Peter Fenton (Partner, Benchmark) on VC and Founder Mindsets, Inflation, and the Current Market State

Peter Fenton is a renowned venture capitalist and a Partner at Benchmark, a leading venture capital firm based in Silicon Valley. With a remarkable track record in the tech industry, Peter has played a pivotal role in shaping the success of numerous high-profile companies such as Twitter, Yelp, Zendesk, Elastic, Docker, and many others. Peter's ability to spot trends and invest in transformative ideas has established him as one of the most respected venture capitalists in the industry. In this episode, Peter discusses his early VC aspirations and the path to get where he is now, as well as the successful VC and entrepreneurial mindsets, plus inflation and the current market state. (0:00) Intro (1:38) Growing up wanting to be a VC (16:33) Mentorship (20:25) Benchmark (30:56) Entrepreneurial mindset (40:53) Successful founder characteristic (45:42) Estimating timelines (54:41 Everyone gets worse in venture over time (1:05:22) VC websites (1:10:52) Inflation (1:18:29) Robert Sapolsky Mixed and edited: Justin Hrabovsky Produced: Rashad Assir Executive Producer: Josh Machiz Music: Griff Lawson 🎙 Listen to the show Apple Podcasts: https://podcasts.apple.com/us/podcast/three-cartoon-avatars/id1606770839 Spotify: https://open.spotify.com/show/5WqBqDb4br3LlyVrdqOYYb?si=3076e6c1b5c94d63&nd=1 Google Podcasts: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGVjYXN0LmNvbS9zb0hJZkhWbg 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 🐦 Twitter - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode, Logan goes behind the scenes with world-class entrepreneurs and investors. If you're interested in the real inside baseball of tech, entrepreneurship, and start-up investing, tune in every Friday for new episodes. Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Logan Bartlett?

  Welcome to the Logan Bartlett Show. I am your host, Logan Bartlett, and what you're going to hear on this episode is a conversation I had with Peter Fenton. Now, this episode originally ran in November of 22, but due to some scheduling errors during the summer slowdown, we figured we would run a best of, which this is one of my favorite episodes we've ever recorded. Now, Peter has appeared on the Midas list for 16 straight years and also been involved in a number of the iconic companies over the course of the last two decades, including Twitter, Yelp, Airtable, Uber, among a number of others. Throughout his career in investing, Peter has always stayed humble, which comes across in this episode. He shares his insights on what makes amazing investors as well as entrepreneurs,

• 0:47Logan Bartlett?

  and we go down the path of what led him to the success he's had to date. Now, if you liked this conversation with Peter and you want to hear more just like it with some of the best investors and entrepreneurs in the world, please do like, share, subscribe, so that we can reach other people. Now, here's Peter. Peter, thanks for doing this. It's a pleasure to be here. I'm excited. We're in the, how new is this office? It's about three years old. Okay, you guys have been here a while. Last time I was here, although the Wi-Fi auto-connected, but the last time I was here, you were in the old, the old San Francisco market. At the Warfield. Yes. Yeah. Controversial Warfield. Yeah, seems like a upgrade. Well, I think we're going to play the hits of a bunch of different things that I've learned about you and asked a bunch of questions about

• 1:30Logan Bartlett?

  the market and some of this. So hopefully, hopefully you're comfortable taking this in a lot of different directions. Yeah, it'd be fun. Cool. Well, the first one, I think is an interesting, you, so I meet people today and they ask, like, they'll be 15 years old, right? And they'll be like, I want to be a venture capitalist. And I'm like, where are they making these people that even know what VC is at 15 years old? Maybe it's not 15, maybe it's 19. And they all seem to go to Wharton or Stanford. But you actually were one of the people that maybe knew early on, I don't know if it was actually 15, but you knew what VC was. It took me to 24 before I actually knew what was this an industry. But you grew up in the Bay Area and your dad ultimately became a venture capitalist, right? So what was your exposure growing up to VCs? And why did you want to be one?

• 2:15Logan Bartlett?

  Yeah, it's, um, it's a story that I've reflected on because you, at some point, you know,

• 2:25Speaker 01

  If you're lucky, I think in a life, you you find something that has a purpose that is insatiable. It's not extrinsic. It's not, you know, if I achieve this, if only then I'm going to have that. And that happened to me in my early twenties for venture, but the seeds were planted through my my teenage years, which is interesting and does make me, you know, a bit self-conscious, I guess, about the luck. Of course, everything is luck. There's no, there's good and bad luck, but it was luck to have been in this soup of the Silicon Valley as a as a kid, you know. Nolan Bushnell came to my seventh grade public school class and said, we have a problem

• 3:09Speaker 01

  of too many ball bearings and and for something. It was a long story about how creativity and entrepreneurship and how that led to these insights. And I thought, well, what he's doing is just fun. And it felt at the time Silicon Valley, I think, was still, and I hope it still is, avowedly anti-authoritarian. And, you know, we had the countercultural elements still percolating in the seventies. And this idea that these companies were coming up to take down the gray lumbering giants of places like IBM, that was in the blood. And, you know, my dad had been an entrepreneur. He'd come out and, you know, founded a company.

• 3:51Speaker 01

  I don't know that it was particularly successful, but it was that sense of like, we're not going to go join the establishment. We're going to blow it up and have do it, do it our own way. And, you know, he did talk about venture capitalists. My first memories of venture capitalists were when I was in my teenage years and he mostly loathed them. They represented for him a bit of authority, right? Like there was a board of directors and they would come up and they used to wear suits back then and they would drive European sports cars and, you know, back then an entrepreneur, you know, you bought used cars, you made much less salary than you would if you'd worked at a big company. And Probably some part of my inner psyche was reacting to, I haven't done enough therapy

• 4:33Speaker 01

  to reveal this, the thing that was terrorizing my dad was interesting.

• 4:37Logan Bartlett?

  Yeah, yeah, just always, right?

• 4:39Speaker 01

  So that was in the water, that was in my psyche. And, you know, when I was, when I went to undergrad, he became a venture capitalist. It's funny, he started at age 50 and I just turned 50. So, and I had a theory for a while that that's about the age where you're, you know, you should be thinking about what's next, 50. And, but, but he, if you're in venture, but that's another discussion. And, and so in the process of going into venture, he, he started to bring home the business plans and back then there were, there were videotapes. So I would watch the videotapes of like the flying car or, you know, it's not about chicken, it's about rabbits and rabbit farms. And there was some crazy shit back in the day, you know, like people were.

• 5:21Logan Bartlett?

  Is this like mid 90s or when is?

• 5:22Speaker 01

  Yeah, this is, this is early 90s.

• 5:24Logan Bartlett?

  Yeah, so pre-internet bubble, like after the Apple and whatever, Dell and all those successes.

• 5:31Speaker 01

  Exactly. It was pre-internet and biotech had been on the scene, so Genentech had gone public and I was quite attracted to that, that idea. And, and I would see him on the weekends, just spend most of the weekend reading business plans. And this idea that you could study something from a distance and form a point of view, it ingrained in me the discipline of the work, which is that we really have to do work to understand the nature of these businesses. But then also, you know, there are success stories, like his firm had invested in Starbucks and you take a coffee shop idea and then scale it and, and what's possible and all those, I mean, the lyric nature of success and, and entrepreneurship captivated me.

• 6:13Speaker 01

  And so, you know, I went to undergrad and studied philosophy, which made me suitably unemployable for anything.

• 6:20Logan Bartlett?

  Yeah.

• 6:20Speaker 01

  Except for getting more philosophy degrees. You know, and, and I think of it's that sort of later time in college when I felt and the internet, of course, hit the scene, this is 94, I graduated. And, you know, it was a question of not, you know, if I was going to participate in the entrepreneurial world, but how would I best orient my psyche to that? And, and venture. I mean, the cynical view is that I was suitably ill-equipped to do anything but, you know, do this, this job where you sit around and, and, you know, think and delete emails.

• 6:56Speaker 01

  The positive view is that it just, it just spoke to me that the idea you could work with these entrepreneurs and be a part of their success, but not in the foreground, you know, not, not the ego that's, you know, claiming anything. And I always exposed that time to people like John Doerr, who might have been in the foreground, but just this notion of, okay, you, you could work with a constellation of, of extraordinary people and companies. And I was totally rational about it, but I thought to myself, no matter what it takes, and I was, I mean, so much so that I was embarrassed to mention it. So even my dad, I didn't tell him I wanted to be a venture capitalist, because God, you know, this last thing you want to do is what your dad did. And, you know, so it was a secret.

• 7:38Speaker 01

  And, you know, I, I spent a couple of years at Bain and then went to a startup company because I felt there's no way to actually do this job without actually being in the shoes of, of an entrepreneur, seeing the problems of a 1.0 product. And I went to a company that's sort of forgettable, but it was to, to launch their first product, where you had to get customers to pay for it. And, and that experience informed me even more that I wanted to be a venture capitalist. Not that it was hard, it was really brutally hard. But to do that as many times as one can in their career. And, and, you know, if you do it in one company, okay, you can launch product two and product three, but imagine having a dozen companies you're working with that are doing that. So, and then I, I found my way into a summer internship at Sutter Hill,

• 8:21Speaker 01

  who had invested in that startup. And the rest is, you know, my, that's my history.

