The Mathematician Who Built a Hedge Fund - with Dr Ewan Kirk

Speaker A: Coming up in today's Idea Space podcast,

Speaker B: it might be stressful for you because your company might be going down the tubes or whatever, but it's even more stressful for your employees. It's a very different thing being a manager and a leader. Managers just tell people what to do. Leaders inspire them to do it. And it's almost the first question I ask is, so who are you going to sell this to? This algorithm, this idea, this product, this thing, who's going to buy it?

Speaker A: Welcome to the IdeaSpace podcast. IdeaSpace is the university of Cambridge's startup community and incubator. In these episodes, we sit down with founders, investors, experts and innovators to unpack how things actually get built and to share insights on entrepreneurship, innovation and leadership. I'm Ben Hartley. Let's get into it Today I'm joined by Dr. Ewan Kirk, mathematician, Goldman Sachs partner, hedge fund founder, investor and philanthropist. Proof that the very best careers rarely follow a set plan. Ewan grew up in Glasgow, earned a PhD in general relativity, spent 13 years at Goldman Sachs, and in 2006 founded Cantab Capital Partners, growing it from two people to four and a half billion dollars under management. I first asked Ewan what he thought he'd do with his life when he was growing up.

Speaker B: I had a plan. I was going to go to Glasgow University. I was going to go do a degree in maths and physics and then I was going to do a PhD and then I was going to become a research scientist because that's what I thought I wanted to do. A big part of that was actually I read a lot of popular science books. We didn't have a lot of money, so I was very focused on working and I did a lot of. I worked for five years every Saturday in a tire fitting bay, which was hard work, but I hadn't really made that leap to something that might be more described as a sort of entrepreneurial thing.

Speaker A: But uh, I guess that need to work and desire to work probably held you in good stead for yourself as a founder. Later on you touched on entrepreneurship or entrepreneurial activity or thinking. When was the first time that you thought about that?

Speaker B: A friend and I had come up with an idea where we could do Computer Aided Design and Computer Aided Drawing. CAD was the big thing. And between us I was very geeky. I knew how to program, been programming since I was 15 or 16. By being really incredibly smart, you could fit a fully featured Computer Aided Design package into a CPC 128 or 256 by doing sort of clever overlay techniques and all sorts of things. And you could draw stuff and zoom in and zoom out and do all of those things that AutoCAD could do. And I can't remember why we started doing it, but by the time we'd got to this point we thought, hey, this is actually quite good. And so we formed a company.

Speaker A: So this would be that university, was it?

Speaker B: Yes, this would be post undergraduate. I spent my undergraduate career mostly playing in a band.

Speaker A: There's a whole other podcast I wish we could.

Speaker B: Well, you've seen my collection of guitar.

Speaker A: Yeah, I'd love to delve in on that one.

Speaker B: So that was really my sort of introduction to entrepreneurship. And also at the time we're talking mid, uh, 80s online didn't exist. I had to go to the library and I imagine almost everyone listening to this podcast is going, what's that? How does that work? But, but it was hard to do. But we sold, and remember, no Internet to advertise things. How you take out adverts in computer magazine, all of those sorts of things. And was it successful? Yes, in a sense. Uh, eventually we sold the rights to it to somebody who ran a chain of computer repair shops for the unbelievably large amount of money of £10,000. When you are a struggling PhD student. Obviously if you divide into that the amount of time I sort of was programming till 4 o' clock in the

Speaker A: morning, it's probably about an hour.

Speaker B: But that was a little bit of that introduction to entrepreneurship.

Speaker A: So in terms of academia or commercialization of research or work that's done within academic institutions, you worked at, um, Scientific, uh, Generics?

Speaker B: I did, yes. They are now Sagentia. So originally I joined Scientific Generics and we sort of internally spun out a group called Metagenerics, which was more about computer technology. And the idea was by using sort of font technology and this thing called sgml, which is what HTML came out of, plus the new technology of isdn, you could switch on your computer in the morning and get a newspaper that was custom designed for you. Fast forward 20 years, of course. And, um, I turn on my phone on my computer and I bring up for me the ft. And this is custom design for me. It's got all the things I'm interested in. It was a really interesting, great project.

Speaker A: And did that come out of research then? Was that specifically sort of spun out?

