yeah we're working on this idea and um yeah it doesn't really fit with anything Dan's done in the past or is interested in but I'm a really big fan of it and you know Dan's gonna come with me this all feels like a recipe for for failure um and i would say that's the kind of the the number one failure mode we see uh with teams on a yeahf is where just the co-founders are treating it like a friend relationship rather than like a business relationship um okay so you're meeting essentially a stranger and you're talking about some of the do's and don'ts of this stuff how do you actually communicate what your edges are because it's kind of odd right it is kind of odd and it's it's worth explaining to the person that you're meeting what you're doing as well rather than coming in there straight away with I've got a market edge what do you what do you have um so just to go through the edges and be really clear what you're trying to communicate is the areas where you either have a competitive advantage compared to other founders in the in the field or where you feel that it's just the strongest thing that you have and maybe you haven't calibrated that against different people so if I think of someone that we've worked with So Barney, for example.

16:15So Barney Hasier, he's the founder of a company called Clio. And when he joined EF, he had about 18 months of work experience, I think. So if he was going to go through his edge stack rank, what he would say is, so number one, I have a very strong catalyst edge, which is a set of behaviors. So I am a real hustler. I'm super commercial. And he would give some examples to show that. and then he'd say in terms of the markets that i understand i've just spent six months i think it was working at wonga and wonga was a big fintech company sort of 10 years ago and and so actually in terms of markets i understand i have a good understanding of consumer finance fintech and and uh how people think about credit and if you know that you only had six months experience so does that count is that sufficient for a market edge and what we talk about is sufficient experience And actually for your edges and particularly on market edge, you don't want to have too much experience.

17:11Often too much experience is a curse. When you have too much experience, you know what's going to be challenging and you can often shy away from the more disruptive ideas. So having a small amount of experience in an industry can actually be very powerful because you know enough to be dangerous, basically. You still probably have a degree of naive optimism about what might be possible. And then Barney would also be able to say, I've also got a technical edge in that I did a computer science degree at Manchester University. and so I'm able to build xyz and so if I was to stack rank them um definitely strongest on Catalyst Edge that's the thing that I really want to double down on I want to um work on something that where I can push really hard and be really super commercial it probably means I'm going to be the CEO in terms of market edge fintech is probably the area that I know best and specifically this piece about consumer finance and consumer credit and then lastly I do have a computer science degree but you know I don't know if that's really my strongest uh strongest point um so it's obviously he would be able to provide more color and more examples and more depth on those those pieces but it's very quickly communicating to the other person how should you understand me and how should you think about intersecting with me when you think about your your own set of edges so it's both categorizing edges and it's also stack ranking them as well so let's say that people have uh a reasonable understanding of each other's edges they're complementary i'm imagining that's important rather than just all the same um it's it's an interesting question i think too much is made of having totally heterogeneous edges uh often people talk about you know take your mba and then connect them to a phd have you ever tried to get an mba and phd to work together it's an absolute nightmare the way they've been trained to think the way they think the way they work the way they communicate is just so different they can't be productive so you need to have again sufficient overlap between your edges and between your backgrounds so that you can communicate and you can be effective together um for technical businesses our preference is that the CEO does have a degree of understanding about technology so either has worked with technical people in the past or maybe has like built or hacked some stuff together themselves because it just makes communication so much easier so I wouldn't look for somebody who's diametrically opposed again there are challenges working with someone who's exactly like you me and my co-founder Matt have very similar skill sets and you know EF is a fantastic business but we would both say the constraint on EF has actually been who we co-founded with and we've had an amazing 10 year plus co-founder relationship but neither one of us is technical so we haven't built a software business now our scalable unit is is um assets under management and so that's worked out pretty well but maybe we would have built much bigger businesses if we'd co-founded with someone who's more different to us rather than having exactly the same training and background how do you find people pick the right or wrong co-founder the right or wrong co-founder um it's one of those really frustrating things where you know it when it's right and when it's wrong you can kid yourself for years very merrily and we often have people who come to us and say yeah I think um I think it's going okay like what do you do you have any views on how how you think it's going and to me that's an immediate indicator that it's just not working the the co-founding team is where it is going well they're not even talking about their co-founder because it's not a thing.