• 8:27Logan Bartlett?

  So Sutter Hill to Excel right after that?

• 8:31Speaker 01

  Yeah, I was at Sutter Hill during the first year of business school, or the summer before business school, and then I went to Excel the second year and stayed there for seven years.

• 8:40Logan Bartlett?

  And so that was straight through, so Excel, you started in 99?

• 8:44Speaker 01

  In 99, October 99.

• 8:46Logan Bartlett?

  And so that was straight through the bubble. And, I mean, there were, obviously you had. Jim Breyer and Jim Getz and Facebook and all that stuff kind of happened while you were there. What was the experience coming on? And you've told the story of a performance review that you got from Breyer and Getz. I think maybe your first performance review. So obviously a pretty interesting time to join any firm, right? Specifically that firm as the internet bubble is kind of blowing up. So what was that experience like?

• 9:18Speaker 01

  You know, I think the gift of that experience, I have so much gratitude because I was lucky to get the job. I didn't have much background. It's not like I worked at Netscape. You know, I was at a company called Verage. But I knew Teresa who had worked with me at Bain and she advocated for me and I have eternal gratitude for. You go back to your career and there's these people that take a leap of faith on you. At the time, you think, they don't really know me. Because if they did, they wouldn't be doing this. And at least I thought that way. And you have a measure of, okay, I want to not prove them wrong. And so I had a lot of insecurity.

• 10:01Speaker 01

  Arguably, everyone does, but it was, you know, mostly a version of like, let's try and not get fired because I so badly want this job. And, you know, I worked 100 hours a week, did everything I could, took too many meetings. And, yeah, I mean, the shaping environment of Excel and from 99 to 2006, when I left, was defined in my memory as mentorship in venture, which is odd because it isn't really, people say it's an apprenticeship business, but how does that play out? And if you, because if you go in with the mindset that I'm being apprentice, I'm the young grasshopper, I think you learn bad habits because you learn how to be a mini-me. And Excel was, I think, good in saying, everyone here is sort of, they didn't treat me like

• 10:45Speaker 01

  a mini-this or mini-that. They said, Jim, the first meeting I had with him in October of 99, I was still in business school, he says, if you do- If you do two or three investments when you're in school before you graduate in June, that's about the pace we would expect. You don't have to be at full throttle. I left thinking, I'm gonna probably be fired before December because how do I invest them at school? But it was, um, Excel had a lot of, uh, you know, investment acumen in the sense that the firm was very attenuated to having a thesis. And, um, they were, they like to quote Louis Pasteur, "The chance prefers a prepared mind." And, and I got that discipline. I got the sense of, okay, so much of what we do in the venture business feels random. And, you know,

• 11:27Speaker 01

  it is. You spend, um, so much time and then all of a sudden lightning strikes and you think, oh my God, I just met a company that I haven't seen something this good in two years. And it may be two more years before it happens again. So what do you do in that space that exists in between? And, and the idea of like, learning the business through success. And, you know, my biggest mentor in those years was two people. It's interesting to think about it now. Arthur Patterson, who, um,

• 11:58Logan Bartlett?

  Founder of Excel.

• 11:59Speaker 01

  The founder of Excel. And we served on a board together. And, um, I have so many memories. I went to a core metrics, we were on the core metrics board together. And the CEO, Brett Hurt, was fantastic. He presents his fiscal plan. This is in like 2001. Um, and it was to consume, you know, today it seems small, but like 20 million of capital. And, and Arthur looks at him and Brett says, okay, is this approved? And Arthur's like, no, this is, this, this is, this plan's ridiculous. And then he got up and he left. And I thought, well, what happens next? And, you know, I, I learned that, you know, you have, uh, it's not a mechanical business. It's not like there's some formal approval. Arthur was expressing something that,

• 12:42Speaker 01

  that Brett would have to internalize and then we'd work on it. And I, I give that a story mostly because, you know, there's a, um, one of the roles as a director, and Arthur taught me this, is truth. And, and truth seeking isn't always, um, socially, in fact, it's almost never socially, um, rewarded.

• 13:03Speaker 01

  Because you don't make someone feel good if there's a truth that they don't want to see. And Arthur, you know, kept bringing me back to like, you know, the relational side of the business, while important, isn't what expresses greatness. And what expresses greatness is this tilting towards truth seeking. Now, you can do it in a more humanized way. And so Arthur taught me that. The other person who taught me, I think of him as mentor, interestingly, although he would never, he would deny it, probably, is Dave Strom. And Dave and I, that was the first board I started on, which was Wiley Technologies. And Dave was, showed to me the craft when you really are deep and strategic

• 13:46Speaker 01

  and think substantively about the business and do work that's not just soundbites at a board meeting. But Dave would have, in any board, two or three comments that would have tip of the iceberg, you know, kind of a phenomenon where you go deeper. And he was seeing that Wiley was totally dependent at the time on IBM for distribution, IBM and BEA. And he could visualize the sockets that were needed to protect that distribution that they had to block. And the actions and the product strategy that would reinforce that business model. And the telemetry that someone could see, I'm like, this is, this to me was a form of,

• 14:26Speaker 01

  not just like, you know, a science of sort of an art of how to make that point, but the science of the underlying structure of the software industry. And I would come out of those board meetings and I would take copious notes. And I would say, okay, how do I get better next time I go to a board meeting? What could I have done better? And so that, those years, those first, you know, call it five to seven years, I was, you know, I was sort of accepting the fact that I was lucky to have a job because it was the post bubble. I didn't really think I deserved it. And I was pretty sure, I remember turning to Teresa and we went to the World Series in 2002. And I had made six investments then. It was in October 2002 and I said, I just, I'm really ashamed that I think I'm gonna have

• 15:10Speaker 01

  lost every investment and, you know, because there was really no positive feedback at that time. And I just want to let you know, I'll always be grateful. It's, um, and I hope you don't hate me. And she's like, ah, you know, we all, we all kind of feel that way right now. I mean, miraculously, none of them died. Um, I mean, not to say they're great investments, but that's not the game is not to have none of them die, but it was, uh, it hardened me in a way. I think many of us who were around during that first bubble burst carry, um, forms of trauma where we're particularly triggered now because those, those patterns, we feel in our gut what it, you know, takes to renegotiate debt. And, you know, having

• 15:54Speaker 01

  done that at Core Metrics, um, or what it means not just to do a layoff, but to, um, have the bottom fallout on you and just assume like all the things that if you do these things, then things are going to be great. Well, no, no, you can do all the things that you thought you're going to do and things going to be, or it could be awful. And, and so you go through that period of time. The trick with, with these traumas is to, um, is to manifest the fears, address them, confront them and not have them, you know, preying on you constantly as you're, you're skittish about risk, but you, when you find a way through, because it turned out it was okay for, for the great companies, it was an opportunity. And, um, great entrepreneurs, I think, you know, uh, tend to thrive in these more stressed environments. So that was the 2000, 2007 era.

• 16:34Logan Bartlett?

  The mentorship thing's interesting because I, I experienced something similar that the people that I viewed as mentors were all much older, had way more gravitas. When they said people, when they spoke, people listened to them, right? It was just like they, they had this wealth of experience to draw on. And I couldn't do that as a 30 something, you know, like I, the heft of my words didn't carry a boardroom, right? But you end up stealing little aspects from people or learning like that from people. And, uh, uh, he'll be embarrassed, I give him credit for this, but, um, your partner Eric, I, uh, we had Amplitude together and like seeing how he works, you internalize little bits of that, right? And how he, he

• 17:16Logan Bartlett?

  operates with entrepreneurs. And, uh, there's been a handful of those people that like you just kind of steal. Little stylistic things are that they do and then make it true to yourself. So it sounds like getting all that board exposure from great people was uh was super helpful for um for all that for you.

• 17:31Speaker 01

  Yeah, I mean, it's an interesting thing, which particularly people coming into the business that um. You know, I had this insecurity of why would anyone want to work with me and.

• 17:44Speaker 01

  Lou Cerny was the first person who took a leap of faith on me. Um, I was um.

• 17:51Speaker 01

  You then, you know, in question of like, okay, if he's willing to work with me, he must have really low standards.

• 17:55Logan Bartlett?

  Rodney Dangerfield, I don't want to be a part of a club that wants me as a member.

• 17:59Speaker 01

  But but you know, I what I discovered is that something we learn over and over again. You know, experience is a weak proxy for character. It's it's a weak proxy for um future manifestations. And it's a weak proxy for the kind of, I would say, non-quantifiable commitment that comes with a great partnership and trust. And so, you know, I was going up against some great venture capitalists in some of these investments and someone gave me the advice, this is on JBoss, and I was clearly, I was actually competing, I didn't know at the time, I was competing with Benchmark.

• 18:43Speaker 01

  And, you know, I so I wrote a long letter to the entrepreneur about how all the ways I could help and and and a dear friend of mine at the time pulled me aside and he said, no one's going to pick you because you're better at anything. They're going to pick you for for who you are as a human being. And that will allow them to take a leap of faith with you. So the feedback was really simple, which like, just go sit down with the entrepreneur and say, you're going to, which is the truth. You're going to make a career bet, this is in 2003, on an open source software company without a business model. And that you're making that career bet, you have no choice. But for this to be something that occupies the totality of my ambition for his success, because that's how I'm going to achieve what I want in my life and.