Speaker B: Not really, no. This was not really a spin out thing. It was more the thing that that uh, taught me was the importance of being a salesperson One of my bosses was Lloyd Blankfein, who ran um, Goldman. And Lloyd always said every job is a sales job. You're either selling up to your boss, down to your employees, out to your customers, out to investors. Whatever you do, at some point you are selling. And the way that it worked at Message Generics was that we kind of sat around on Monday morning and brainstormed some ideas and then the job was to go out and sell that idea to somebody who's going to pay for a consultancy job. And that was a really good teaching experience.

Speaker A: Yeah, we do find with a lot of early stage founders and, and as maybe more so within the academic founders or the, the spin outs that that gets a little bit lost, this idea that you actually have to sell it. It's not just all about the technology and the product, but you've got to sell yourself as a founder. As you've said, you've got to kind of think early on if you're going to sell this, that means there's a customer, who's the customer? Where do I find them? And that gets lost, isn't it?

Speaker B: I'm skipping forward a little bit, but I've been the Royal Society Entrepreneur in Residence at the, uh, center for Mathematical Sciences, the maths department here in Cambridge. And I do office hours. I do electric course, but I do office hours where people can come to my office and explain their often not very good business idea. And it is fascinating and it's intellectually very demanding because these are very, very smart young men and women or sometimes older men and women. And it's almost the first question I ask is, so who are you going to sell this to? This algorithm, this idea, this product, this thing, who's going to buy it? And there's, I mean you can't really do it on a podcast, but there's this sort of. I haven't really thought about that and being able to sell things. Uh, I'll come back to that selling thing later on when we talk about later in the career. But I think it's an important skill to learn.

Speaker A: Really interesting. So after that period you then. Well, you eventually joined Goldman Sachs?

Speaker B: Yes, I left the generics group partly because we were sort of caught up quite badly in all of the fallout from the Robert Maxwell affair. The multimedia, uh, publishing environment that I was talking about. The lead contractor on that was Maxwell Communications Corporation. So that was pretty ugly. And so I turned up a Goldman. I had these weird set of interviews where they asked me programming questions and maths puzzles. And then somebody Said, okay, you're in. Would you like to be our oil strategist? And I said, I don't know what that is. I just didn't. I knew nothing about finance at all. Maybe embarrassingly, I didn't even know who Goldman Sachs were. I, I went to their offices for the interview on Fleet street. And I remember pulling the door to, to walk into the main lobby and it was heavy and solid. And I remember thinking, wow, this must be a Qu Marble and tanks. Because I'd only ever worked in science parks and university departments, which as we all know, are sort of made out of chipboard. So that's where I ended up. So initially it was just me on the oil desk with the oil traders and the other commodities traders. And they didn't know what to do with me and I didn't really know what to do. So I ended up sort of fixing their phones. I'd be crawling around under the relo boards, plugging in the phones and trying to fix them. And then eventually I asked somebody. There were only about three or four quants, however you want to use that phrase. Quantus is short for quantitative. So the word quant came to apply to groups of generally mathematicians, programmers, physicists who were applying more advanced mathematical methods to two very distinct parts of finance. Um, the one that everyone thinks is important is what's the price going to be tomorrow? The prediction side of things. Or in a much more subtle way, if I look at the state of the market today, if I compare what happened when the state of the market was as it was today to as it was in history, is it more likely that this thing will go up or down? And if it's more likely to go up, then I'll buy it and if it's more likely to go down, I'll sell it. Now that is simplifying things an awful lot.

Speaker A: So you were arriving as essentially a scientist, mathematician, as a programmer problem. And did you feel like you sort of fit into that corporate world? Was it an easy fit?

Speaker B: It was a very different corporate world. And there is this thing about finance where everyone thinks it's the same and actually everything is very different. And there was nothing as different as, uh, the oil trading desk at, uh, Goldman Sachs in the mid-90s. You could still smoke on the desk. We had a telex route. People used to go down the pub at lunchtime on the interest rate desk. People would go out for a run at lunchtime on the oil desk. They would do it. Commodities is. I enjoyed it because it wasn't quite as structured, it was a little bit mad. Nobody really knew how to do these optiony things and most importantly, nobody knew how to sell them. How do you actually go and say to KLM M or an oil producer or a fuel oil consumer or any of these people, you have a risk and here is a way of managing that risk. You're saying to them you have a risk exposure in your company that if the price of jet fuel goes up then you're going to have to pay more. But you've sold all of these seats going forward, so how do you do that? But that was before you jet fuel surcharges for example. So that's a selling job and it's about selling being smart.