20:24Their co-founder has enabled them to be super focused on their idea because it's not an issue. I think the productivity really matters and then having an open feedback culture. So we actually do a bunch of slightly weird things at EF. So we do a big feedback training piece. Everyone's together in the same room. Then we say, right, cool. Turn to your co-founder, give them feedback and then work out whether you should break up. And literally, usually two or three people at the end will be like, we've just broken up and everyone gives them a huge round of applause. And the idea is that you should celebrate these breakups because people are actually getting out of the wrong teams rather than it being something shameful or something that you're trying to avoid from a social perspective.

21:04So having structured feedback, so every Friday we're going to give each other feedback. And the other thing that we find helpful is using a number. One to 10, one to five, one to four, whatever it may be, but being able to put a number on how you're feeling because, and particularly working with somebody of a different nationality or from a different culture um who might have a different uh predilection towards confrontation actually the number can really really diffuse difficult uh or hidden um uh contentions so you know okay this week i'm a nine it's been a great week how are you feeling like okay well it's it's a five for me it's like okay well now we've got a jumping off point now we've got something to talk about about the gap between the two and maybe it's me as your co-founder pissing you off or maybe it's something else but at least then there's a conversation about it if you've already got an idea that you're into how do you find the right co-founder to be honest this is the most common thing that happens right somebody's looking for a co-founder because they have something they want to build the failure mode here is that in your pursuit of a co-founder you um are looking for an employee and you are looking for somebody to build your idea um if you're going to co-found with someone you are going to be so intimately connected um financially as much as anything else uh you're going to spend all your time together your financial futures are very strongly aligned um you cannot hire somebody into this role so you have to have a degree of vulnerability even if you think you have exactly the right idea when you go through the process of finding someone working through your network working through your second degree connections i would still come to the table saying these are my edges what I think I should work on is this this is what I'm currently really excited about what do you think um and so to give you an example I was just working with uh an individual who came to EF with a really really strong idea about what she wanted to work on um and no one really wanted to work on it with her and so she felt the idea more and more and more grew more and more conviction on what she was working on when she found her co-founder the person that she wanted to work with instead of saying cool this is what we're doing they basically went back to the beginning they went and did a bunch of customer development as if from the start and so he was able to go on the journey and they were able to co-create and she was like yeah we kind of got to the same position with some with a few tweaks but what matters is he was super bought into it and he felt like it was his idea rather than he'd be brought in to build her idea so you probably do have a really strong idea you probably well it may be good it may not be you strong attachment to that idea and you still need to have vulnerability and humility about that idea most ideas are crap most ideas are bad but the beautiful thing about ideas is that you get to a great idea through work and through customer development and and you need to do that with your co-founder and the more you can do that with your co-founder the more likely you are to have a successful relationship everyone when they start i'm imagining thinks that they're the ceo And that's how you get into lots of co-CEOs.

24:06And there are rare circumstances where co-CEOs work. The one that's constantly put out there is Calm. And, you know, there are a few others. What's your view? Who's the CEO? Who's not the CEO? How do you decide? Everyone wants to be CEO. It feels like CEO is an ego boost rather than it is a title for a person who has to do a certain job. And there are certain tasks associated with being CEO. But congratulations on your new role as CEO. I have after 10 years. after 10 years yeah good ego boost great ego boost well done thank god i got there yeah um uh the ceo is a role and if you are going down the road of building a vc-backed business the most important thing the ceo is going to be doing is fundraising and spending a huge amount of their time going out speaking to vcs fundraising and so when we're talking to people about who should be the ceo in a partnership it's largely how do you want to spend your time what are the things that you're good at.