• 19:26Speaker 01

  What I found in any situation is that if you tap into what's deeply your expression of your connection and all that, and it's truthful, by the way, if it's not, then you probably should move on, that a great entrepreneur is going to respond to that level of depth. And experience ends up becoming this, again, weak proxy. We all hire people. There's so many times in companies where it's like, perfect background, got them into the company, and then, you know, three months later, you have that pit in your stomach of like, something's off here. And, well, because it was, it was right on paper, but not right in reality. And there's so many unknowns. And you project, you tell yourself stories around, okay, this is, this is the right partner because they have that background. And, you know, it's

• 20:10Speaker 01

  far more subtle. It's sort of like friendship that way. Like, you don't, no one picks their friends in that sort of deliberate, explicit way. It's felt. And it, and it, in sort of in spite of all the reasons they shouldn't be your friend, they're your friends. And that's how it should work, I think, when we partner with entrepreneurs.

• 20:25Logan Bartlett?

  So, so competing with Benchmark at JBoss, and you also, I think, knew the industry well enough to know sort of the ethos of Benchmark as well. And it appealed to you even before, like, they wouldn't return your emails or something, or Bruce Donlevy wouldn't, wouldn't call you back. And then ultimately, they started recruiting you?

• 20:47Speaker 01

  Yeah, there was just a seven-year hiatus there. You know, I knew I wanted to be in venture at, at age 24, 25. I got into the business at, well, I mean explicitly with Excel at 26. And at that time, I had this false dream that Benchmark would break the model and hire a principal. And just give me a chance. I'll get in there, I'll get in front of Bruce, I'll make the case. And Bruce blew me off a few times. I did sit down with Bruce, who was at like, you know, 7:00 PM. He says, like, I'd rather, I'd rather be with my daughters right now, respectfully, but I'm doing this as a favor. And, you know, culture is not just the things you write down. It's, it's the things that aren't said. And the feeling of the Benchmark culture at the time...

• 21:34Speaker 01

  Particularly resonated with me, anti authoritarian, there was no hierarchy. And I abhor authority and hierarchy. And I love entrepreneurs, I want to blow it up. Doesn't mean you don't have to have hierarchy in companies, you have to allocate resources. I get that and there's governance. And this idea at the time, because people forget that Benchmark was viewed as a renegade firm in 1999. Of like these, the young punks and people would say it's like Lord of the Flies. Oh, there's an interesting story now. Lord of the Flies doesn't actually, it's all fantasy. Like, you know, you put kids on an island, they end up being really, there's an example out of Tonga where they did quite well. And Bruce was like, yeah, good luck.

• 22:16Speaker 01

  And I thought to myself, well, that's, that's the kind of firm that I would want to be part of and help found. But this isn't for me. And so, you know, many times in your life, you sublimate, you know, what you really want. And you then figure out what you actually practically can do.

• 22:34Speaker 01

  And I didn't dislike Excel. You know, I really, it was a weird thing because people thought, well, he left because of compensation. I took a pretty big pay cut when I came over to Benchmark. People don't know that. That's not just because it was a Facebook fund. So it was a huge pay cut.

• 22:48Speaker 01

  At the time, it seemed like a pay cut. The time it seemed like a pay cut and then in hindsight, it was probably a very big pay. Yeah, 5,000x later. Yeah, and that's okay because there's, I don't know. Some people say this is a manifestation of, of privilege. And I'm sensitive to that, which is that I didn't look at my employment agreement at Excel and I didn't look at it at Benchmark. I just thought if I have the platform to do this work, it all figures itself out. And, you know, when Kevin called me, I was at Excel and I was, I was really admired my partners. I had a lot of hope for where Excel could go. I was still heartbroken that Jim Gatz left.

• 23:29Speaker 01

  And I think we all were because he was just a decent human being and we all felt. What year did Jim leave? He left a year and a half before I left. Okay, so so middle of 2004 or something and you left in 2006. Yeah, and it was hard, you know, Jim had gone through a difficult period of the reset in the in the communications or networking world, right? So it was just, it was, it was just tough environment and. Worked out well. It worked out for him.

• 23:58Speaker 01

  You know, and I wasn't, I wasn't itching to leave. I did think to myself that, you know, if I'm lucky enough to earn the ability to start my own fund, I probably would start a firm with Matt Kohler, John Lilly and Reid Hoffman, and they didn't know this, and so I say they'll laugh when I say that, right? But that was like my dream. That's because I really love those people as human beings and thought, you know, if you could work with people like that, it's not to say that, I mean, I had a ton of admiration for Kevin Effers, who I work with and my partners at Excel. So, yeah, when they called, Kevin called me and my first response was, he's like, hey, you know, we're looking to add people to the firm and I just froze and I thought, uh oh.

• 24:39Speaker 01

  I wasn't ready for that. And they said, I can't say yes to having this conversation unless I'm prepared to go through with it. And that's really hard because it makes me, I have to reconcile my relationships at Excel and they mean the world to me. So I can't, I can't engage until I'm able to really imagine if I can, I can transform Excel into a place that I would want to be at for 20 years. Because this is the question I'm being asked, which is, do I want to do something? I'm, you did it once, you did it once, you don't do it three times.

• 25:11Speaker 01

  And and that's one branch in the tree, which is to work to have Excel really connect with who I was as a human being and being anti hierarchical. The Excel model did have hierarchy and and it's not wrong, it's just it's different. And and then the other version was like, do I want to not pursue this dream of founding a firm and

• 25:31Speaker 01

  you know, I I thought about it and you rationalize whatever you do. So, right? I mean, you tell yourself stories and so I told Kevin I needed about a week to think about it. I called him back maybe 48 hours later. Yeah.

• 25:47Logan Bartlett?

  Rings true. I think I don't want to draw on on my experiences too much here, but I I get that decision. And so but once you walk through that door, right? And I had it happen with Redpoint. You have this experience that that you built your career around to date. And then you walk in to Benchmark and there's not the 9am partner meeting that people are like ticking through and trying to figure out how much to talk versus how little to talk and all the memo presentations and all that stuff that I've, you know, I'm familiar with. But instead, people are kind of, for lack of a better term, just enjoying each other's company or fucking

• 26:27Logan Bartlett?

  around in the first partner meeting, right? They're looking at videos and talking about the weekend and ultimately getting to companies along the way, kind of an unstructured. Was that an interesting kind of out of body experience going from this like more structured world to this very unstructured kind of mindset?

• 26:46Speaker 01

  Yeah, I was gonna I was gonna reflect on something which is, it's not lost on me. People always say like, well, when you fire somebody, you always, no one ever says, I fired that person too soon. Because they look back and they think, oh, there's, I mean, obviously, I should have done that six months ago. And I'm sensitive, again, to this being a rationalization, because you don't really have the A B test.

• 27:08Logan Bartlett?

  Yeah.

• 27:09Speaker 01

  So but oftentimes, when people are switching jobs, and we spend a lot of time on our job recruiting, one of the things I try and have a sense for is, is the nature of that human being well suited to the culture that they're going to? Will they will they flourish in a way that they were not able to flourish? And you don't see that typically in an environment? Because we get into a company, maybe Gen Xers do this more than than than a more conscious generation. But you know, you just say, okay, I got to do my job. And and who am I to, okay, at the marginal challenge, the culture and all that. But like, let me first earn the right to do that. And so what I didn't know, in hindsight, by the way, it's funny, because Benchmark said, you were the one taking the risk, not us, because if you didn't work out, we would have fired you.

• 27:50Logan Bartlett?

  Yeah.

• 27:51Speaker 01

  So you were kind of, you'd made yourself who you were at Excel. Where it was done.

• 27:56Logan Bartlett?

  Oh, totally. They hire you for everything you've done to date. Then you walk through the door and it's like, great.

• 28:00Speaker 01

  It's like, yeah, new portfolio, new relationships and good luck. And but you don't think about that. I had this instinct that that the cultural piece, which is the anti hierarchical fluidity, the sense of the equality as a ethos was like really reflected who I spoke to me. And I think so. I came to the firm, but I was terrified in the sense that do I know like, and you don't know. It's like so many of these consumer products get launched. You don't know until you actually run the experiment. And so I went in and I'm thinking, okay, if it sucks, that's fine. You know, I'll just. If I continue to be passionate about working with great entrepreneurs and earning their trust and respect, then this won't matter.

• 28:46Speaker 01

  And I had rationalized a lot of that in my mind about about the nature of what does a partnership do versus the, you know, individual. But but I went in and I was sort of, I couldn't believe it. Like, people are just having a fluid, natural, honest conversation. Now, it was around stupid things, interesting things, but but it was, it was.