Speaker A: That's interesting that experience. It sounds like it's really stuck with you for later on. Just as an aside, you're probably in and around people who are dealing with huge sums of money in these transactions.

Speaker B: There's two separate things there. One is how easy is it to deal with large sums of money. So we're going to do a financing for Middle eastern state, it's $900 million. You better get the numbers right. It's terrifying. Or later on the notional numbers. Cantab Capital managed nearly $5 billion and notionally we might have been trading 20 billion DOL. These are just numbers. One of the things I. This is a little bit of an aside. One of the things I really liked doing when we started the firm was early on we didn't actually have automatic trading systems because they're very hard to write. So the models, our models or the system would say okay, at 415 today we need to buy 100 of these things, 700 of these things, sell these sorts of things and it would produce the trading list and then you would actually have to trade it on a screen, do the clicking. It's not very efficient. But the great thing was I got everyone to do it. The mathematicians, the programmers, everyone did a bit of trading. And it's incredible how quite early on somebody gets quite blase about, about uh. The thing comes up and it says, okay, you've got to sell 120 million Swiss government bonds. I go okay, well I'll do that on the thing. So you get very bloated things. Transitions that happened in finance was that over the be the right place at the right time is always important. So over the period, sort of when I started quantitative people, programmers, mathematicians started to be much more highly valued because back in the day it was really about traders were the most highly valued People, salespeople, a little bit less so. And the geeks, they were in the back room. Nobody saw. So my first thing at, uh, Goldman, my very first boss at Goldman, I arrived and I was given this office in the back. And the guy in the oil desk said, you're not sitting in the back. Come and sit right here. And I was sort of sitting right on the trading desk, which was great. And suddenly this became really valuable. And so, yes, people were being paid quite a lot of money. But increasingly, being smart, being a geek, happy to say I was. I was a geek. Being a geek got you paid too. And that was good. I mean, that was. That was a nice thing to do.

Speaker A: Yeah, I bet. And so. So at this period, you ended up leading a, uh, large team. I know we're, we're probably skipping quite a few years here, but at what point did you feel that you were becoming, you know, from the geek to a manager or a leader of people? Was that an easy transition for you?

Speaker B: It's a very different thing being a manager and a leader. Managers, uh, just tell people what to do. Leaders inspire them to do it. And so I've never really thought of myself as a good manager. I hire good people. I expect them to sort of get on with what they're supposed to do. Hopefully the good leader says, let's all go and do this. And most people say, yeah, sure, let's go and do that. A manager says, you're doing this, you're doing that, you're doing the rest of it. So I, I don't really equate the two. And I'm not, uh, I'm an okay manager, Obviously, I can manage large groups, but I don't think that's really the job. And it has always been the case, and indeed, for the rest of my career, it was only in 2022, so four years ago, when I joined the maths department as the entrepreneur in residence, that I had an office. And I think that's really important. Yeah, they sit on the desk.

Speaker A: So.

Speaker B: So I always sat on the desk. Gorman. Uh, but at my. And. And it's not just sitting on the desk. Doing your leadership management role, you've got to be able to walk the walk as well as talk the talk. So I would develop pricing models, I'd develop products. I'd go and do that. When I was at Cantab, I would come up with trading models or trading systems. And my trading systems and trading models were no more valuable than anybody else's. In fact, in some cases they were Quite a bit worse than other people's and therefore the rest of my team would tell me, no, that's completely crap. But if I have a leadership management style, it is sort of management by flyby and being in the center of it. Because it's amazing how when you're sitting in an office, uh, the typical trading desk thing that everyone's seen on the television, you know, long lines of desks, banks of monitors, all of those kind of things, people in braces, it's not all like that. But if you think about that, then one of the things that it does do and one of the reasons that it exists is that information flows very fast. So when I was running my own firm, I'd be at my desk and you'd hear not a conflict, but you'd hear a tension behind you between a couple of people who were not arguing as such, but you could feel that it was getting a little bit heated and that's the time to stand up and walk over and say, hey, how's it going? And turns out this person wants to do it this way and this person wants to do it that way. And maybe you go and sit in the conference room with a whiteboard and work it all out and everyone's kind of happy, I think.

Speaker A: And it's not something you could have done shut away in an office. And I'm, I'm, I'm wondering whether you're sort of early times within starting your own company with Dalek at university and, and that might have given you a sense of having to be in and amongst it rather than, I don't know, maybe not.