25:02If you are good at managing a pipeline, a degree of sales, negotiation, everything that's connected to fundraising, and you're willing to do that for most of your time, go be CEO. If actually what you're more interested in is the product or the operations, you know, be CPO or COO. I suppose because we build a lot of software businesses, we are very strict on having a CEO and a CTO. And I suppose sometimes the thing we see is two CTOs together where neither of them wants to be the CEO and that really doesn't work um but yeah the CEO conversation needs to be the CEO was a role there are tasks attached to that attached to that role do I want to do those tasks um rather than you've got to leave the ego trip behind and how did that conversation just out of interest between you and Matt develop so your co-founder well it was exactly about this it was about how we currently spending our time and I was spending more and more of my time on CEO tasks and he was spending more and more of his time on directly working with the companies that we build and the talent that we find.

26:02And so it just made sense that for the next phase of the company, I'll do the CEO role and he's going to spend more time talent investing, which is the work that we do. Maybe we'll change back in five years time, 10 years time, who knows? But it's very much like there's a task to be done. It's now my turn to do that task. Was it a difficult conversation? No, it's very natural. He'd actually just had a sabbatical working for the government on the AI safety summit. And so he'd been out for three months. And so during that time, I was default. there was a coup it was a coup finally took him down exactly best moment um and yeah so it's a very sort of natural just shift in the way that we were spending our time got it okay so let's assume you found the perfect co-founder because magic just happened and now you've got a plan you know what you're working on what are the first 90 days look like how do you actually start to build something meaningful what does progress what does productivity look like the thing that everyone wants to wants to do is say i know what i'm meant to be doing it's customer development i know i'm meant to speak to customers i know i need to build something people want so we need to go and do customer development and tick that box and what people forget is that customer development never ends still 10 years in i'm doing customer development i was actually talking to one of our um companies that was about five it's about five years old and he's just about to raise his series a and he said after five years we've just got to an inflection point where suddenly our products are flying off the shelves so that's so interesting like was there was there a moment where suddenly you reach product market fit what happened and he said every Friday for five years I've spent six or seven hours speaking to customers doing customer meetings and so little by little we've inched towards and iterated towards a product that is like catnip for our for our customers but it took five years five years of Fridays doing five or six hours of customer development you know it's just it's just relentless so the best teams in those first early days will be doing two things, customer discovery and customer development.

27:54The split between those things is customer discovery is when you're sort of, you're asking the customer loose questions to try and understand how they're spending their time. And we often talk about this as the customer doesn't know the answer, but they do have the secret. And so what you're trying to do is, you know, everyone always says, no point in doing customer development, because as Henry Ford says, if I'd asked people what they wanted, they would have said a faster horse. Well, Henry Ford was just doing his customer development wrong um should have stopped asking horses idiot yeah uh and he should have been saying okay well talk me through how you experience this certain problem and people would have said yes it takes too long to go 30 miles in my horse you know my horse craps all over the street it's really stinky whatever um and he would have been able to understand the root of the problem rather than how the person would want to solve it Sorry, just interlude reminds me what Rory Sutherland now says about the HS2 project.

