Uncapped #41 | The Benchmark Partnership

In this episode, the Benchmark partnership explains why they’ve resisted scale, eliminated residual economics, and built an equal partnership designed to endure. We talk about what that choice enables – for founders, for decision-making, and for practicing venture as a craft rather than a factory. Peter Fenton is the longest-serving full-time general partner at Benchmark. Over the last two decades, Peter led investments in Twitter, Yelp, Elastic, Docker, Zuora, and many others. More recent investments include Sierra, Ollama, ClickHouse, and Airtable. Peter has been on the Forbes Midas list 18 years in a row. Eric Vishria is a general partner at Benchmark. Eric led investments in Confluent and Amplitude, both of which IPO’ed in 2021. He is also an investor and board member at Cerebras Systems, Benchling, Contentful, among others. Most recent investments include Fireworks, Quilter, and Greptile. Before joining Benchmark, Eric was the co-founder and CEO of a social web browser company called Rockmelt, which was sold to Yahoo. Chetan Puttagunta is a general partner at Benchmark. Eric is an investor and actively involved with Elastic (which IPO’ed in 2018), Legora, Manus, LangChain, Airbyte, Cursor, Reducto, Numeral, and the list of great companies goes on. Noteworthy exits include MuleSoft, which was acquired for $6.5B by Salesforce and Acquia, which was acquired for $1B in 2019. Prior to Benchmark, Chetan was a general partner at NEA for seven years. Ev Randle is the newest general partner at Benchmark. Prior to joining the firm, Ev invested in Anthropic, Chainguard, Databricks, Flock Safety, and SpaceX, among others as a partner at Kleiner Perkins. Through his experience at Founders Fund and with personal capital, Ev also has invested in Rippling, Ramp, Wave, Faire, Figma, among others. --- Timestamps: (0:00) Intro (0:18) Becoming more rare to stay small (4:58) Activities that degrade with scale (9:08) The principles of Benchmark (14:07) Contributing as much as you take out (18:37) Doing the right, hard-to-sell things (23:31) Benchmark’s relationship with founders (31:29) What makes a quality investor (36:15) Cultivating different tastes in founders (39:56) Spotting special people (46:06) Consensus vs non-consensus bets (47:50) Investing in founders, then AI (53:06) Founder centricity matters more than ever --- Links: https://x.com/peterfenton https://x.com/ericvishria https://x.com/chetanp https://x.com/EverettRandle https://x.com/jaltma --- https://uncappedpod.substack.com/ Email: [email protected]

• 0:00Speaker 00

  I know that I'm a moment away from many of these people firing me and I want them to. But the minute I become predictable, it's over.

• 0:07Speaker 01

  Many things predictable is not one of them.

• 0:11Speaker 01

  Benchmark team, it is an honor to be here with you all. I'm not going to make you all reply in unison to me, but I'm really excited to be doing this with you. I want to start with an observation, which is that of the sort of top VC firms, whatever you'll call that, but like, you know, I'm thinking of founders funds, Koya, thrive, Andreessen. Most have scaled in a big way for whatever set of reasons that has been sort of like the dominant strategy. Benchmark has been a stalwart in some ways to hold out with small firm, small team, smallish capital base. And I'm just curious, like, why? And I'm sure you all have sort of like different opinions on this. So just to pick somebody random like Chathin, I'm curious. Like, what is your take on this whole topic?

• 0:53Speaker 02

  You know, we only do one thing, which is partner with founders early and we really like to partner with them really early. Like, I think the favorite amongst all of us is partnering with a founder pre-launch or at idea phase, or when it's like two or three people in a room. You know, just growing with a firm, I think, just like in terms of measuring happiness for each of us, like that's where we derive the most amount of like professional satisfaction. And if you just think about what that does in terms of alignment of benchmark with the founders and that company, it's pretty amazing if you're there from like step zero. I would argue that you can't do that as you scale, like the interests, and we see it all at our board meetings.

• 1:36Speaker 02

  Like every round becomes its own thing and its own game and its own whatever.

• 1:42Speaker 01

  And one of benchmarks thinks that you, I mean, we've talked about this, that you're like, we don't do the future rounds. There's no conflict in the middle of this.

• 1:48Speaker 02

  And we're fully aligned on dilution. We're fully aligned on trying to make this is the biggest outcome we can do and. I think capital constrains you in that way. Time constrains you in that way. And each time you go partner with a founder, you're doing it with extremely high conviction and you're going all in. That, to me personally, is an extraordinary experience. And, you know, different models, different ways of practicing the business. But for me, this is the way I love practicing the business. It's becoming rarer by the day. And then therefore it becomes more differentiated.

• 2:26Speaker 01

  Peter, you've been here the longest. And so you've obviously seen Benchmark in its context through a bunch of sort of changes around you. Have you felt tempted at any points? Have you felt strengthened and sort of your clarity on what it should be like?