Speaker B: That's, that's an interesting insight. I think some of it is just a personality thing. I do think that sort of leadership and being good at a job is a sort of fractal thing. You do need to be able to understand what's going on a long way down in the organization, mainly because the good ideas come a long way down in the organization. So there's two ways of doing that. Either you have an immensely flat structure, so it's you basically and 120 people that report to you, or you, you. If you're going to have people that report into you, that have other people reporting into you, they need to be aware of the fact that sometimes you're going to jump over them. There is no point in employing people whose sole job is to tell you what other people are doing. Yeah, you might as well just ask them yourself. So I, I, I like people who lead and do. I think it's important to do that. I think pure management just, I'm just telling people what to do I think is ultimately going to fail because you don't understand the details. You need to really understand what's going on.

Speaker A: That's a great piece of advice for listeners.

Speaker B: Uh, I would add one more thing to that, which is I've often advised people who are in those leadership positions to pick a project and just work on it. I had my own projects like a plot tool to plot high frequency data. Now that wasn't mission critical, but it was a useful piece of kit because it wasn't mission critical. It meant that if I had to be in New York or Tokyo or something for a week, it didn't matter. But it did mean that I had a real thing that then at the end of however long it took to make that, I could push that out to the team and say, hey, look, I've built that right? And I've sort of shown that I can still do it. And I think that's important for respect as well.

Speaker A: So you've mentioned cantab of a few times there. You ended up creating something with a, uh, with a partner, as you said that you know, initially a small fund that grew up to managing billions of dollars worth in the fund. So how did that come about? Was it an obvious move for you? Had you been thinking about it for a while?

Speaker B: I'd retired from Goldman in 2005 because I thought I was kind of done. I. At some point, at some point. And I enjoy my job a lot but at some point it morphs into being more of a political job in somewhere like Goldman because the prize is so huge if you make it to the management committee. So I didn't really like that so much. So I retired. I took a year off, bought more guitars, a motorcycle sold that traveled around the world with my family, which is really nice. And then in 2006 I almost sat down with a blank sheet of paper and said, well, what can I do? What would I like to do? And I knew I didn't want to commute, so it was going to have to be based in Cambridge because I'd commuted. I wanted it to be something that was hard, something difficult, something that if you succeed, you feel good about it. I wanted to do things I liked, right? So I like maths, I like programming. I am a geek after all. I like the markets. I like that sort of side of things. It's a very analytical kind of place to be. And as we've maybe talked about earlier I like selling. I like that thing about uh, being in a room with some customers or potential clients and you're on one side of the room and you're sort of trying to get them to do something that they're not entirely sure that they want to do. So how do you do that? It's about working out what makes them smile. See, okay. What makes them smile, what makes them laugh, what worries them. It's watching those little micro expressions when you talk about some feature of your fund and you can see there's something else there. It's a performance, it's a gig. And so I like so needed to be that. And also I said if I'm going to do something myself, I'm never going to hire somebody I don't like. And so with that what could I do? I mean quantitative, systematic. Systematic is a better word for it. So systematic is effectively rules based because although I like markets, I am no better than chance at uh, forecasting markets. I can't tell you where Apple stock or the price of gold or oil is going to be tomorrow. I just can't. Well we can't do it for the next five minutes. So a rules based thing and I had some ideas about things that would work, asked a lot of people, got a lot of help because this is very different from setting up a small software company in the mid-80s. This is setting up a proper regulated business. You've got to be FCA regulated. How do you do that? You've got to have links to exchanges, prime brokers, administrators who knew what was an administrator. I didn't know what those things were. I had been in finance but that doesn't mean I'd been in that bit of finance. So I asked lots of people, got a lot of help. And part of the reason that I do a lot of sort of support, mentoring, advice, investing in small companies now is that uh, this is me paying it forward to people that I that help from the people that help me. And then we had an idea, we got, we hired about, I think we had 15 people before we launched and for a long time it was touch and go. And um, it's a bit of a cliche but without the luck I would not be sitting here. We had a few lucky moments.

Speaker A: I think people underestimate how much luck and chance is involved. There are people who start things that are in their basic form. What it's built from is all credible and it's great product or service or anything else but it does things do rely on a little bit of luck. And I think people can take it personally when things don't work out, but it can just be luck of the drawers.