28:49You know, for the fast speed, the super hyper speed train that the British government have developed and billions gone wasted, etc. And he's like, the whole thing has been asked from an engineer's point of view, which is how do we make a faster train between London and Manchester? Whereas actually a marketer would have just said, most people going from London to Manchester for work, quite like that two hours for productivity, how can we make the best experience inside what we currently have? how can we make the best trains he was like just give 100 million quid to johnny ive yeah and design the best train experience everyone would have been happy but they've spent billions doing new railways swedish quality trains yeah yeah such a good point um and the best book that is out there on this is the mom test by rob fitzpatrick i love that um and it's a great really practical book and it's called the mom test because it's you know it's it's um i don't know why he's called it that the mom test yeah uh the reason the reason is because i use the mom test to develop heights um your mom is always going to think you've got the best idea i thought that and then i yeah okay so if you tell your mom uh what your idea is she's going to tell you it's amazing so your job is to find something that your mom isn't going to do that with and ask better questions and not basically remove your bias yeah one of the one of the ways he positions customer uh discovery that i think is really powerful is it's really easy to come to this as a um you know a entrepreneur a business person doing business things and so like tell me about your problem when did that happen what time was it on tuesday that that happened like um what three things happened to you right away and actually the way that he says is you should take it as if a friend has just come to you and said i've just broken up with my boyfriend and you don't say when did it happen was it tuesday had you just had a glass of wine um and you say oh wow tell me everything about that what happened how did it make you feel um you know what are the what were the circumstances like how can i help um and so thinking about this as a way of really digging into the customer's psyche to find the secret and i keep on saying secrets and it's it comes from this um uh peter teal framing of the best companies unnecessarily founded on a secret because if everyone knew it then that company would already be built and so airbnb for example is a great example of a secret where um the idea that you would go into a stranger's home and originally like sleep on their couch and pay them for it almost feels like a disgusting idea like that's that's a crazy idea so that's a secret it's a really great really great secret and the reason why companies that are built in spaces that are secrets are so powerful is because uh there's often very little competition and means you have the the time and space to kind of build in private while everyone else thinks your idea is terrible but it only works if your customer desperately needs and wants what you're what you're providing um so the early days those first early days are going to be largely on customer discovery and customer development discovery is where you're trying to understand the customer and development is where you're beginning to soft sell what you're doing hey look at this mock-up um how would you use it uh you know um actually trying to get them to use very early sort of messy mbps minimal viable um products which is kind of like the scrappiest simplest version of your product that people might actually use while you're doing that there are two things that people often forget to do one is you do need to keep an eye on your co-founder relationship um so the important thing here is if you are working with someone that you don't know very well you have to do this stuff together so part of what you're trying to do is create a shared brain so you're trying to get to the point where the amazing thing about founders is they are the world expert on their idea no one else knows as much of them about this really really niche tiny thing as you say i know way too much about co-founding relationships like i know so much about this very very niche thing which is why you know i'm the best founder for this company and it's not like i knew that before it's that you develop the expertise as you build and you think it's the most interesting topic that everyone else has to love and be fascinated by as well and get very annoyed when they don't quite care about it as much as i'm a massive for dinner parties um and so you need to both have both co-founders in that and then so it's no like oh i'm the ceo so i'm going to do the customer development and you're the cto so you're going to sit and like you know code and build stuff is going out speaking to customers together and talking talking talking like what are we learning what are we observing and you'll probably observe different things you'll probably learn different things and so it's bringing that all together to constantly update our hypotheses of okay what's happening what's happening here got an amazing company called acurex that was founded seven years ago and that's the founder on secret leaders actually oh amazing jacob oh yeah yeah fab um And it's a really interesting story because they started off both pretty young.

33:27Jacob had spent sort of 12 months in healthcare consulting. And he came in as one of those people with a really fixed idea. The thing that I'm going to do is I'm going to prevent overprescription of antibiotics. And he had this sort of zealous belief in this, this, you know, real missionary founder. And he and his co-founder Lawrence spent a couple of years trying to sell this into doctors. And doctors were like, yes, such a great idea. such a great deal but they never used it because actually there's a bunch of reasons why they can't do that you know patients can ask for antibiotics and they have to prescribe them all the rest of it but the thing they did that was really good was they spent so much time in um doctor surgeries literally working in doctor surgeries alongside them that they were able to observe the real problem and the real problem was that doctors just couldn't communicate with their patients people weren't taking their drugs weren't turning up for appointments weren't able to do a quick, like, I think I've got a weird mole, what is this?

34:23And they realized the challenge that they actually needed to solve through spending so much time with their customers was SMS text messages. And so the first version of Accurix was literally just enabling doctors to SMS text messages. And this is not in 2012, this is like 2018. Allow them to text their patients. They then became the platform for communication between patients and doctors and are in basically 99 % of GP practices in the UK. And then COVID happened. And then COVID happened. They ran the vaccine signups and like how to get access to a vaccine. Nationally. So absolutely crazy growth.

35:00And really the first three years, not very much happened. And then they listened to their customers. They updated their hypotheses and got to the point where they found a secret that no one else, and like it's so weird. You would never think that text messaging is going to be a big company. Now it's a really, really big, very valuable company. Okay. So you found your co-founder. you've got customer discovery what's that bit in between what's this shared belief like how are you actually developing this in that right direction so the best founders have to manage the best founders do two things that are really really hard they have to have a really long-term view about the big vision for this company what's the change that they're going to make in this world and then they have to distill that down into and today I'm going to send 30 emails and have like four coffees.