• 2:40Speaker 00

  You know, you have your behavioral experience on a Monday, which is what we aggregate. Today is a Monday. We're here with you. It feels great. And, and there are eras in the business that I've participated in where the Mondays sort of sucked. And some of those were just cyclical. You know, you have a downturn in the economy. Your partners are bringing in their struggles, their pains, the channeling the entrepreneurial landscape at that moment in time. What I was struck by is the period of time that I've spent. I've had time at Excel and I've had time at Benchmark, when that felt more self-inflicted, not market-driven. And, and so the lived experience, the behavioral experience is the joy of the business

• 3:24Speaker 00

  is centered on serving entrepreneurs. And as Shaitan related, you know, getting close to an entrepreneur, being a partner, deep partner to them, social emotional partner, strategic partner, all of that. On a Monday, if we're talking about that, it feels really good. It feels aligned and it feels purposeful. And when the Mondays, we're talking about our friction with our European effort. And I'm sure the European partners at the time, now called Balder Timmer, talking about the problems with us. It felt draining. I joined Benchmark and they had just raised over a billion dollar fund in Benchmark 4. And the overhang of the misfit between how do we practice our business of partnering early? Going shoulder to shoulder with an entrepreneur and deploying that volume of capital.

• 4:09Speaker 00

  And so there are a number of things that happen when strategies are misaligned with purpose and values. And the main thing that happens is just less fun. And so I looked at the simple question of like, how many hours a day? Our Monday meetings go, you know, somewhere between six to eight hours. And how much of it is just joyful and aligned? And how much of it is dealing with the stuff that's not sort of what brings us purpose and meaning and value in the business? And what I feel like we got right is we select people who care mostly about the proximity to the entrepreneur, being able to deliver a meaningfully differentiated experience for them. So they come away and they give a reference to us that says, benchmark shows up on all the recruiting calls. Benchmark is at the epicenter of our tough decisions.

• 4:53Speaker 00

  They're always available, they being us individually and then as a group. And scaling, just asking the question of like, more capital equals a whole bunch of activities that I think degrade. Interestingly enough, they eat at the essence of why we practice the business. So the outcome of maximum cash and cash multiple, I think, is degraded with scaling.

• 5:15Speaker 03

  Yeah, definitely that.

• 5:16Speaker 00

  The quality of the relationship with the entrepreneur is degraded by scaling. The, you know, I think the ultimately the joy, because there's some other thing that's growing, which is an incentive system that fuels more and more, you know, isn't wrong for other people to do it. I just know what their Mondays feel like. And like, we leave Monday and carry that energy and that effervescence and the sense of purpose into every day that follows from that. And when we didn't do that, and we had more activities, more extracurricular activities, man, it felt the opposite. It's like you want a Monday to end, and then you were a little less of yourself the rest of the week.

• 5:55Speaker 03

  What about you, Eric? I think this strategy is not.

• 5:59Speaker 03

  Finance financially maximal. It's not financially maximal for us. No one's crying for us. We're doing fine. But like it's so it's a perfectly fine financial outcome for us or financial strategy for us. But it's not financially maximizing. It's happiness maximizing. And it's happiness maximizing for the kind of person who wants to do the the work.

• 6:20Speaker 01

  Can I put a third variable there if there's happiness, financial?

• 6:24Speaker 03

  Yeah.

• 6:24Speaker 01

  If you had to put a third variable of like impact, do you think that you can have the most impact this way? Or do you think you could increase your impact if you worked with more companies, even if you suffered a little bit for it?

• 6:38Speaker 03

  I don't know that the way we do it, it it just doesn't scale, unfortunately. Like it doesn't scale.

• 6:44Speaker 01

  Is that because of the board seats?

• 6:45Speaker 03

  Yeah, it's the engagement. I just say it's like the engagement with the entrepreneur that I think is the is the time limiter and the constraint.

• 6:53Speaker 01

  Yeah.

• 6:53Speaker 03

  And that's it. That's the time.

• 6:55Speaker 01

  Ev, you obviously came from like bigger firms, Founders Fund and KP. I guess you're rolling what? Are you two months in now? Uh, three months. Three months. So like your experience on this has to be at least notable because it must operate so differently.

• 7:08Speaker 04

  I mean, I I think today, especially one of the beautiful parts about the asset class is that the menu is so large in terms of how do you want to spend your day to day? And what do you want your life to look like as an aggregation of that day to day? So even among firms that are larger, like KP is very different from Founders Fund, which is very, very different from Sequoia, which is very different from Andreessen, which is different from Lightspeed and GC, like everything. Some firms are more similar than others, but every firm is actually quite distinct. But I do think the thing that really stands out about Benchmark, and I think to Chathin's point around being even more relatively differentiated than it was in the past, is as the prevailing trend has been towards scaling and getting to mega scale, I just I talked to some of my friends and peers at some of these larger firms

• 7:52Speaker 04

  and the way that they talk about their day to day and their job and you know, how they're getting fulfillment out of their job. You know, it'll be, let's say it's over the summer and they're like, yeah, I've already done four deals this year, so I'm having a pretty good year.

• 8:04Speaker 01

  Mm hmm.