Speaker B: Totally agree that luck extends to being in the right place at the right time. I often think about Clive Sinclair and his C5, his electric micro mobility idea. What a great idea it turned out to be. It's just he was in the wrong place and the wrong time. Don't launch something like that with bad batteries because the technology doesn't exist in the UK in January. Wrong, wrong place, wrong time. But fast Forward now, what, 40 years after C5 come out here to IdeaSpace and everyone's whizzing past me on.

Speaker A: Yeah. On electric scooters.

Speaker B: So you do have to have a

Speaker A: bit of luck and dare I say it. And uh, I'm going to say it anyway. There's lots of people who really don't understand that they've had a lot of luck and they can be, uh, incredibly.

Speaker B: That is very true. I will not arrogant almost, I will not name any names, but I have met a lot of, of people who believe that because, probably because they sold out of their company just before the dot com bubble burst. They are geniuses. Whereas they just, and I think I'm not giving them a hard time for doing that. They had the luck and they did it. But I think it is important to have the humility to know not just that you were lucky, but also to understand there's a big thing about people believing transferability of skills. So you see this a lot, or you used to back in the day on proprietary trading desks. Some guy is sadly always a guy who's fantastically good at trading interest rates and then suddenly they start trading soybeans. Why are you trading soybeans, Ed? Well, I don't know. I thought I might give them a try. You haven't got transferable skills there. And then that gets even worse. Of course, when somebody like that gets promoted to be head of a division at Morgan Stanley and they've got no management skills, they're just remember they're just the person who was really good at trading interest rate swaps back in the day. So two things. One is be aware of luck and be aware that you don't have transferable skills.

Speaker A: So did you need to raise money M to Obviously you've got a team to build. Were you able to self finance in a certain way?

Speaker B: I was able to self finance but it was really touchy and go.

Speaker A: Yeah.

Speaker B: So, uh, a lot of when you, when you start a fund, you've got to raise two sets of money. You raise money into the fund, which is from investors, and then you've got to raise the money to actually get the fund started before the. Sorry, get the management company. Because that's the thing that you're actually running. That's the thing that's doing the models. Get the management company started before the fees from the investors start to flow in. And we had a little bit of support from Goldman Sachs. Not much, but enough. But it was really touch and go. And of course I completely funded the management company except for the Goldman money. And if that had gone down then I would have lost all of that. But we didn't have external investors.

Speaker A: So did that add pressure to your. You mentioned you had a family at the time. Was there a lot of pressure on everyone in that time from going from retired. Everyone's happy.

Speaker B: Yes. Obviously I had been at Goldman Sachs for a while. It wasn't penury, but it was costing a lot of money to keep 15 people going.

Speaker A: Imagine.

Speaker B: And you've got millions of lines of code to write before you can even trade a tiny bit of this customer money. I've generally been fairly good at not bringing stress home. Mostly it was okay. There were a few very stressful moments we had in 2013. We had an absolutely terrible month. We just had the wrong positions. There was the taper tantrum when the Fed decided they were going to taper quantitative easing. All of our positions were the wrong way around. We lost an enormous amount of money and we had got quite a lot of money because for the previous two or three years we'd done really quite well and everyone thought that we were infallible and we were never going to lose money. Despite me saying to them, this will not last. We. This is just. We're just on the right side of the distribution of.

Speaker A: The mathematician couldn't say that we are.

Speaker B: This is not going to last. But a lot of people invested thinking we were never, ever, ever going to lose money. And then of course we did. So that's quite stressful. I can imagine it's really important as a founder or a leader of a firm to realize that when these things are happening, it might be stressful for you because your company might be going down the tubes or whatever, but it's even more stressful for your employees. And so you've got to be. You've got to be, uh, not necessarily calm, but you've got to be transparent and there. And not. And the first. The thing you want to do is you just want to curl up under your desk. You never want to answer the phone again. And that was the really hard, difficult bit after we lost a lot of money was I had to then spend six months traveling around the world with investors shouting at me and being angry and, or worse than angry, being disappointed. That's really terrible. And that was horrible because we were really fighting for the future. If everyone had redeemed, we were done. So we were fighting for the future of the firm.

Speaker A: Uh, and that's also when you show your metal as a leader as opposed to a manager, isn't it? To be able to pull a team through difficult times. However, that's correct feeling well, uh, it then picked back up again and you managed to salvage things and save things.

