Investors wait for supply to appear, and hope to be in the right place when it does. They hang around where gold appears fastest, but they can’t make it appear faster.
How do we know this is the case? Because waiting would be an insane strategy if you knew the alternative – how to create supply.
Creating the supply of an otherwise scarce resource will make you very rich. If you control the supply of something scarce, you control the economics associated with the resource, and can create monopolies of many kinds.
Given the dominant investment strategy is not to create supply, but to compete for it, this suggests no one has figured out how to reliably create valuable companies from scratch yet. If you knew how to reliably create valuable companies, you would be doing it already.
People have been trying to figure this out for a while. Academics have studied startups for decades. You might protest that universities, accelerators, incubators, pre-seed investors start very early – just some technology, an idea, or a pitch.
But even Day 1 is fundamentally different to Day 0. As soon as a company exists, you lose the chance to study how it came to be. No one in the world has systematically, at scale, observed what came before.
This is what we’re doing at EF. We are taking in raw materials – hundreds of extraordinary people from across the world every year – and putting them through an iterative, data driven methodology. We are experimenting all the time: collecting information about the founders we support; understanding their qualitative experience; and learning what works and doesn’t work. From the moment we first make contact, we are building a methodology to get them from Day minus 100 to Day 1 of something valuable.
We go beyond Day 1, to the end. This is a massive feedback loop – from the thousands of people we interact with, to the hundreds we fund, to the tens that become outliers. Every step of the way we are there supporting, tracking, analysing. Over time, this turns the mystical process of creation into a science. What inputs yield what outputs? What interventions change outcomes?
At EF we study outliers from before they even know they’re outliers, right through to the day they prove it. This has never been done before.
Uncovering the secret to finding, creating, and supporting them, means owning the supply of a scarce resource. EF is alchemy for the 21st century.