• 8:05Speaker 04

  Yeah.

• 8:05Speaker 01

  And I'm like, I have to play a lot.

• 8:07Speaker 04

  And I'm like, I'm like, that, that is like the,

• 8:09Speaker 01

  Yeah.

• 8:10Speaker 04

  That is the North Star in KPI of like,

• 8:12Speaker 01

  Yes.

• 8:12Speaker 04

  What's giving you fulfillment? I'm like, do you like the, the founders? Do you like the companies? Or is it just the fact that you've shoved capital into four, four investments and four companies?

• 8:20Speaker 01

  Yeah.

• 8:20Speaker 04

  It's giving you.

• 8:20Speaker 01

  This was one, actually, that gets at one of the things that was a noteworthy difference for me going from running a company that now doing investing is, as a company, like money's involved, but like the primary work is about a product and customers.

• 8:33Speaker 04

  Yeah.

• 8:33Speaker 01

  And then in venture, there is at least one way to practice it where it's primarily about dollars.

• 8:38Speaker 04

  Yeah.

• 8:39Speaker 01

  Which I just don't think that's like a path to happiness.

• 8:41Speaker 04

  I mean, and it can be for some people, but I think like this is, this is a group that's very much self-selected into, you know, maybe the Charlie Munger punch guard approach where it's like, over your lifetime, you might only have 10 meaningful partnerships. So every single one of those partnerships should be unbelievably meaningful for you, for the founder that you're working with. And I think that fundamentally comes into conflict with the idea of, you know, each of us going out and doing eight investments a year or scaling up massively or something like that.

• 9:09Speaker 01

  What are like the principles or like foundational tenants of benchmark? If you had to describe like the three to five things that like define what benchmark's about, like, how would you name those?

• 9:21Speaker 02

  We want to be the first call for an entrepreneur. We want to be their most important and most impactful partner. And I think it's like, pretty easy to quantify. You could ask any of the companies we all work with, who do you call first when you hit a patch of bad news? Like, who do you share that with? We want to be that person. That can only come from being there for the founder, having full trust between you and the entrepreneur. And the entrepreneur knowing that when they speak to one of us, they're getting an authentic experience. Like, it's not, I noticed, you know, with these like, large groups that we've all been part of and boards and stuff. Like, whenever bad news gets presented in a board meeting, you can see panic in some people in the room because they have to go tell their boss.

• 10:07Speaker 02

  With the board meeting notes afterwards, like, things are off track.

• 10:11Speaker 01

  Also, by the way, it's a reflection of something in the relationship if they're learning bad news live in a board meeting.

• 10:15Speaker 02

  Sure, yeah, 100%. And, you know, like, we're working with such unformed companies and people that, like, there's gonna be bad news. And if you, like, aren't expecting that, then you're doing this job all wrong. And so, like, things go well, things go badly, things go sideways, things go up, things go down, stuff happens. And as long as the entrepreneur knows that they can call you, and you're gonna be there, and there's trust there, and you're that first call, I mean, that's what we aspire to in every single one of our relationships.

• 10:45Speaker 03

  So there's that, that part of it, which we've talked about a bunch. And then the other part of it is the equal partnership. And I think that's a, it's a very special, like, it's a very special thing, you know, Ev's been here for a quarter, Peter's been here for 20 years, I think I'm on 11, you're on, like, eight. That equal partnership is really special, I think, and just something that also doesn't scale, frankly, but has a very kind of special dynamic. And I remember when I joined, and you're just like this new person, it's my first investing job, you know, Peter and Bill and Mitch and Matt, who were the four that, that I joined, they're like, asking me about doing things.

• 11:29Speaker 03

  And you're like, well, I have no idea. Like, I, I have no idea, I have no idea how to do this job or anything else. But I think it's just, it relates to this, you know, deep belief in the equal partnership. And I think it's, it's very empowering for a new person. Um, I think, or I found it very empowering.

• 11:45Speaker 01

  Ev told me he was disempowered.

• 11:46Speaker 03

  He was disempowered right out again. I think it's just like, it's very empowering for the new person, and it's, and it's also, it has, it also, like, creates, I think for the right kind of person, it creates a lot of internal drive and expectation, because you're like, oh. I better not fuck this up. And, um, and so I think that's a magical piece of.

• 12:05Speaker 01

  Why is it so hard for most people to do this? Cause like, I think a lot of other firms, you know, want it, but effectively, you know, rounds to zero, the number that can do it.

• 12:14Speaker 03

  I have this belief that the biggest leap wasn't at the founding of Benchmark. The founding of Benchmark was like the founders came together. It's like, how do we cut things up? Okay. We cut them up. Okay. It's equal. What else can we do? But then they had an amazing first fund. Benchmark one was like a legendary, um, you know, whatever.

• 12:32Speaker 01

  eBay.

• 12:32Speaker 03

  Seventy X return or something like that. Then, so they built all this brand value, like they.

• 12:39Speaker 01

  And they gave it away.

• 12:40Speaker 03

  And then they gave it away. And I think that was the.