Speaker B: In 2014, we were up 40%. We started making money again. But we. I got to the point where I'd sort of realized that. But although this was sustainable for me in the sense I lived 250 meters from the office so I could wander there anytime I wanted. I was doing something I really liked. Things were going okay, so we weren't losing money. And I got to program and do maths and do sales and all of that kind of stuff. And it was great. And people would invite me to conferences and I'd do keynote speeches and all of that great stuff that you do. It wasn't really very good for the rest of the team because where did they go? And as much as I really encouraged people to go and talk to customers, we had all these very geeky men and women, and I go and tell them to go and talk to the customers. I give them sub portfolios to run. Ultimately, they were in a very constrained environment. There's no growth. So we thought two things. We thought, well, we could just organically grow. So that would involve going out and hiring 100 salespeople, doing all of that kind of thing, turning yourself into a big asset manager. And that would have fundamentally damaged the firm. We were 50 or 60 people. 85% of them were programmers, mathematicians, statisticians, those kind of people. So it was an incredibly geeky environment. We were, I assume, the only hedge fund in history to have a 3D printer and spend about a thousand pounds a month on Lego. That's great. That is great. That's a very different. Now how do you maintain that environment? So the other way to do it is to kind of sell yourself into a large asset manager as a kind of quantitative unit that sits inside it. And so we did that and we sold ourselves to a Swiss asset manager. Called gam. I can't talk too much about it. But it didn't really end very well for nabd. They didn't really understand what they bought and we were too slow in sort of saying, no, no, no, you really need to do this. And so it sort of ended badly is often the case.

Speaker A: Absolutely.

Speaker B: They sell their businesses, then you go through the Kubler Ross grief cycle, which is denial, anger, bargaining, depression and acceptance. So I'm at acceptance, you're at acceptance. It's fine. The guitars helped, but actually filling my life with doing other things really helped.

Speaker A: Yeah, that's. It's some, some career and obviously there's, there's been lots of things you've done subsequently, so it'd be great to touch on those. So, yeah. Tell me, uh, after you sold called Cantab, how did you move into either philanthropic side of things with the foundation? Mhm. And also the other work within the. The master partner.

Speaker B: I. I've done a quite a few things on the entrepreneurial side, you know, investing in small companies, helping them grow, being on the board, being mentors and advisors. That's part of the pay it forward, as you know. I'm on the board of BAE Systems, which is a fabulous, uh, British company, and my first public company board, which has been a real sort of eye opener. It's a learning experience and if there's one thing that I have done through my entire. Well, I was going to say life, I was going to say career, but actually life it is. I just like learning things. And so whilst learning about audit committee is maybe not as exciting as you might think. On the other hand, they let me fly a drone, so offset that. So quite a bit on that. The maths department. I had been involved with the, uh, Isaac Newton Institute. I've been the chairman of the Isaac Newton Institute up until last month actually. So I did seven years of that. And that's really great because that's a fantastic part of the UK's maths infrastructure. And then I was asked to be the entrepreneur in residence at, uh, cms, which is. I don't think anybody really knows what an entrepreneur in residence is supposed to do, because I did ask both the head of Dampt and the head of Dipham's what they'd like me to do and they said, well, we're not really very sure. And then I said. So I phoned up the Royal Society and said, so what am I supposed to do? And they said, we don't really know. Choose yourself. So I gave a lecture course Sort of eight hours of entrepreneurship for mathematicians, which is just basically entrepreneurship, but sort of more kind of focused towards people who may have less well developed social skills. I'm, um, not dissing mathematicians. I'm a mathematician, so I'm not dissing it. But sometimes that side of things needs to be developed, but also just understanding things. I remember talking to somebody who'd won, maybe it's a Cambridge enterprise problem, uh, the program. And they'd offered a convertible loan and. And she was shaking, terrified, because she said, well, I can't afford to pay that back. And I go, no, no, it's a loan to your company. You don't have to pay it back. And she said, uh, oh, I didn't understand. I thought it meant I had all of these kinds. How does debt work? How do partnerships work? How do you do sales? How do you write a good presentation? Writing a good presentation and then giving a good presentation is. I'm not going to say it's half the battle, but it's really important. You can have as good an idea as you want, but if you cannot put that together in a way that some junior analyst at, uh, a venture capital firm with the attention span of a gnat can get it in 10 minutes, you're not getting any money, so you better be good at that stuff.

Speaker A: And we said the chance as well it might be that there's only a few chance pass things that might be the opportunity that gets you there and m. Then you have to be ready. You've got to be ready to sell all the time.