• 29:08Speaker 01

  That you could literally breathe and from from the difference of what, and I'm not saying the other models are wrong. Where there's a felt insecurity in the conversation of I am a level below, I'm working my way up, I'm going to earn the. Or I'm more senior and I have to justify my existence, which is gone. And you could have taken the same human beings that I was working with and put them into that structure. And I think the same thing would have happened. So then I had a sense for how a system can can activate internal states. As much as internal states can sort of construct a system. And so I didn't know it until I was in it. And then after that first Monday, I was like, that was probably just a show like, next Monday, it's going to be, oh, here we go.

• 29:53Logan Bartlett?

  Yeah, the CRM is going to come out and.

• 29:55Speaker 01

  CRM. And then then we have to do, first, we talk about new business, then we talk about.

• 30:00Logan Bartlett?

  Follow on financings and.

• 30:02Speaker 01

  Yeah. And no, it wasn't that way. And it was far from perfect. So every system has its trade off. And so, you know, it became clear to me at the time, we had our European efforts, we had our Israeli efforts, we had other. We were. We were not honoring, I think, in the deepest sense, equality of partnership because I think there were different versions of hunger, different versions of ambition of-

• 30:32Logan Bartlett?

  Trust, probably, across offices.

• 30:34Speaker 01

  Yeah, but even inside of the Menlo Park office, trust was high. It was more, people were in different stations in life.

• 30:43Logan Bartlett?

  Yeah.

• 30:43Speaker 01

  And I think what the seed that was planted for me in those early years at Benchmark was, the potentiality is there for the system to be much better. But I think we have to curate and edit it. And I say this now, not because I'm on some woke mission, but, you know, we were, when I joined, I was the, I think, the seventh white male partner. And, you know, you look at these things and say, okay, well, we have to destroy this, creatively destroy it, because that's what entrepreneurial mindset, you just, it's okay, there are no sacred cows. And, you know, it's evolved towards what I would say is the essential

• 31:27Speaker 01

  core of what defined the original Benchmark, which is a small group of people, high fluidity in terms of, you know, transferring some information, of trust, which is sort of the glue and mutual admiration, all aligned towards this purpose of like, working with extraordinary entrepreneurs. And, you know, that brings us the totality of joy in our life. We're also parents, we also have other identities and roles, but this firm, you know, so destroys the notion of you're better than anybody else. Because the minute you start to think that in a partnership dynamic, it levels you. It's fantastic.

• 32:05Logan Bartlett?

  What about just, I mean, now there's actually a book about venture capital, Power Law, that Sebastian Malloy or whatever did. And piecing together all these things was something of an academic exercise I enjoyed of trying to learn the history of how venture capital came to be. But one of the things, there's an Excel chapter in there, and it talks about- Prepared mind ethos, the Louis Pasteur's quote. And I've heard you say that, I don't know who it was when you walked in, said, don't bring any of that prepared mind bullshit here or something. I don't know who to attribute that quote to, but a little bit of stylistic rewiring, not just like the structure in the meetings and the trust and all that.

• 32:46Logan Bartlett?

  But there was definitely, it sounds like there was definitely a, hey, we can, we can, and for people that don't know, like the prepared mind is, hey, we're going to go really deep into this, these domains. And we're going to figure out all the different companies in these different sectors. And when Facebook comes across the plate or whatever it is, we will have studied every single social network and know what to look for in that versus looking for when lightning strikes, right? Or when there's something special there. Did that, did you always gravitate a little bit more to the lightning striking element of it? Or was that something you had to learn from your partners to look for rather than, hey, I'm going to go do a thesis, deep dive diligence thing?

• 33:28Speaker 01

  Yeah, it's funny. It's one of those questions that sometimes it's better to ask others about your internal,

• 33:37Speaker 01

  you know,

• 33:39Speaker 01

  perspectives, because you get, when it's your perspective, it's the water you're swimming in. So you don't really know. Eric said something to me the other week that really stuck with me. And he said, if you're investing in a company because of its business model,

• 33:52Speaker 01

  I'm not so sure I should trust your instincts. If you're investing because of the people, I think we should invest. And there's other partners where he would flip that, you know, where it's if it's investing because of the people, then probably not that person, that partner. So in a firm dynamic, what you find is there's different,

• 34:09Speaker 01

  you have different, unique, ideally, perspectives and abilities to see things that are very clear and true to you that aren't obvious to others. I'm not drawn to crystal ball work. You know, I get excited about vision. And when people come to me and say, okay, here's the way this goes. And you get, oh yeah, you can see it has radical potential. And I'm, I respond to it, but I'm also suspicious when, when it becomes this sort of promotional thing. And I think what I, actually, I think I share this to a degree with someone like Paul Graham. Although I wouldn't compare myself to him, when he's doing 42 Y Combinator interviews in one day,

• 34:52Speaker 01

  he's looking for this aspect of authenticity. And this is a big word that got overused in the 60s as some sort of, you know, ether. But the authentic is, to me, what you'd find in a great poem. And even though a great poem may take structural similarities to other great poems, in fact, it does. It's a unique contribution to reality. And you see the world differently after having read a good poem. It's this, the Proust comment about it changes your eyes. And so I think when I think about our role, everyone's different. If I see an entrepreneur that does that to me, and it does seem like a great poem, and it blows you away, that can happen in like three minutes, it could happen an hour.

• 35:34Speaker 01

  But I don't look for great poems by saying poems should be written about the twilight, you know, with the ocean and have symbolic reference to the fact that we're conscious beings. And so we can't imagine the world without consciousness. No, like you read the poem and think, that's a great fucking poem. And so I come back to my own sort of investment style, probably evolved from a, a truth that I would encourage everyone who listens to this to follow, which is there are parts of what activate you uniquely, where you completely lose your sense of self, where you fall in and you

• 36:14Speaker 01

  aren't trying to do something for making money or winning a deal or all that, you're just swept off your feet. And we're all different. And when I get swept off my feet, it's that sensation of a, with a poet of a business. And yeah, it tends to be stitched into business models. And if there's a network effect, all the better. But I'm, but I'm principally relating to a human being. And that's what compels me. And that's what motivates me. And I can't do that with slide decks. I can't do that with abstractions as much as I can do it in the real life, you know, you know. And then how do you modulate that is an interesting question. So, so when I look at my partners, they help modulate that instinct of mine with, okay, you have to do some due diligence. I don't really like.

• 36:56Speaker 01

  But it helps. Sarah's especially effective ex-besomer saying, okay, well, you know, it's great. You feel this way.

• 37:04Logan Bartlett?

  Let's go validate it.

• 37:05Speaker 01

  Let's, let's, let's, let's, let's check our assumptions here.

• 37:08Logan Bartlett?

  Yeah.

• 37:08Speaker 01

  And by the way, she does it in such a delightful way. I don't have this gift, but when she's checking the assumptions invariably the entrepreneur feels better about themselves and their business because she's asked the questions and.

• 37:19Logan Bartlett?

  And you're going in eyes wide open to the opportunity.

• 37:22Speaker 01

  Yeah, exactly. And, and you have the beginnings of what happens in terms of a great partnership, which is that we should be elevating consciousness for the entrepreneurs we work with around the stuff that really matters. And we shouldn't be elevating it for the stuff that doesn't matter. And that's one of the arts of venture where you get, I think you get better at that. But I want to contrast those with the prepared mind approach, which has a role to play. You know, the prepared mind, in a sense, is reacting to a different aspect of where opportunities come from, preconditions. If you look at the great things that have happened in venture, there's a set of preconditions, a little bit like adaptation, like people don't just start with a wing. It wasn't like all of a sudden insects could fly. There were

• 38:06Speaker 01

  preconditions. There are little stubs that came off of, you know, amphibians or fish, or of course, we all came from fish. And but if they didn't have a little stub, it wouldn't then compound towards a wing. So there's these preconditions. And so having a mobile phone penetration at 20% with GPS is a precondition for Uber, for Instagram. I think today the blockchain is a precondition for a set of things that will blow us away. So the prepared mind as a, let's be vulnerable to areas where there's no incumbent because there's high disruption force, to me is an interesting, depending on the fissile material of the mind's preparation, you know, if my prepared mind work, and I remember trying to do this on storage, right?

• 38:49Speaker 01

  You know, storage is a big industry and lots of problems. And I did my prepared mind work and I met these amazing people, John calls growth, who would then go on to found pure storage, when he was still at Veritas. And I thought, okay.

• 39:02Speaker 01

  This is one way to do it. And credit to Mike Spicer, who went and like, didn't just meet him. He worked with him at Veritas, but then had the instinct to sort of see the flash storage opportunity and nucleate that and all that. It's deeply rewarding. And I mean, I've done that in different forms. I've worked with founding entrepreneurs like Rob Bearden at what became Cloud Era. But there is something about lightning strikes. This is a fact which we all sort of try to suppress in for sure consumer. The big winners took off before they had venture money. And that really weighed on me. It's like, okay, well, you know, we didn't.

• 39:43Logan Bartlett?

  And Amazon, right? Apple, Microsoft.

• 39:47Speaker 01

  Google.

• 39:47Logan Bartlett?

  Google.

• 39:48Speaker 01

  Facebook.

• 39:49Logan Bartlett?

  Facebook.