• 12:42Speaker 01

  Nobody can do that.

• 12:43Speaker 03

  And that, that I think is the hard part, right? It's like, well, I, I, I built the firm. I built the brand. I should get some economics from that. I should do, or whatever it is.

• 12:51Speaker 02

  No residual economics is the craziest.

• 12:54Speaker 03

  It's the craziest thing. It's the craziest thing.

• 12:57Speaker 01

  There's no incentive really to do it unless you really care about legacy and something other than yourself. I mean, there's, the incentives are very thin to do it.

• 13:06Speaker 00

  It's also just root, I think rooted in the culture of Benchmark. And you go back to Bob, I mean, Bob, Bruce, Andy, all these, the founders have had played their part, but it was, uh, rooted in this idea of respect and affection is that you should have a partnership where you really respect and admire, you give them, give all my money to any of my partners. But then you admire them. You say they're, there's a old saying like a virtuoso, somebody who surprises even themself. And I believe that about all my partners practicing the business. They're virtuosos in the aspects of the business that motivate us to do the work. So when Bob raised his hand and I was there, he just said, it's time I'm out.

• 13:48Speaker 00

  And others had left before, you know, Andy and others, but there was never a conversation. It was actually just the opposite. So we want to, we, we gave him, we gave him economics in the fund. Um, there weren't giant economics, but it was just, um, yeah, we're saying thank you. And I think the culture, you know, as soon as you get into the, the parts of everyone's identity that, that are ego driven. They, they, they lay claim to things psychically that make sense to them. And, and it never, it would never make sense to ask for something of this firm. That was going to entail taking more than you're giving. And I think that's a weird thing just to say, but it's a pressure that I feel. As the last of the prior generations, knowing that I.

• 14:31Speaker 00

  Want to be raising my hand first before I realize I'm not contributing more than I've taken out, not because it's some explicit trade, but just it's a cultural ethic and the cultures we know as you founded your company, like they're so durable, like the inertial forces of a culture that get founded. There's one other thing you said, what is Benchmark? And if I read one book that captures Benchmark, it's this book. Now, partner's different here, but it's the Carl Rogers on Becoming a Person. And that, the premise of the book, which is very simplistic in a sense, it was like the apex of client-centered therapy. It's about psychotherapy. Sorry, this is where you wanted to go in this conversation. But the premise of the book is that to be useful in a relationship, you have to first

• 15:13Speaker 00

  permit yourself to understand the other person fully. And I think if Benchmark is doing its best work, an entrepreneur comes in here and says, they see me. I bet if you ask Andrew at Cerebrus, you know, who understands him most fully? And the founding team, the purpose and the vision of the company. It wasn't, well, he found this hire for me, or he gave me this advice about negotiating the contract with the company X, Y, or Z. It's a, like, Benchmark understands what I want to do. And then we do something else, which I think is equally important, unconditional positive regard. And there are examples in the past of Benchmark where that's been broken. And I think an immune system builds around those failures and says, how do we not do that again? As opposed to say, we're defined by

• 15:58Speaker 00

  that one act. And so I think what you see in the current lineup at Benchmark is really an emboldened immune system. We've had some vaccinations from past experiences to basically say, like, we never want to be in a position where the relationship degrades, where there isn't that faith that we've delivered unconditional positive regard, because we believe in our founders oftentimes more than they believe themselves. And so if you understand the founder fully, and you have unconditional positive regard, Then you really can empathize with what they're going through. And I think that that that nurtures the sorts of success possible with founder entrepreneurs that we all hold out as the great examples of why we do this job.

• 16:37Speaker 01

  I remember when we spoke last, you talked about the fact that like the benchmark seat was kind of given to you, like that from the beginning is like, I'm going to give this to the next person. And I can see why, like you're saying, like the seminal moment was actually the handoff, because that creates the instigation for all the future handoffs.

• 16:53Speaker 03

  Yeah. And you feel responsibility for that. Like, I mean, like, I think all of us feel, we feel responsibility. That was one of the big things we talked to Ev about when, as Ev was joining us, just like that responsibility. Well, just like you feel it, like, not everyone feels that, like, and not, you know, which is fine, but like.

• 17:08Speaker 01

  Totally. Well, also, I think, you know, if you're talking about if at the, because it's equal when you walk in, it's like if a bunch is given to you right at the beginning, you're like, I gotta pay this off to somebody. And the people who kind of set me up from the beginning, like, I can't really pay them back anymore. So I can see why you'd be like, I gotta make sure I give enough before I go, even though it's sort of your, in a weird way, you know, paying back prior generations.

• 17:30Speaker 00

  But rooted in that as well, Eric says responsibility, and I think he feels it, and I respect that. I think the founders gave us permission to basically not take it too seriously.

• 17:40Speaker 03

  Yeah.

• 17:41Speaker 00

  There's a, listen, come on, like, as a group of you, no one's gonna be around in, you know, a million years.

• 17:46Speaker 03

  Doesn't have to be so heavy.