Speaker B: And then I do office hours where I'd sit around, people come in my office and ask me about their often bad businesses and I help them through that and direct them through. The Cambridge ecosystem is really good. It's the best we have in the UK in terms of a, uh, technology transfer ecosystem. Still not perfect. And often people need a little bit of advice. How do you think about this product? Or rather, what is the way that you can adjust this and think about it so that it becomes attractive to Cambridge Enterprise or angels or idea space? What does it need at that very early stage? And then on the philanthropy side, back when I was definitely working full time, and that really was full time, like six days a week, 12 hours a day, I had no time for philanthropy, so what that meant was random people would come to me and say, this is a really important good thing that we are doing. And I'd say, here's some money now never talk to me again because I'm too busy. And it would be just all over the place, sort of scattergun. So when I left, or I suppose left gam as it would have been then, and started doing other things, my wife and I kind of sat down and said, okay, how are we really going to think about this? What's the right way to do philanthropy? And I am hyper aware that this is just my view and I might be wrong because everyone's got a view, particularly in philanthropy, actually. Everyone's got a view about how it should be done and I've got a view and I could be wrong, but this is how I think. This is what I think is important. So we picked some areas. I'm obviously very involved in stem and whether or not that's very high end STEM like the Isaac Newton Institute or education or use of technology to solve problems, whatever that might be. My wife is more into the, the conservation and early child development side. So we, we pick those and then absolutely strictly never do anything outside that space. Because as you might imagine, as any charitable foundation is, you get an awful lot of people saying, will you give us money? And by writing sort of into the articles of the charity, we will never do medical because medicine, um, and its associated things gets more than half of the philanthropic money in the uk, so. So maybe we'll do something else. So I've said this a lot and used this joke a lot and it's probably been on somebody else's podcast, but when I get some time, I'm going to write a book about philanthropy and its title is going to be Learning to say no because you say no a lot and the other so focused. And then maybe m even more important than that is to philanthropy should be about very high risk. It should be about the highest risk things you can do. Because if you think about it, in a capital stack of a company, the debt's the lowest risk and then you've got converts and you've got equity and all these things. But the super high risk thing in a project should be philanthropy. And if it is, then you should invest in the highest risk things which potentially have the highest return. But that does mean, but that does mean that you get a lot of failures and that's okay. And we explicitly say to the projects that we fund, it's okay if it doesn't work.

Speaker A: Which is a good thing to say to them because the pressure on them to make things work must be huge as well.

Speaker B: It also encourages them m to innovate, to bring it back around to the innovation side. If you've been Given money by a philanthropist to dig a hundred wells in Africa, African villages, then you just have to get that done right. You've been given the money. If you only dig 50 wells, it's a disaster. And if you dig 110, you get a pat in the back. But you're not going to innovate there because you might fail. M. So I'm much happier to fund somebody who says, I've got a new way of digging a well, or I've got a new way of lighting houses, which is one that we actually did in Malawi. We don't know if it's going to work. And I go, great, let's do that. That sounds fantastic. And if it doesn't work, that's okay. We're fine with that. So we do that. Explicit permission to fail high risk projects.

Speaker A: Amazing. If I may just ask a few things, I know there'd be listeners within the ecosystem and ideas base itself. They might be interested in specific characteristics of maybe founders and innovators. What sort of characteristics do you think the best innovators have?

Speaker B: You should have given me a heads up on this question because I don't really know if you can. If there is some. I remember finding some research on this when I was doing my entrepreneur in residence lectures. And I think the only characteristics that seem to stand out are firstborn, age between 30 and 40 and have a beard, which, let's face it, is completely useless. That is not, uh. I think one of the things that helps is to be comfortable with ambiguity. Maybe running a company or finding a company. And we should be very clear here, running a company is different from finding a company. And very often the founder of a company is not the right person to run it. It doesn't mean that they can't own 80% of the shares and get richer than God, but they're not the right person to run it. Ultimately, uh, at, uh, Cantab, I hired a CEO, my own boss, because at some point I was doing too much of the stuff that I didn't like doing. And those were sort of CEO kind of things. Whereas as the cio, the chief investment Officer, I could do all the stuff I really like doing and concentrate on that and go out and see clients and program and think about risk and trading and so on. So I think that's flexibility on that is important. There is some. I'm not sure I could put my finger on it, but there is some element of drive. Maybe one of the. I shouldn't give away this trick on a podcast, but one of the things I often do when I get approached, because I get approached by lots of small companies and things and do lots of meetings or video meetings with people, I always leave something, I always leave it in their court to come back to me because I want to see whether or not they've got that hustle, they've got that drive that I've said, well, what you could do is why don't you send me through this or once this has happened, send me through this analysis and do that. I'd love to see it it now. You'd be surprised, and I am surprised and shocked how, um, more than a quarter of people just never get back. They've got, it's got an intro and it's not that I've told them to piss off or anything like that, it's that they've just never got back, never thought about it, they've sort of dropped it on the ground somewhere. So that is not good. And then it's not quite being pushy because sometimes being pushy has completely, completely the opposite effect. Somebody's all over you, sending you texts and emails and phone you up at 4 o' clock in the morning.