• 39:50Speaker 01

  I mean, I'd like to say we, we, we saw it before it was obvious. It was profoundly obvious in the Series A investment in 2005, in March of 2005. There were questions about, about some aspects of it, but you had, you couldn't have imagined stronger cohorts. It was just, you know, jaw dropping. And so if that's consumer, it's really challenging to crystal ball your way into. I think social needs something that does something like, you're going to want to meet an entrepreneur that, that provides poetry and, and then hope that that, that moves you. And, you know, but, but in other segments of venture, I think for sure in, in, in life sciences and you have to have more of a crystal ball.

• 40:34Logan Bartlett?

  What, so, so it's interesting because you bring up, I mean, you were in the pitch, the Series A for, for Facebook, right? At Excel. And then obviously, you know, Evan Spiegel at Snapchat and Travis and Lou with New Relic and then Jake Krebs at Confluent, like all these different types of businesses. Do you think about like the characteristics? What is the unifying characteristic that you've seen founders, successful founders across B2B and consumer have? And then it sounds like maybe there's some differences that Mark can fall asleep or maybe barely stay awake in the Facebook Series A pitch meeting and you give them a little

• 41:13Logan Bartlett?

  bit more latitude versus, you know, Travis at the, at Uber in, in consumer versus B2B? Like, what are the differences between the two?

• 41:24Speaker 01

  Well, I think there's a common feeling of rapture. And I don't know what the full preconditions are of creating that feeling or state. But in a firm where you have, particularly our model, where you have five partners that are literally in rapture. And it's a divine experience. I don't want to glorify it past it's sort of, you know, okay, it's a startup and you're putting money in. It's a pitch, but you get the sense in these common threads of

• 41:57Speaker 01

  you're not looking at your device, you're at the edge of your seat. And what evokes that is an interesting question. And I think one of the aspects that evokes that is seeing a reality that when it's explained to you and expressed is gripping. It feels like a secret in a sense, like others haven't seen it. And it's, it's just at the beginning of being manifest. I would say another dimension, this is, this is more elusive than you would think is a sense of real purpose.

• 42:32Speaker 01

  Lou's purpose was surprise and delight and joy for a developer.

• 42:38Speaker 01

  Okay, Evan's purpose, I think, was more, yeah, more visceral, which is that there had been this loss of freedom of self-expression. Something had been taken away from us in the way that the social media world had evolved.

• 42:56Speaker 01

  And we couldn't communicate with our friends without fear of like the part of your brain that, that learns at about age six or seven, you could be rejected. And he wanted to give that back to people. And so that's like, wow. And it's, that's the rapture, but it's also a purpose that's activating it. The entrepreneur themselves, and by the way, you felt that in Mark's case, you know, it was, I remember that pitch, not as Mark being sleepy.

• 43:21Speaker 01

  Of just, it's like shivering because you think, oh, wow. Like this is such a powerful force of being able to bring people in on a long line, community or whatever at the time, the Facebook. And it, it's like one of those things and you pay at the pump the first time. Of course, everyone laughs now because I use NFT and. But but these moments like Uber, when you first got your first Uber, that you can't unsee that. And and then your mind starts to race and think, okay, what's possible here? Now, some products like Kafka for J. Krebs, we can't really relate to, maybe for developers, but but but the but the rapture is there, as is the sense of like,

• 44:01Speaker 01

  you know, purpose and and the other thing I would say is a common thread is, you know, you can you can get in your head very quickly in this business, right? You can start to tell yourself, well, this is this checks this box. It's the right space. It's that I think it's always useful to say, what is there some part of me that would quit? What I'm doing right now to go work with this person? If the answer is no, you probably shouldn't invest because you're going to be a terrible recruiter. So it doesn't mean that it won't be a successful company, but but I think and then there's a lot of things I haven't done or I didn't do where I would say I didn't feel that way. And I just sort of knew the business would be successful, but it didn't activate that in me. And so I'm not going to be the best partner. And we have a business that's not a monopoly. You don't have to do everything.

• 44:44Speaker 01

  You have to do things that you uniquely are passionate about. And I think as an entrepreneur picking investor, you should feel that electricity, that this person would maybe even quit their job to work with me. I mean, you know, Sarah did that at Pinterest. It's that's the bar. And and so in those meetings, I think of those great entrepreneurs, again, it's probably hindsight bias. Perhaps a more interesting question is, did I ever not feel that way? And we invested and we look back and and, you know, we have some interesting stories. There's WeWork, there's others. And yeah, I mean, that's why you have a partnership. You have different points of view.

• 45:21Logan Bartlett?

  How do you think about like what can go right versus what can go wrong? Right inherently, there's this fooled by randomness aspect that you don't want to get caught in the hindsight bias. To use your term. And so but you also want to take the right level of risk that these, you know, whatever. If you get an Uber, it can make up for a lot of other other sins. When you're when you're evaluating something, what time horizon are you actually thinking about? Like, are you actually thinking 10 years in the future? What it could be like if this actually manifests itself? Are you thinking, hey, in three years, can they actually get this product live? Do you use an infrastructure example or something?

• 46:00Speaker 01

  Yeah, it's cliche now to say this, that we overestimate what we can do in a year and underestimate what we can do in 10 years. But, you know, there is this.

• 46:11Speaker 01

  Thing you have to teach yourself, because it's not instinctive and it's certainly something that we weren't wired up with statistical minds, you know, and so our perception tends to be of the present. And as an investor, one of the biggest skills, this is the thing you have to develop intentfully, is compounding. How does compounding work? And then there's probability distributions and how you think about that. And when I, when I come back to that question of, and it ultimately resolves to time horizon, right? Which is like, how anxious should you be? How patient should you be? In a sense, if it doesn't take seven

• 46:50Speaker 01

  to 10 years to manifest, then, you know, it's a problem, because it would then invite a lot of other companies to come in early. It doesn't allow for that sort of natural expression. And many of the challenges we have ironically are with companies that have childhood actor syndrome, where boom, it happened. And there you are. And everyone sort of declared victory before they've really built a company. Came easy early on. We had this at Docker. We had it at Twitter. And these are two, you know, tough experiences for me, because in both cases, I think you have companies that have the genotype of a hundred billion dollars economic value, maybe a trillion. That's their genotype. And

• 47:32Speaker 01

  their phenotype was a fraction of that. So you take that very personally and think, okay, what have I done? And in some cases, there, there are bad behaviors that try to prematurely optimize, jack revenue quickly. At Docker, we did that. We got too much revenue of the wrong kind too quickly. And at Twitter, we had other problems. But, but the point I'm making is that if you can have this hinge, and I, in a way, I actually think it's a little bit like the sympathetic and the parasympathetic nervous systems. There needs to be this hinge between the long-term You know, if we do the right things, it all takes care of itself. And then the short term focus, maybe it's left brain, right brain. I don't think any analogy you want.

• 48:12Speaker 01

  So, so what I get worried about, right? Hearing companies like we're long term focused, so our numbers suck. It's like, you don't get that luxury. And, you know, we just juiced our quarter. Isn't it great what we did? I'm like, nobody cares. By the way, and I'm a company right now, I'm doing this, they had an extraordinary fiscal year. I'm like, congratulations, you just raised the bar, which is great, but it's terrifying. Because if you want to continue to grow at 75%. So, the balancing act, the hinge, the dance that you get involved with is, which is, I think is, you know, challenging to sustain for 10 years, is to bite off enough that you can chew, while having in the background, the most absurdly radical ambition.

• 48:55Speaker 01

  And you, doing those two things together is really hard.

• 48:58Logan Bartlett?

  Yeah.

• 48:59Speaker 01

  And I found entrepreneurs that focus on the background ambition at the expense of the short term,

• 49:05Speaker 01

  lose their teams. And oftentimes their investor support. And the people that are hyper focused on the short term, lose the purpose. And so, so being able to have a dynamic, and I think you can set this up as a systematic thing, like, how do you interact with it? What questions do I ask the entrepreneurs I work with? I think is one way to keep true to that. You know, it's great, we did the fiscal planning, a lot of fiscal planning going on this year. When you look back in three years, what do you wish you will have done this year? Oh, that's a different frame, you know? And it gets you out of the, but you, you need to be balancing those two systems. And if you don't, then I think you end up with the common pathologies. Typically, if it's ambition focused, you can, or ambition centric, at times you can lose focus. And when it's, yeah.

• 49:49Logan Bartlett?

  Do you think in probabilities when making investments? Because ultimately, there's only one outcome, right? And, I mean, theoretically, there's an infinite number of potential outcomes, but there's going to be one. And, you know, you can, you can build the model, right? I'm sure, I'm sure you've thought about this, that, but ultimately, there'll only be one.

• 50:06Speaker 01

  I have so much respect and admiration for Jeremy Levine. And I talked to him about an investment we're in together, and he says, well, we, we, like you, like, when we build the models, we wait the- Here's the wild ass case, it's gonna really work. Here's the wildest negative case. And then we look at each, we assign a probability. I'm like,

• 50:20Logan Bartlett?

  10% chance it's 10 billion.

• 50:22Speaker 01

  That's an amazing way to think about it.

• 50:24Logan Bartlett?

  Yeah. It blends out to the costs that we should pay $400.

• 50:28Speaker 01

  For sure. You back solve. And I thought, it is amazing when you think about it, and it is completely inconsistent with the way I think about it.

