Is Entrepreneur First Worth It? Part 1: Introduction
What it’s really like to start a startup at the world’s premier talent investor
“Do you really want to spend the next five years visiting underground mines?” our advisor asked my cofounder and I. I felt my stomach drop. My cofounder, a talented roboticist, and I were working on an idea for a new computer vision system that could understand and react to small changes in physically challenging, low-light environments with poor internet connectivity. We thought our initial market would be in the mining industry, where we could lower the cost of manual inspection.
The problem? I didn’t know anything about mining. But that was overcomable. After all, I was the business guy on our team! Surely I could figure out a new industry and talk my way into some customer discovery calls. But the bigger problem was that I realized I didn’t want to dedicate the next five years to learning about an industry that didn’t interest me. In fact, I had a hard time thinking about spending another week validating that our hunch was a real problem that needed solving. I only had three weeks left at Entrepreneur First (EF) though, and I dreaded the idea of returning home to Vancouver empty handed, without a startup.
Three months earlier, I had joined EF’s Fall ‘22 cohort in Toronto in order to fast track my path to entrepreneurship.
EF dubs itself a “talent investor.” It’s like an accelerator, but instead of recruiting startup companies like an accelerator does, it recruits potential founders that want to start startups from scratch. You don’t need to have an existing startup idea to join EF. Over the course of an intense three-month program, participants form teams and test startup ideas. If you make it to the end, you’re given the opportunity to pitch to EF’s partners for pre-seed funding. It’s backed by some of the startup world's biggest names including Patrick and John Collison (Stripe) and Reid Hoffman (LinkedIn).
I have a lot to say about my experience, so I’ve broken my story up into a 4-part series: Part 1: Introduction, Parts 2 & 3: My Experience at EF and Part 4: Lessons Learned.
In Part 1, I’ll explain why I decided to join EF, how it works and what surprised me about the first week of the program.
Why did I apply to Entrepreneur First?
I had been with Lendesk, a mortgage fintech startup, for eight years. I joined as the second employee, eventually becoming Chief Product Officer, and I was there through its acquisition by Rocket Companies. I had never intended to stay as long as I did, but I felt a great deal of ownership in what we had built, and I wanted to see our vision for the Canadian mortgage industry become a reality.
Last year, a serious cycling accident caused me to reassess what I wanted in my career. I realized that I wanted a financial outcome that most jobs can’t provide. I wanted a project that I could sink all of my energy into, knowing that the upside potential justified the effort. And I wanted to build something from scratch.
I decided that I wanted to build a business, and I didn’t want to wait until I had the perfect idea or cofounder - I just needed to get started. I didn’t know if starting a VC-backed technology company was the right path for me, but joining EF seemed like a good way to figure that out.
So I applied to EF's Fall `22 cohort, took a sabbatical from Lendesk and moved to Toronto for three months.
How does Entrepreneur First work?
EF is a guided, three-month program of co-founder speed dating and rapid testing of ideas. You’re given a stipend during the three months and lots of tough love. At the end of the program, you pitch for pre-seed funding from EF, and if you succeed, you develop an MVP and prepare to raise a seed round over the subsequent three months.
Your life at EF looks something like this: form team -> test idea -> refine idea or breakup team and start cycle again.
EF basics:
EF’s program is divided into two, three-month phases: Form, where you find a cofounder, validate an idea and pitch to EF’s Investment Committee (IC) and Launch, where you secure your first customers and prepare to raise a seed round. Form just ended a few weeks ago, and it’s the topic of this series of posts.
EF believes that the best startups are created by co-founding teams of two, with one commercial co-founder and one technical co-founder. So, cohorts are composed of equal parts aspiring CEOs and CTOs. I was on the commercial track.
EF also believes that the best startup ideas come from hunches about counterintuitive, shared beliefs between co-founders. Mutual beliefs are formed based on overlapping Edges. An Edge is an unfair advantage in solving a problem, like industry expertise or technical skill. Edge should answer the question, “Why you?”
To create winning startup ideas from scratch quickly, EF forces collisions between commercial and technical co-founders in two ways: mandating that everyone be in a team; and challenging teams with high expectations for productivity. Because the opportunity cost of being in the wrong team is so high, founders are encouraged to break up quickly if they’re not blown away by their mutual productivity. Breakups are celebrated at EF; the average founder forms 2.4 teams over the course of Form (I formed four).
What do good ideas look like? EF is looking for opportunities to solve hair on fire problems, i.e. problems that are so urgent that customers are willing to try anything to solve them, in large or growing markets. EF is only interested in unicorns, so founders need to explain how their idea will generate $100M in ARR.
By creating as many forced collisions as possible and maintaining a high bar for ideas and productivity, EF maximizes the odds of producing a billion dollar startup each cohort.
What happened?
A few weeks before Form kicked off, EF shared the bios of everyone in my cohort. I stack-ranked the technical founders and set up Zoom calls with my shortlist. I couldn’t believe the caliber of technical talent that EF had attracted. How was I going to position myself in order to work with the best of them? At Lendesk, I saw firsthand how competitive the market for rockstar developers was. I pictured myself competing with the other commercial founders to work with the standout technical founders.
I was wrong. I quickly learned that the constraint in starting a startup - at least at EF - wasn’t a shortage of technical talent. Rather, the scarce commodity was non-obvious insights about business problems, grounded in domain expertise. A lot has been written about the importance of solving problems that matter, but I had never seen this startup maxim play out so vividly than during my first week at EF.
Having built software for the mortgage industry for a number of years, I had industry insights to share and was able to attract excellent technical founders to partner with. Everyone I wanted to work with was approaching me. I couldn’t believe it! The insights I shared about the mortgage industry and home ownership weren’t all good insights, but they sounded profound to outsiders.
The fact that a generic insight about an industry can sound profound to an outsider demonstrates the importance of Edge, arguably the most important concept of EF’s platform. Without sufficient domain expertise on the team, it’s easy to fool yourself into thinking that you’ve found a valuable insight about a problem, when really, it’s common knowledge.
This situation wouldn’t be so bad if you could validate the problem quickly by connecting with prospective customers or industry experts, but you can’t because you don’t have a network to call on in that industry. So inevitably, problem validation takes a long time. What makes this situation especially dangerous is that during this time, you probably feel like you’re learning, and you are - but you’re only learning your ABC’s. The result is that you spend too much time trying to validate something that turns out to not be a real problem.
Of course, there are too many counterexamples to name. And it’s not that industry experience is a prerequisite to startup success - in fact, it can be a disadvantage in some cases - but without it, you need more luck, or more time to learn. And time is not on your side at EF.
Before Form officially kicked off, I was already working with my first choice of technical cofounder on a problem that I had an unfair advantage in solving. Specifically, we had picked the problem of the manual verification of documents in the mortgage industry (an operationally inefficient process that is prone to fraud and delays). We even had a verbal commitment from a mortgage lender to be our first customer. I thought we were killing it. But we hadn’t yet had our first 1:1 with the EF staff, and I was about to learn a lesson that would change how I approached the remainder of the program.
That’s it for Part 1. In Part 2, I’ll cover the roller coaster ride that would be the next 9 weeks.
As someone currently considering EF Paris, this blog series has been great. Looking forward to the 4th installment
Dan, this is a fantastic piece- I look forward to reading more. Please keep writing- your storytelling is amazing!