• 17:47Speaker 00

  Everything's ephemeral.

• 17:48Speaker 03

  Yes.

• 17:49Speaker 00

  So what you want is, is, is a tight-knit group of people that are at maximum potential manifestation, like the energy, the joy, the, and the heaviness of like, oh, we're gonna, you know, have to maintain this relic and wheel it out and like. They'll tap tablets in the back about what the founder said. None of that bullshit, man. Like, you're like, this is like a day-to-day thing. By the way, forgive me, we're in an entrepreneurial environment where like, when somebody has a legacy, we want to destroy it. We're, we're in the business of creative destruction, not, not permanence and enduring and forgive me.

• 18:22Speaker 03

  Yeah.

• 18:23Speaker 00

  Like, our startups bubble up from nothing, and we stay true to that. And I think the firm's premise is that we should have our own form of creative destruction. There's no legacy or claim to it at Benchmark. It's like the immediacy and present moment that we deliver. Everything else is secondary.

• 18:37Speaker 01

  One of the things that you just said, which I hope it's okay for me to press on is, and I've wanted you guys to talk about this, which is, I know each of you individually and I know you all are founder friendly and there's like, it's very easy for people in a competitive venture landscape to like poke at one historical example that everybody else has done. If you're just loud, you can just like, you could just poke at people. Sure. I would say you're not loud externally and you sort of have a mindset of like, we're gonna let our actions speak. But I've wanted you guys to sort of like speak, because I know you're very founder friendly and I've talked to founders you work with and all of that. So I'm actually curious to hear, you know, your sort of thoughts is, you know, you've

• 19:18Speaker 01

  seen some of the stuff, like, is it important for you to sort of just like talk about like what you just said, like, there's like a thing and then we have like an immune reaction to it and the firm updates? Or like, yeah, how do you process all of that?

• 19:30Speaker 00

  Humans are storytelling animals. Every firm has their story and depending on the situation and what the motivations are of the counterparty, you accentuate certain parts of a firm's history. You know, the ethic of the firm, I think this is sort of borne out and even in our worst moments is the company must come first. And so we're not more important than the company. Nobody's more important than the company. It's the initiative. It's the collective premise of an entity which is bigger than any one individual. And there are moments in the past, you know, like I was, I've been around through the generations where it used to be the standard model that, you know, when are you gonna get a real management team? And, and that sort of faded to,

• 20:16Speaker 00

  well, perhaps we can go the distance and you have the Steve Jobs narrative, which is like what crimes were committed against this notion of general management versus the founder mode reality that we all support. The part that's sort of most relevant, I think this is, this is what happens every day here is we, we view our job, I do personally, and this has been borne out in the references, is making the founders the best version of themselves. And, and like any relationship, if it's simply synchophantic and enablement and codependency, we make them worse.

• 20:46Speaker 00

  If it's harsh and it's judgmental or absent, you make them worse. So one of the things I think you need to figure out in references is like, what questions should you ask? And of course, if you're going to engage with any great firm, you want to go and do references. The one that's first phone call, but I actually think it's even you go a level deeper and say, how does this person make you a better entrepreneur? And how have they unlocked your potential? And what we care about more than happiness is flourishing. And our companies, and I think what's borne out in the work that we've done is that if I work with that group, like I'm going to be a better version and I'm not going to be living in fear because then you're not a better version of ourselves, nor am I going to be getting, forgive me, what happens in our job right now, I'm struck by the number

• 21:27Speaker 00

  of boards where I see this is a relationship that's synchophantic, that where people aren't afraid, people are afraid, I should say, to pursue the truth because they don't want to hurt anyone's feelings. Or worse, I think the greatest crime that occurs in many of the boards that we all serve on is that somebody says something behind the entrepreneur's back they won't say to their face. That's one of the things I think is a deep ethic at Benchmark is that we are transparent. Like if we're going to say it to your face, we may not say it behind your back, but we're not going to be in a situation where, here's what I really thought about the board meeting. And this idea of congruence, which is a key term in psychotherapy, is that you really want to know that you can trust your partner because they're not putting a face, a mask on because they want you to feel a certain way, but they're being real.

• 22:08Speaker 01

  By the way, this also goes to your point about if you're not gonna, if you don't need to put more dollars into the company, if you structurally almost can't put more dollars into the company, then you just want to tell them the truth.

• 22:17Speaker 00

  You're truth seeking.

• 22:18Speaker 01

  If you're hoping to get to win the next round, you don't want to piss them off because next month you might be writing a term sheet. And I think there's a lot of, there's the references piece, there's the I want to put more money into this company thing, there's just like, I don't want to fight type of stuff. And I do think it leads to that, which I think, I think there's like the, like the best version of being founder friendly is, is not comfort all the time, obviously.

• 22:39Speaker 00

  Yeah, certainly not.