• 50:34Logan Bartlett?

  Yeah. It's comforting in some ways. You can, you can look at the inputs and well, you know, I mean, it was only a 10% chance it worked anyway.

• 50:41Speaker 01

  It's especially comforting when you have partners that are breathing down your neck and saying like, how crazy is this? And you're like, well, I understand, but here's a way of framing it. And I think it can be helpful. I don't think of it the world that way. The way I come at it is actually very, um, in, in, in a way relational, which is,

• 51:02Speaker 01

  we, we end up running into more problems, believe it or not, when founders lose their energy, their passion, their motivation. And if, if, if that, if I feel like that won't be satiated at the first wave of success, that it goes so deep that they're gonna, you know, because that's when you get to the outer, you know, realms of probabilistic success, there's a human side to it, which is the person both didn't sell their company, but pushed to expand the possibilities to get there. And that's a human question. So, so, so my experience of it comes very much down to that centered human connection to say,

• 51:45Speaker 01

  this is not, you could say this cynically and say, this is a function of, uh, is, is the insecurity of the founder, something that can grow and become weaponized? Um, I'd like to think of it more as the joy of the founder. And it's like, is it, is it insatiable? Does it, or, or does it like end when they can have their private jet, their five vacation homes, and other things you do with the manifestation of wealth? And it's an interesting phenomenon. If you just think about it like psychographically, which is how does success shape and contour the individual? That's what I think about it. And so when I'm asking questions of an entrepreneur in these meetings, it's like, what is, what is, what can I imagine happens to them when it all washes over them? Take Toby as an example of Shopify. And I had the opportunity, regrettably,

• 52:30Speaker 01

  To do the series A, which now would have been called pre-seed. But the first investment, the second, the third, and I, you know, I didn't do it 100% like proof that I shouldn't even be in this share in this business. And yet somehow I still. I think you have other examples. Maybe. It's so humbling because I don't, Toby said something to me. It's like we are us as a partnership. Cause we had a $200 billion market cap. It's like, yeah, but I built the $200 million market cap out of a $2 trillion opportunity.

• 53:01Speaker 01

  And I sort of think of it that way, which is like, I've built a little venture career out of something was most of, and you know, I'm lucky to be able to continue to do it. Not knowing at that time, that a German, you know, expat in Canada entrepreneur building white label e-commerce, like what? What would success look like? And it's been our biggest risk out of, out of the Silicon Valley has been the background conditions that people feel. Pattern matching. Yeah. What they like here, a lot of people want to be bigger than Google. And maybe they want to be, you know, their purpose is, has no limit. And that's a better way of saying. Yeah. Where sometimes you go to, you know, I don't want to pick on the Topeka, Kansas, but it might be like, hey, you know, like we're, that's a hundred million dollars.

• 53:44Speaker 01

  That's great. It's like, ah, so, so I think that question is less, the probabilities have to have a human manifestation story. That more often than not, a great company gets an acquisition offer that's, that's irresistibly good. Evan Spiegel is an example, right? And, and what you're betting on, not betting, but what you, what you have to imagine is that in the radical success, which is why we do the job. And honestly, it's sort of the, what we tilt towards that we need to believe that they're going to face that decision. And the, the, the pull of, of the joy, the purpose, the things that have them going to work every day.

• 54:26Speaker 01

  Will transcend the extrinsic rewards of all the money they could ever possibly imagine. And how do you know that? It's really tricky, but you, but you have to kind of have a point of view. Otherwise you have, there are so many examples of the companies that. Faced that choice and they sold.

• 54:41Logan Bartlett?

  I've heard you say that everyone gets worse at this job over time. I think that's probably true. If you look at the iconic people in the industry, all of them had some either stepped back early, right? Or they had some unfortunate run towards the tail end. We might be thinking of the same people. What, uh, why do you think that's the case? Why do you think this is that that ultimately does, does the luck run out? Or does something change with the people? A lack of adapting?

• 55:14Speaker 01

  I think it's a confluence of variables that, you know, the best you can do is be conscious of them because then you have a chance to transcend them. The first is ego. And, you know, the great next company is likely to be started by somebody that's totally unknown. And they don't know that you did these things 10 years ago, or that you're this or that. Maybe they can find you online and have some, but the probability that they're going to reach out to you is really low. So if you let your ego develop, then you start to assume great people will come find you. But they don't typically. And I think this is the true and the super majority of cases for us, we call them cold. And it's hard if

• 55:57Speaker 01

  you think you're successful to do something that you were doing when you were 26. The same cold call, "Hey, I'm Logan and I, you know, you don't know who I am, but..." dot, dot, dot. So ego gives you a set of assumptions about what's going to come your way that are typically wrong. It has a double negative though, because you then get the opportunities of people who want to talk to famous people or well-known people. And, and, and so you have a flow of opportunities, either from your historical investments that are historical. That, that can be great, by the way, but it's on average, you know, you just, you build more of a.

• 56:36Speaker 01

  Perturbation in the signals from that fresh question of what's the most interesting new thing right now? And so the trappings of success, ego is a facet of that, the aging of the network. And I think there are other pathologies that people experience and one of them is just the nature of wealth and how that tends to impact. It happens with entrepreneurs too. The hours in the day. So you look at the map, the 24 hours that you spend when you're at the beginning of your venture career versus the middle versus the end, and there's a pretty profound shift for many people. One of the things I'm struggling with, I always struggle with is making enough time

• 57:19Speaker 01

  to go find that next great young entrepreneur. I'm on 12 boards. So I still do it and I have to rely more on the instincts now that I have on the person than I do on due diligence or like spending, meeting all 10 companies that are in this area. And so that puts me at risk. I'm more likely to commit quickly and decisively. And I'm committing for 10 years. And so that, these are all conflating factors, right? So one of the dimensions, I think this is the one which you have more control over than you know, is mental agility and freshness.

• 57:58Speaker 01

  And if you assume that there's a requirement of equality, of curiosity, and you take that as a ground condition of being a benchmark partner, and I certainly do, then I have to be just as wildly curious as I was when I was 26 or 32 or 42. And I find that for some people that ages and it fatigues and they get a little bit more, well, let me tell you about my, and you know, you sit in a board meeting, you get to hear about, I've been doing this for X number of years and you're like, ah, like, I want to be part of the team that destroys that generation. So in a sense, I want to destroy my prior self through the creative process, the curious process of discovering what's violent and new and interesting. Again, a good example of that, for a long time, AI was

• 58:45Speaker 01

  Not a good place to invest. And in fact, a honeypot for a particularly bad kind of investor. That didn't understand that economic value is not created in science per se. It's created in the construct of a company and a product and value capture and value creation aren't the same thing. And if you wanted to make money in ML, you needed to build the vertical product. And so, you know, ML was sort of the icing on the cake. And if you just look at the icing, you wouldn't see the cake. That's shifting quickly. And the perturbations, the violence and the pace of movement in ML and AI requires you to come at it fresh, as if you'd never been an investor and say, okay, imagine there's things happening

• 59:28Speaker 01

  where we're able to look at a whole ecosystem being lit up, where historically you would have been killed if you wouldn't have invested in it. Now it may be the thing to be investing in. And so, that's hard to let go of. And, you know, for a while, I mean, I even go back to the beginning of my venture career, consumer internet was a good way to get out of the venture business if you'd been doing it in 99 and 2000, because most of those companies had failed. But, but then you wouldn't have done Facebook. And yeah, so these aging aspects, if you're conscious of them, you can undermine them. I think it's not specific to venture. And there are some jobs, though, and I think particularly you look at someone

• 1:00:06Speaker 01

  like Stan Rockmiller, where 30 years of experience makes you a lot better. And venture, I think you have to lay out, it makes you a lot better in some ways, it makes you a lot worse in other ways. And if you're conscious of it, you have a chance to overcome that, I think.

• 1:00:24Logan Bartlett?

  It sort of goes back to the what can go. If you're looking at an opportunity and thinking about all the ways people have died along that journey before versus what could go right, right? Seeing all the way, all the way through. Shifting gears a little bit. So the, the benchmark partnership. So, so you joined in 2006, and now you're the, the oldest active investor of the current fund. Is that right?

• 1:00:47Speaker 01

  That's fair to say, yeah.

• 1:00:49Logan Bartlett?

  So how has, obviously the compositions evolved. You're no longer all tall, white men. And the, but the ethos and all of those things seem to have stayed consistent in terms of like what you guys want to be doing. How, how have you thought about building the firm to the, to the point it is today? And hiring in the right set of partners and making sure you all have the trust and the complementary skills and all of that stuff?

• 1:01:20Speaker 01

  Yeah, I think it starts with this very basic question. I ask my partners this question all the time where, I mean, all the time, every few months, we're founding a new firm. Who do we go hire? And that's a very different question than who do we want to add to Benchmark? And so when you think of it from that primitive state of refounding, and I think Benchmark has been founded a few times.