35:43And that's really, really hard. But the very early part, what we encourage people to do is get excited about that long term vision, like work out what that shared belief is. And we talk about it in the framing of how do you think the world will look different in five years time. So to give you an example, a lot of the best businesses are founded on a strong why now. And often you'll hear investors ask this, like, what's the why now for this business? And it's basically saying what's changed that's created a gap in the market or an interesting opportunity that can be that can be captured and so to give you an example we've got a company called tractable and their shared belief was you have these two um uh young computer scientists and there'd just been a paper released in i think it was 2014 that basically said one day computers will be able to look at images and recognize them as well as humans can now today we're like well yeah obviously but actually in 2014 that was quite a counterintuitive point of view and so alex and Razzle and the founders of Tractable, their sort of counterintuitive belief was like, we are going to choose to really believe in this paper.

36:46We believe this is possible. So if you believe that's the future, how can we work from that into what we're going to do today? And actually what they were, the very first thing they started doing was Alex said, okay, well, one of my edges is that I have a market edge in, wait for it, polyethylene pipe welding. During his master's, he'd had exposure to a company that did literally like welded plastic pipes together. And he's like, okay well that's a good place to start there are problems in pipe welding that we could maybe apply computer vision to and so they started trying to do customer development in that space and build a product specifically for that and what they began to learn was that the market was actually just really really small so at that point they had a nascent idea a hunch about what the product could be the vision stayed the same but they completely changed the market said okay this market's really small we literally said what are the big markets what are the big markets we could go after and they started going after insurance which is one of the biggest markets in the world um and you would think again like you know two 23 year olds going after insurance like a highly highly regulated market and it doesn't make sense but they were able to um convince through building relationships through customer development able to convince some of the ceos of some of the biggest insurance companies in the us and weirdly japan even though neither of them have a connection there to give them data sets that help them build this the first version of their their product they then ended up being Europe's first computer vision unicorn um and uh you know now work with Geico and all the biggest insurers in the in the world um but really it came from this like big vision we're going to choose to believe in this thing that everyone else thinks is crazy and we're going to run with it um and today we're going to start on this really micro tiny tiny little problem just to see if there's an opportunity there um and just to to start building the product so when when we're thinking about ideas um what we encourage people to do is I think about ideas like an onion okay so an onion has lots of layers you cry and they do most people's ideas do make me cry um because they're bad right and the reason they're bad is just they haven't thought about them enough and they haven't got to the heart of the onion you know the best ideas are the you know that really soft bit in the onion that looks a bit like a shallot that's what we need to get to and so typically and i see this when companies pitch to sorry and to be clear that's the secret yeah right so you get enough wise enough drilling down yeah that's the love of And the way that I would categorize the stages is outside of the onion is things anyone would be able to tell you.

39:10So, for example, if you think about the Accurix example that I already shared, like most people could tell you, oh, it's really annoying interacting with your doctor. Yeah, like, cool. The next layer in is like, OK, well, if you asked people who were in the industry, what would they say? and they would say oh well it's really annoying interacting um between uh patients and doctors but you can't fix it okay and then the next layer in the onion is like okay maybe what other founders in the space might know which is like oh um it's really annoying interacting with patients it's going to be really difficult to fix and maybe the answer is a machine learning platform that automatically responds to the x blah blah blah and then the next layer in the onion is what do you as a founder uniquely know which is it's nothing special it's just simple sms text messages to fix all those problems.

39:58And so as a founder, what I would encourage you to do in those early days of developing the idea is to ask yourself, where are we on the onion? And what do we need to do to get to the center of the onion? And largely it's customer development. You say one of the favorite questions you like to ask people, where's this going to be in five years? It's interesting because like the opposite thing is so famous, the Jeff Bezos thing of what's not going to change in 10 years and that's what makes them successful. where do you think is the the right time or right place for each of those different statements or is it just because amazon is a consumer company and therefore that's an easier framing for it than a tech company so one of the things we strongly believe in have seen to be true is that ambition attracts resources so the best startups are the ones that can attract the most resources they attract the most funding they attract the best people they attract the best advisors and so how do you demonstrate to people that you're worth being the the entity that gets all of those things and largely it's through ambition as you demonstrate your ambition through having a view about how this startup is going to change the world and humans love stories humans don't particularly enjoy numbers no one wakes up in the morning well some people i suppose maybe people who work in the city and leaps out of bed and says you know oh i'm so excited to increase all my metrics by 0.25 % today.