Speaker A: Do you want to invest? Do you want to invest?

Speaker B: Do you want to be on my board? That can be a little bit irritating, but it is just that drive here to just go a little bit further,

Speaker A: just briefly before we have to wrap up. Maybe one of the misconceptions about entrepreneurship,

Speaker B: you do have to have a good balance. Okay. It's important to uh, a lot of people run themselves into the ground because they're working so hard. They're not thinking, they don't keep their head up, they don't give themselves a bit of time to think a little bit longer term. They're too busy right on it. And sometimes people mistake the fact that it isn't just about hard work. Sometimes you need to have some good ideas, you need to be able to do things well in some ways I do advise a lot of early stage companies, entrepreneurs and founders and things. Things. One of the things, uh, is all about the money. If you can't raise money and you run out of money, your dream is dead. And so whenever I'm with a company and they just raised the first round, I always say to CEO, start raising the next round now because you're going to need it. And so you better get out on the road and say, look, we've raised this first round, we'll be raising another round of 5 million in 12 months time. Can I keep you up to date on how we're going, all of those sorts of things so that you don't end up 11 months from now with a month to raise £5 million. And that's never going to happen. As a good founder, you know where every pound is. Uh, you know what your cash flow looks like. You know what your Runway looks like. You have got a good feeling that if you hire this person, then that reduces your Runway by two months, but it increases the probability that you get a beta out of this. You need to know all of that stuff. It. I believe it's important to be good with people. I think the trope of the, uh, sort of aggressive, often male founder who rides roughshod over everybody. I'm not sure that's really true.

Speaker A: One last thing.

Speaker B: Okay.

Speaker A: All right. Just, um, a problem in science and technology that you'd love to be solved in the next 10, 15, 20 years or so.

Speaker B: So something realistic. Yeah. Here's an achievable thing that would be. Would be transformative is just to double the energy density of batteries from 250 watts per kilogram to 500 watts per kilogram. Um, that would change everything. It's a chemistry problem. And I'm not saying it's an easy problem, because if I say it's an easy problem, I will get death threats from battery engineers around the world because it's a very hard problem.

Speaker A: But.

Speaker B: But it's one of those things that maybe it might be achievable through hard work. It might just be achievable through some massive breakthrough in the same way as lithium ion batteries with just this step change. There's maybe another step change there. But if we could double the energy density and the specific energy, which is how big they are, then that immediately doubles the range of electric cars, makes home storage possible. I'd also, if I'm allowed sort of two things. I'd like to double the energy density and cut the price by 50%, but that would probably have an enormous effect on the economy and society and how we think about the world and could, at the end of the day, sort of save the planet. So that would be good.

Speaker A: I think that's excellent and, uh, a great place to end the chat. So, Ewan, thank you so much for coming in and giving us your time. I really, really appreciate it and fascinating story. So thank you.

Speaker B: Thanks for inviting me back, Ben. Look forward to talking again at some point.

Speaker A: Thank you. That was you and Kirk. What an interesting story, a great conversation, and so much to take away a few of the things that stayed with me. First, every job is a sales job, whether you're pitching to investors, recruiting your first hire, or finding customers. If you can't sell, you're pretty stuck. Second, the best leaders lead and do do. Stay close enough to the work to know exactly what's going on, because that's where the good ideas often come from. Third, be honest about how much of your success you can actually take credit for. Luck matters more than most people admit. And finally, give the people around you explicit permission to fail. For founders and leaders, that's how you create an environment where people actually innovate, rather than just playing it safe. If you enjoyed this episode, please subscribe and share. Until next time.