• 22:40Speaker 04

  There was, I mean, there was a recent example of this. I recently led an investment that's still unannounced, but we actually had the founders over for dinner in the dining room where we'll have lunch here in about an hour. And after, you know, we, during the dinner, they showed a demo, we were going through their Inertial strategy and we gave them a lot of very direct feedback and and a lot of it was constructive. It was like a really productive constructive conversation, but not every founder responds super well to that. So I called the founder afterwards and I was like, well, how was that for you? You know, how would you respond to that? And in that call, he said, you as a team are going to make us better founders. And I can tell that right away.

• 23:19Speaker 04

  And because of that, he really wanted to work together because it wasn't just going to be slapped on the back and congratulations. But it was going to be a relationship where we really pushed both the founders and the whole team to be a better version.

• 23:31Speaker 01

  Does it feel like structurally different to you than KP and Founder's Fund in any way?

• 23:35Speaker 04

  I think maybe the most difference is with Founder's Fund because I do think Founder's Fund obviously really, really leans on this. The kind of like Hippocratic oath of VC, which is do no harm. And in doing so, it's like, hey, we're going to be completely hands off is kind of the pitch. And then if you need something, call us. I think, again, that sells really easy. I actually do think that it's one of these things that in practice actually materializes sometimes is, I don't want to say like laziness, but it is just more passive. It is just like, we should back founders that are going to figure it out all on their own and that they don't need help and they don't need any VC assistance. And sometimes that works out and you know, sometimes maybe there are founders that are like that.

• 24:18Speaker 04

  But I think the vast majority of the time, almost every single founder could use feedback, a sparring partner. Any of these things.

• 24:26Speaker 01

  Like even Tiger Woods has a coach.

• 24:27Speaker 04

  It's like a hundred percent. And so I think like having that position is something that I think is a great soundbite and like, you know, goes really well on Twitter. But I think when it comes down to it, there's very, very few practitioners, even you know, the Tiger Woods of the world that don't, don't benefit from something like that.

• 24:43Speaker 01

  This is ultimately the highest accolade of a firm.

• 24:48Speaker 00

  That they seek is a manifestation of a value system. And everyone in this room, I've heard this, and I know I'm going to hear this on your newest investment, is that if we've really done our job, and you'll hear this in our references, they feel like a co-founder benchmark. It feels like they were a co-founder. And what does that mean? Well, it wasn't a conditional transaction. It wasn't a one night stand of they gave us money and then we sort of could brag about the brand, but it was a, they were proximate with me when, when, what a founder, a co-founder does, it's a bit like being in a partnership where you have a child, where you just say like, there's something existentially deep that's permanent in that relationship. And I believe most companies that have single founders end up finding proxy co-founders

• 25:33Speaker 00

  because they, you need support systems. You need a relational, you know, balance and as the ups and downs of being an entrepreneur. And so if we've achieved that, you could say, well, it's not for everybody. Some firms might want more of like, just, just the money, thank you and the brand, or they want services that are delivered by people who work at the firm. Yeah, those are different facets, but the depth that can occur when you have that kind of proximate relationship and ends up, you know, taking you through troughs that would otherwise lead companies to be sold early or to have a destitute, you know, founder who's just tired and doesn't.

• 26:09Speaker 01

  There's also a through line to it. Like, I felt this as a founder, where like, even like a, like a long time exec might be four, five, six years, but then you have a board member who's there through the first round, the second round of execs, and the third exec team and all of that. So you're working, you know, many more hours per day with people on your team, but then when you look back over a decade, you're like, there was somebody who was with you the whole time and it's, you know, hopefully your co-founder and your board members. So I, there's, there's something about the long arc of it too, that is special.

• 26:36Speaker 00

  I have moved away from talking about it as like guidance or advice or whatever. And I loved your sparring partner thing because I think that's what it is and that's what the co-founder thing is too. Because like startups are hard.

• 26:49Speaker 03

  They're really hard and the most successful startups are doing things that are new, innovative and haven't been done before. Therefore, you're figuring things out for the first time. Like you're figuring things out for the first time that are like challenging hard and no one knows. And so like a huge part of the co-founder thing or, um, you know, which, which we should be careful about like using it, but like it's, it's that aspiration or that idea is, hey, we're asking each other questions that like sharpen our thinking. We are like trying to figure things out together. And I think that's a, that's a very specific way of working where I feel like a lot of times what we're doing

• 27:33Speaker 03

  is you're, I'm, I'm talking to somebody and I'm thinking of a very specific example from last week was just like, where it's like, the author knows, like she knows what she wants to do and it's like in there and you're asking questions to help them realize, realize it and, and for it to like come to surface or get clarity on it. And like, that's very, it's different than getting like advice, right? That isn't advice. That is, that's a sparring partner.

• 27:59Speaker 00

  Yeah.

• 27:59Speaker 03

  And, um, and, and a sounding board. And I think that's where you get.

• 28:04Speaker 00

  It's part of what I feel like is, forgive me, this is where I gotta be the older person in the room. The, the degradation of our industry, and it really has been a degradation is I think it's shifted, the, the, the system has shifted to winning. Our goal is to win.

• 28:17Speaker 03

  Right. Because there's, there's capital supply now.