41:19Most people jump out of bed and say, so for example, if you work at EF, it's I might meet the future Mark Zuckerberg today. And he has the opportunity to make a massive impact in the world. And I'm really excited to do that. So as a founder, you're thinking about what is the story, the ambitious story that's going to attract resources to you. And it's often about what change you're going to make in the world. Like, how can you make that happen? So I get the Jeff Bezos point. Obviously, Jeff Bezos is a very successful founder, I think will be all right. But I think for founders who are in the early stages, it's really working out, how can I articulate the change that I'm going to make in the future?

41:53And then how can I articulate what I'm going to do today that will eventually get me there? Yeah, so so much can go into the idea of being a great founder and a great co-founding team, more importantly. What are the most important ingredients, do you think? Because we sort of talked about right idea or right energy, but what does this picture look like? So one of the things that is often either talked about too much or not talked about enough is passion. And where does passion fit into this? I'm a passion skeptic. I'm anti-passion. And I think passion can be very, very misleading. Most people don't actually know what they're passionate about.

42:33And it's one of the reasons we talk about edge is because if you say to somebody, what are you passionate about? They'll probably give you a long list of things that they do occasionally. But if you look at how they spend their hours in their day, how they actually spend their time, i.e. their life, those are the things they're typically passionate about. They just wouldn't categorize it like that. And so I'm very skeptical of startups built from passion projects. Those spaces are very, very crowded. It's often sport, leisure, dating, food. And so you get very, very crowded spaces. And so even though I'm a passion skeptic, I think it is worth saying, it also doesn't work if you just work on something where you want to make money.

43:10um so we talk about it as like a sort of a two by two where you have to both have a right to win which is your edge and a want to win you actually have to want to do it and if you just want to do it but you have no right to win well okay you can try it's going to be really really hard if you just have a right to win but you don't want to do it you're basically pushing water uphill so the overlap of those two things is really really important one of the frameworks that often gets talked about a lot is um this missionary versus mercenary founders so missionary founders are somebody who, you know, there's a problem they want to solve in the world and, you know, they will do whatever it takes to fix it.

43:46Mercenary founders are like, show me the money and I'm going to build there. The perceived wisdom is that you should invest in missionary founders because they're more resilient and, you know, their passion will attract more resources. I would actually push and say it's not just about missionaries. You have to have people who are at the intersection of missionary and mercenary. You have to both have a mission that you're excited by, that sort of ambitious piece that will attract resources, and you also have to want to make money. Because ultimately being a founder is about making money. Like if you want to be successful, you have to build a company, particularly in this, now we're in this bear market, you have to be able to generate not just revenue, but also someday profit.

44:23And so having founders who, so if you think about the Accurix example with Jacob and Lawrence, where, you know, Lawrence came in with a missionary zeal about preventing antibiotic prescription. But he was mercenary enough that, and okay, it took three years, but he was mercenary enough when that opportunity wasn't there to say, actually, maybe what I care about is the efficacy of our healthcare system. And so that's what I'm going to go after instead. And the opportunity is here. And so I think ultimately, the best founders are a little bit missionary and a little bit mercenary. And it's the combination of the two that's so powerful.

44:56I like this idea that your passion is for you and your purpose is for others. And I'm wondering if purpose is also a bit fluffy for you, right? Because there's this sort of way of framing things, this sort of narrative, isn't it? It's all narrative. Whereas what you've said is want to do and write to do, which is much more literal. So how do you think about purpose? Building a startup is brutal. Most people will fail. Even the really good ones will fail. And I actually do worry about if you believe you are working on your life's purpose and it fails, how do you feel about that? What does it do to you?