• 1:01:48Speaker 01

  I think some companies say this to try and convince people that they're, you don't have to be a founder, you can come be a founder here. I actually think that's true here because the, the culture, while it carries that through line of attracting a certain kind of person who wants to be in a non-hierarchical structure, who wants a firm that amplifies their strengths and that buttresses their weaknesses. Like we, we speak to a certain kind of

• 1:02:11Speaker 01

  investor, but if you, if we start with that question, that's how I've thought about it with the people we brought on, which is if I were leaving Benchmark to start the next Benchmark, would I hire this person? Would I want to convince them to go found with me? Because in a sense, I'm not hiring them. And it's a weird conversation, which is why I think we can recruit some great people is that

• 1:02:29Speaker 01

  we're not really hiring them. We're asking them to, to found the next version of whatever this is that we have. It's not like a band, right? Where you say, you know, here he is, Neil Young with a new lineup. And I think that's kind of fun because it is a Anti-hierarchical, anti-legacy, anti-permanence theory, which is that everything is ephemeral. And every firm is ephemeral. In the totality of existence, we're just this little blip. And getting us more in touch with that finitude of this benchmark, this benchmark will be gone in three to five years. There'll be a new group.

• 1:03:12Speaker 01

  Not entirely, but certain people, myself included, we're finite. So I come to that question of like, who wants to refound? And then there's other layers on top of that, which is, what's not represented in the group that's part of the firm we want to found? And it could be experience-based. It could be personality-type. It could be... But it's far less quantitative than it is qualitative. So I think one of the things we'd like to add to the firm going forward, Eric, having been a failed CEO, successful CEO actually, because he sold the company, and he says failed, but he's not exactly right. I think having people who are around the table

• 1:03:56Speaker 01

  that have had more recent and relevant, direct experience building a startup will be great for the firm. And we're going to add that. And it's not that we can't do our job without it. And we're not defined by having experience. We're defined by the quality of people, the questions we ask. But it's a nice thing to have in the room. And Eric represents it. Sarah was at Pinterest for a long time, I think, saw that. But we want to add more of that. So you tune it against that sort of core note of founder-level quality, which means they have to share culturally the sort of sense of, you know, they're serving entrepreneurs. They don't want their name on the website. They don't seek opportunities for egoic self-expression,

• 1:04:41Speaker 01

  because of course you can rationalize it. Well, if you're doing that, it's because you can draw attention to the companies. Yeah, maybe.

• 1:04:48Speaker 01

  There's always some way to think about everything and a light that's kind to yourself. But that's where we are. And I think we have an average age right now in the late 30s. It's an interesting thing to think about. If we hadn't done the work of the founders all firing themselves, our average age would be mid 50s. And actually, it's not true. It would be early 60s, even with the current partners. And so the fact that we continue to rejuvenate and keep it in that essential core is, I think, really, to me, the model propagates that way because it's destroying itself constantly.

• 1:05:22Logan Bartlett?

  You just referenced it, but you've also obviated the single biggest tension point at all venture capital firms, which is the firm website. It's perpetually, to do a firm website is to hate a firm website, is to need to update a firm website, is to, I hate to let people in on this secret, but if anyone asks you, if you work at a VC firm and you get asked to do the firm website, that is a baton death march. And you guys have gotten by, once upon a time, you had a website, right? And was it Matt Kohler that was forced to figure out what the new version of the, I mean, back in the day, it was super interactive, right?

• 1:06:01Speaker 01

  We don't, I don't, maybe I'll share this, it's probably not totally appropriate, but when we launched the new website, which was the no website, there was a dividing line at roughly 40 years old. And I'm overstating this, but it's not exactly wrong. Of the people who called us up and said, "Your website's broken," to the people who called us up and said, "It's just awesome you guys don't have a website." Because now we can go to the Twitter, the LinkedIn, and really...

• 1:06:31Speaker 01

  And so the other logic of that is, I think there's a question of,

• 1:06:37Speaker 01

  we don't want to be non-transparent. So it's not meant to be somewhere, we're hiding anything. But it's also...

• 1:06:45Speaker 01

  It burdens us in a way to get out there and have our website be the relational reality of Benchmark. The entrepreneurs who say, if you're going to talk to a firm, you got to talk to Benchmark. If you're going to raise money, you owe your, we would hope that they'd say you owe it to yourself to see if they're fit. So it, in a sense, it sort of challenges us to be more out there and not rely on some artifact that we created that tried to tell a story. And because our telling our story, to me, is not nearly as interesting as allowing that to happen in the natural effervescence of the way life goes down in the networks we work in. You know, is it always successful? No, there's real trade offs. I could imagine parts of the website, and we've thought about

• 1:07:29Speaker 01

  it. Oh, maybe it's time to go back to be the first firm that relaunches a website. You know, that is, it's a particularly unpleasant task in a firm that doesn't have any hierarchy, because, you know, nobody wants that hot potato. It's like, why we don't have PR.

• 1:07:47Logan Bartlett?

  Yes. Yeah, that, I found office space and websites are the two things that if you, if you get involved in those things at venture firms, you're, yeah, it's a, it's a no win. Now, state of the market today, you, you've gone through three different, three different cycles, right, of downturns. There was the 01 that we talked about when you were getting going, then the 08, and now, now this one. What, what elements of it rhyme with some of these past experiences you've had and seen? And what do you feel like we're in right now that's new and indifferent?

• 1:08:22Speaker 01

  Yeah, the, the part that rhymes, if you want to call it that, is the lived reality of valuation resets. It's been, it's been common across these cycle shifts, where public markets are wired up to be very nimble and agile in resets. Now, they, they still take six months' time, sometimes it takes longer. But broadly, we've seen an catastrophic loss of value in the public tech stocks, 80% loss of value. That's not happened in the private sector. How does it happen in the private sector? Slowly. And, you know, because so much money got put into the balance sheets of the companies

• 1:09:03Speaker 01

  that, that could raise it in the last 18 months, many of them, in broadly, you know, in our portfolio and in the ecosystem. They got to higher valuations or buying time. And then there's maybe the market will recover by the time we need to get out there again. We'll see. But that reset takes more time in the private market and it can lead to these weird distortions. You know, of the practical consideration of is my equity grant real? And I think, you know, it stresses companies to sort of face the music in a sense to say, okay, let's know that we're not our valuation today. You never are. It's just a point in time.

• 1:09:41Logan Bartlett?

  And it's what one person or some group of people said you were, right? It's not a liquid market either.

• 1:09:47Speaker 01

  Yeah. And so you say, okay, isn't it nice that we're private and we don't have to deal with that problem? It's like, you have to deal with that problem. It's just, it's not liquid. So I think it requires the great, the great companies will come back to that question of, where are we in five to seven years if we manifest our strategy? How do we not let the, the stress of the financial market wreck that opportunity set? And, and you're going to see a non-trivial number of companies. My, my instinct is that it's, this is what rhymes with maybe more like 2000 to 2003 is that, you know, some percent, 25, 50% of the companies are going to severely impair their five to seven year opportunity because of the access to capital problem. They'll be in denial about the need to cut. They'll be in denial about the, you know, hey, if I just do this, this is a common conversation.

• 1:10:32Speaker 01

  You know, we can get this valuation if we just do this. It's like, no, you don't understand. If you just do what your plans were, you're still going to have an 80% lower valuation. And whoa. And I'm struck particularly with younger people who say, we're going to grow into our multiple. The multiple is gone. And so that part rhymes, which is the sense of denial. What doesn't rhyme, and I think this is the part which I still will say that, I think one of the greatest traits of a good investor is a sense of bewilderment of, not just being agnostic, but being really careful about any certainties. And I'm quite bewildered by the nature of inflation this time around.

• 1:11:13Speaker 01

  The analogy that people have used, which makes sense to me is it's more like cancer than the other flus that we've had. And then the venture business, I've seen two or three flus. One was very cute in 2008, you know? It was a little more sustained in 2000 to 2004. Maybe it's 2001 to 2004. This is the cancer in the sense that it tends to compound towards negative and it gets worse and worse and worse until it gets fixed through chemotherapy, which is called high interest rates. We could imagine it's not out of the realm of possibility. Interest rates being above CPI to reset the economy and that that means what? Eight, nine, 10 percentage rates? Well, they were 20% in the 1980s.

• 1:11:57Speaker 01

  So if we get to that level, I think the question our companies don't really have a point of view about is when when the cost of capital goes up three to five X, maybe 10 X. It's some subsegment of what we're doing no longer economically viable. And that's probably the case if you believe that the inflation remedy is 12, 15% interest rates. We're far away from that. And maybe it can course correct, maybe, but but so this is where I think it's really different. And what does that mean practically day to day? It doesn't really impact the series A business, crazy as it is, because we still look for the same. I say series A, I'm also putting a lasso around what people call seed today.

• 1:12:40Logan Bartlett?

  And pre-seed too.

• 1:12:41Speaker 01

  Yeah, and pre-seed and pre-pre-seed. The because those companies are not going to be exposed to the stresses of the cost of capital at this scale until five to seven years down the road, at which point there'll be some new reality, among other reasons.

• 1:12:56Logan Bartlett?

  And from the investor side, if it works, it I mean, maybe the pricing changes the difference between a thousand X and a 500 X or something, but it'll be good.

• 1:13:05Speaker 01

  The terminal value will will, yeah, it may be different, but the nature of the alchemy of venture is all intact. I'm in the process right now of working with a former entrepreneur and we're starting a company. He's starting it and I'm and it feels like a great time to be starting a company.