• 28:19Speaker 00

  And so, so you have this large sums of capital that need to be deployed. And so the system is built to, I think, create in the mind of the entrepreneur, a selection criteria. They'll say if you're doing P O Cs, you want to design the criteria of the P O C. So you win it. So what's happening is the industry is programming entrepreneurs in a way to select for things that I think are off target. And they're aligned with the target of the firms and the capital bases they're deploying, but they're off target relative to the quality of the relationship the entrepreneur seeks.

• 28:47Speaker 01

  So what are the big ones?

• 28:48Speaker 00

  The biggest thing, I'm not going to pick on the off-target things. The on-target things are when I want a co-founder, what questions do I ask? And do they make me a better version of myself? Do they provide the kind of expansion of my horizons that make me every day feel more joy for doing this work? Do they keep me honest? Are they available? Do they put me first? And so a lot of winning as opposed to serving, winning is a moment in time. We average in our boards 10-plus years. If you go back and look at the history of my boards, 10-plus years. And so maybe three or four executive teams, as you say, might go through those years. And the sense of continuity of my partner is there.

• 29:31Speaker 00

  And this is the case of, I mean, I love my relationship with Howie, not to pick one, but with Howie Lew at Airtable. And you know, Howie's going through a genesis right now and a creativity that I think occurred at the beginning of Airtable. And it is so fun to watch, but I, but I understand the human and I know what he's gone through. I know how to help him at parts or say, hey, like this is an area you want to be asking some questions about. And, and I think that that's different than winning. Winning was a, is a transaction of like, take my capital and I got to get on to the next one. Cause if you win, you got to win the next one. And so we, we say yes, once or twice a year, served for a decade long. And the differentiation of that, and because our incentives aren't the same as deploying capital. So I think that creates, in the entrepreneur's mind, they, they have to ask the right questions. What do you want in that co-founder? Cause you can't fire your board member.

• 30:15Speaker 01

  Right. I'll take a shot at one of the things I think is like off-target, which is the like, you know, it's become like a, a thing to sell no board seat. And you're like, one of the advantages of working with our firm is we'll give you all this, you know, capital with no board seat. And I think it's, um, there's like a misunderstanding of boards as governance and control, rather than boards as like signing up to work on the company, which I think is like how it should be understood in like 99.9% of cases.

• 30:41Speaker 00

  Yeah.

• 30:41Speaker 01

  But I think it has been very effectively. And somewhat disingenuously sold the founders because it like, sounds good. And you just keep control of your company and there's no risk. And that means that we don't have to help. And so we can, it'll end up deploying a lot more capital. Deploy more capital, yes. And probably says something about the experience of the average founder with the average board member. It's like, can you blame a founder for thinking that's a good pitch? Based on the experience that they probably have with the average firm. Yeah, and also you hear about a terrible situation once and it makes a big impact without nuance and it's hard.

• 31:10Speaker 00

  It's, it's going on right now. Yeah, like these seed rounds at over a hundred million with no board. And it just, I, I know how it ends. It's just between now and then, the amount of entrepreneurs that will miss the opportunity to really seek out a close partner is such a, it's a shame.

• 31:28Speaker 01

  It is. One of the things I wanted to ask you all about was, I'm guessing, I'll take it as a premise, that we probably all agree that like, a great entrepreneur is like, unique or odd or strange or just beats to their own drum in some important way. Yeah, maybe there's examples where it's not like that. And we could talk about that too. But one of my questions is, do you think to be a great investor, you have to be the same way? Do you have to be unusual as a person to be a great investor? Or is that not the case? And can you just sort of be like a, a regular person who can spot unusualness?

• 32:01Speaker 02

  You know, one of the things about Benchmark, as we were talking to Ev.

• 32:06Speaker 01

  I'm asking selfishly because I don't think I've got the oddities that sometimes I wish I had.

• 32:10Speaker 02

  You know, in our conversations with Ev, I think Peter framed it perfectly, which is like, when you know, you know, very clearly. And then given our structure of equal partnership, you're essentially refounding the firm every time somebody new comes on. Because the, the whole dynamic of the partnership changes. The conversations change, sort of feel changes, everything sort of changes. And so it feels like a refounding moment. There's some alignment that happens. I think it's, it goes back to the core of like, what values do you prescribe to as a person? And part of it. Is like you are competitive. I think that is important. Like, there is a competition aspect to this asset class. At the end of the day, we are investment managers.

• 32:52Speaker 02

  And you enter a company and then there's competition to enter the company. And then you invest. And then the company itself faces competition at some point. Like, you can run competition free for maybe 12 months and then the big guys show up. Like, each of us has faced immense industrial, like, competitive threats from external bodies. And you have to have some kind of competitive, persevering spirit about you that can be that stabilizing force for the founders. Because you also have to have that empathy that the founders feel it 10 to 100x more than you. Because at the end of the day, you as an investor are diversified. You get to work on lots of projects.