• 1:13:20Logan Bartlett?

  I would be careful you're going to get term sheets right now.

• 1:13:22Speaker 01

  Oh, no.

• 1:13:23Logan Bartlett?

  Just got three X, the markup five X.

• 1:13:25Speaker 01

  Yeah, I mean, it's, um, yeah, if he, yeah, don't tell him because we're negotiating price.

• 1:13:30Logan Bartlett?

  Oh, yeah, yeah.

• 1:13:32Speaker 01

  Yeah, yeah, anyway.

• 1:13:34Logan Bartlett?

  We'll let you get this signed before we release the episode.

• 1:13:36Speaker 01

  Indeed. Yeah, so that's the the hard part. And I think this is the human story that.

• 1:13:45Speaker 01

  I don't know how you can sever your emotional attenuation to the suffering that real people go through during a period like this. I mean, it's sort of,

• 1:13:55Speaker 01

  one thing to say, face the music and you guys are all sinners in the hands of an angry god. It's another to say, oh, man, it's gonna suck for a lot of people. And I think what I've tried to invest in more in now with the founders I'm lucky enough to work with is building their emotional capabilities to deal with this because it is really vicious and hard. And there was a lot of stress during COVID and the CEO world, it's so lonely. And then the number of the issues that they had to not be silent on

• 1:14:26Speaker 01

  the issues that our society has systemically. This is a different, more exhausting phenomenon. I'm more worried about how that may take somebody who's the next Toby

• 1:14:41Speaker 01

  and cripple them in some fundamental ways from being their full potential. So being a resource for our founders to not just, you know, shame them into this is, you know, brutal times, but how do we help you get through this so that you're stronger through it? And that, that's really, I think, a unique role we can play because we're in the sense, like as a founder, we have an unconditional commitment to the business. I mean, in theory, until we sell the stock when it's public, but whereas employees are, you know, and, you know, regrettably, in some cases, you make them conditional, but, but we can be there through this. And I think give them some sense of continuity and ballast and and that's when it's hardest for us to do our job, but we have to do it.

• 1:15:18Logan Bartlett?

  That's on the startup side, which I like that you answered that very founder centric. What do you think about on the VC side? We've seen these cycles that corporate capital comes in and crossover funds come in and, you know, whatever. Different pockets of big money come in. How do you think that sort of flushes out?

• 1:15:38Speaker 01

  Yeah, I mean, I put jealousy and schadenfreude up there as. Probably the worst human vices and they tend to lead to cruelty, which is the worst human vice from my vantage point. So yeah, you know, it is.

• 1:15:57Speaker 01

  We're going to be very challenging for anybody that has high exposure for the last three years to get back to even and it may take a very long time. And what does that mean to those funds and their access to capital? Right now, there's still this weird reality distortion, right? Because the marked values don't reflect the if everyone had to raise money tomorrow, what's the real value? If you told all of them, guess what? Your portfolio's down indexed to what the public market's down. I think that the LPs would be quite surprised. Not that they don't know that instinctively and they're all trying to do the right thing and stay true to the but but you know, if that, how does that impact the capital long term? I think you have the same basic phenomenon, which is that private venture investing doesn't

• 1:16:42Speaker 01

  outperform the NASDAQ and that that is a bitter pill that people have to swallow. Now, there's, there's the tautological statement that the top 10% of the funds out. Okay, you know, and if you're 10% this time, you have a higher probability being top 10% next time. Yeah.

• 1:17:00Logan Bartlett?

  There's some really good studies on that, persistence in the asset class.

• 1:17:04Speaker 01

  Yeah, I mean, it, yeah, I mean, it's a, I remember doing references on Jeremy Levine and people said, well, you know, we're just, we're not sure if we should commit to Bessemer because of the just, he's just new. And I was like, you don't understand, this is the person you want to back. You know, he's just at the beginning of a 20 year run. And the people you're getting assurances from who've had a good 20 year run, they're the people you should take your money away from. And like, oh, no, that's not how it works. I'm like, it's like science, you know, if you're more likely to get a grant, if you have warmed over mediocrity in the bureaucracy of modern science, than if you're the young 22 year old punk who has a radical idea.

• 1:17:40Logan Bartlett?

  It is an interesting phenomenon that you raise money in the venture asset class over what you've done, but you make money off of what you will do. And those two. Things, I mean, they can be congruous, but often are very not, right? For all the reasons we talked about earlier.

• 1:17:53Speaker 01

  There are compounding effects of success in every business. They're also, in this particular line of business, compounding negative effects of success as you accumulate the trappings of success. And so, yeah, I mean, it's a, most LPs, I get it. They want to feel safe. They want it because they're being entrusted to make this decision, either for their family or for their family office or for philanthropy. And if they say, well, no, this person seems great. And it's like, it doesn't sound as smart as like, look at this track record, but.

• 1:18:22Logan Bartlett?

  I didn't find a good time to work in Mark Flurry asking a customer to suck his dick. So I've heard you say Robert Sapolsky has been a mentor, friend, someone that you look up to in your career. Obviously a different, I mean, maybe for people listening that don't know, like what, what about him do you admire? And how has that actually internalized itself in your job or in your life? Like what elements of that have you internalized?

• 1:18:55Speaker 01

  Yeah, by way of background, Robert Sapolsky is a professor at Stanford of neuroscience. He teaches a few classes, some of them you can see online. And I don't know that I would say he's a mentor, other than a hugely influential thought impact on or cognitive impact on my life. And I think this in the category of someone like William James, who's in our midst, who's saying things that are going to be remembered in a hundred years and that, you know, really can shape your understanding of reality. And it's not a TED Talk kind of thing. It's a volume of work that if you get to know the human being, you realize.

• 1:19:40Speaker 01

  He makes you more human. He gets you more in touch with the fragility of what it is to be conscious and to be, you know, controlled by our neurology and, you know, the effects of obviously the endocrinology and the, the, the mechanics of our cognitive abilities are something he has deep understanding of, but, but, you know, Roberts more recently really affected my internalization of the absence of free will and he's about to have a book called Determined, The Life in Science of, um, something, I think it's Life in Science Without Free Will.

• 1:20:17Logan Bartlett?

  We can link in the show notes. I'm sure there's a preorder.

• 1:20:19Speaker 01

  It is, and it's a controversial position, which is that free will is a precondition for the modern judicial system. How do you punish someone if they didn't have free will? And if you assume that they didn't have free will, then, then you get out of this notion of retributive justice and you move to this, you know, restorative justice. But why is that relevant in the venture business in my life and all this, you know, because, you know, Roberts has this humanizing effect to recognize a bunch of things that, that relate to station in life. It's just luck. So I say these, one of these things, just when you give up the notion of free will, you give up the notion that you were, you were successful because you

• 1:21:00Speaker 01

  didn't, you don't really exist. If you sort of, and it's not just meant to be some, you know, Zen comment, but you start to think about and take an ethical, I think, relationship to systematic phenomenon that, that preconditions exist that you can in fact, that will show up in someone's character, someone's, um, I hope philanthropically I'm able to have an impact on the world, um, that's outsized relative to my, my work with my venture portfolio. The thread that's pulling me there, and this is where I think anyone, anyone that's connected to philanthropy, you can give money, that's one thing, but you should, you should feel the same total loss of self and joy and pursuit that you feel and the things you've done

• 1:21:43Speaker 01

  that are your most successful at, if, in a philanthropic effort, because then you might actually do something great. So his assault on the notion that we have a justice system that is attenuated to reality, but in fact, it's just really, you know, 15th century barbarism that we're brutalizing people. You take this, you know, solitary confinement as a punishment for people in prison. And we know that tachykinin, which is, well, there's three or four versions of it in the brain, right, that get released in social isolation that activate aggression in the worst of human behavior. And we're amplifying that in the people who are the most vulnerable. So I think, Robert, my guess is that if we had this podcast in 10 years, that his influence in my life will have set a trajectory. And I urge people to read his

• 1:22:28Speaker 01

  work. You know, his last book, Behave, the best book I've read of his was, you know, My Zebras Don't Get Ulcers and How We Kill Ourselves With Our Stress Responses. And this is a living giant amongst our time. So, you know, listen to his podcasts. And I think people get swept off their feet when they hear a person like this talk.

• 1:22:46Logan Bartlett?

  That's great. That's a very heightened state for us to end. I had two final questions. One was a portfolio company telling someone, a customer, to suck their dick in that one. And I, there were two choices. We'll have to leave that for the next time we do this. That was a much more elevated way for us to end this discussion. So.

• 1:23:04Speaker 01

  That is true. I invested after I knew he did that.

• 1:23:08Logan Bartlett?

  It worked out for you?

• 1:23:09Speaker 01

  Yeah, it did. It was the start of a chain of investments.

• 1:23:13Logan Bartlett?

  Yeah. Your whole open source thesis or whatever, investments all traced back to an SMD CEO saying that.

• 1:23:21Speaker 01

  Yeah, that's incredible.

• 1:23:22Logan Bartlett?

  Yeah. Well, thanks, Peter.

• 1:23:23Speaker 01

  Thank you.