• 33:36Speaker 02

  The founder is simply not diversified at all. This is the only thing that they get to work on. This, like, value system, hyper-competitive energy in empathy, like, that is actually not present in a lot of people.

• 33:52Speaker 01

  I mean, you and I talked about this a little bit with, like, Max at LaGor. It's an interesting example. You know, you did the seed. We're not here to pump LaGor, but like, while we're here. You know, it's like, but it was like NYC. It's a legal type company. Like, there was already Harvey. And the question I think I asked you right before we sat down was like, why'd you meet, like, you know? I think, like, once you meet Max, you can see it's good. But like, I'm like, you know, to the extent that, like, that's like a case study in spotting who, somebody who I think is unusual in a very positive, strong way. Like, what was that for you?

• 34:24Speaker 02

  Well, Peter and I actually met Max in this exact room together. That was the first meeting we had. And I think within 15 to 30 minutes, we both came away. Sort of like that unspoken language between us that we want to be in business with this person. Yes, it was legal tech, but there was some core purpose with him as he was expressing it and the founding story of like how he picked that problem. And you know, they're sitting in Stockholm, watching Harvey. At the time of our seed round in March 24, I think Harvey had already raised at a billion and a half dollar valuation or two billion. And then by the time the product had launched in October of 2024, I think their number one competitor had already raised at three or four billion dollar valuation.

• 35:08Speaker 02

  And so, but what we were backing was him, his co-founders, because when we invested, it was a team of five people that had a very core insight on how to attack the legal market and why LLMs were like the perfect fit for lawyers. And when he expressed it, Eric likes to say this a lot, there's a magic of founders when they explain something very complex and they explain their unique insight into it and it becomes very obvious. Like that's obviously how the world should work and with your fire and your energy, that will probably be how the world works. And in Max, you saw that right away, but we saw it right away. And so we needed to be in business with them. And that was it. And like the conversation immediately went to, well, great.

• 35:52Speaker 02

  Like, what are you doing the rest of the day? Like, we just want to spend time with you because like clearly you're spectacular. Clearly there's something here. Yeah, it's, it's been amazing. And like, we didn't see it, right? Like the product didn't launch until six months after our money went in. And then I think like it's, you don't start to see the amazing stuff that a person can do for a while, but it's amazing.

• 36:15Speaker 01

  If you look back at other great investments that you've had, do you think it's always clear that the person's unique to you or was something in the Legora situation, did something there jump out faster? Or like, are there other situations where you don't see it for a while? Do you always see it quickly?

• 36:30Speaker 02

  No, I think you see it quickly, but each person spikes differently. Like I think-

• 36:34Speaker 01

  Yeah, we all have different, coming back to your question of like, is there one way to succeed as an investor? God, no. In fact, in this firm-

• 36:43Speaker 00

  We joke, imagine two circles entrepreneurs that I respond to entrepreneurs Eric responds to. There's this tiny little gray area in between with like six people in the universe.

• 36:54Speaker 03

  For two people who do like a lot of software infrastructure or enterprise or open source or whatever. For our Venn diagrams of entrepreneurs to be so separate is

• 37:06Speaker 01

  Founder together and one of you will be like, this person's amazing. And the other one's like, I don't see it at all.

• 37:11Speaker 00

  I don't know about that.

• 37:12Speaker 03

  Yeah.

• 37:14Speaker 00

  No, I could never work with that person.

• 37:16Speaker 03

  That's a different, that's a different statement than whether

• 37:20Speaker 00

  Whether they're good or not. I would like benchmark to investment. I think we often Yes, good for you, not for me. Yes, I think we do have that. By the way, Bill Gurley and I had that where it's like, there's again, almost no intersection. What's, what's, what's interesting, I think this actually relates to any entrepreneur that's thinking about working at a venture firm. A friend of mine was raising money, um, family friend, so that I, it wasn't a problem for benchmark. And I said, you know, he said, how do I choose? And I said, the question I would be asking if I was an entrepreneur is which of these esteemed venture capitalists is most personally resonant with you and committed to you? Yeah. And they're going to say they're committed because they want to win, codify it. Like make them be explicit about the kind of commitment they're going to make and make it uncomfortably concrete.

• 38:05Speaker 00

  So with most of the entrepreneurs I work with, we speak every Friday and, and so, but you, you make it real. And if you don't want to put the time in, if you don't feel that response for you with running your fund and for us individually. I knew Maxwell Gore, like Jason would be 24/7, he'd fly to Stockholm on the mom's and he has. And he is today. Yeah. It's true.

• 38:28Speaker 00

  Okay. So there you go. And so, so, so as you introspect in your commitments, does it clear that threshold for you personally? Cause if it doesn't, and you're doing it because it's a good investment, that is a reliable path to a bad investment and a bad relationship. And, and so I think you're going to find that, that. Chasing what is it that you see? And then, and then allowing that to get washed with experience because sometimes you're going to get it wrong. And, and when you get it wrong, you learn, okay, don't make that mistake again because you've seen me make that mistake and vice versa. So.

• 38:58Speaker 01

  So it's interesting that you guys have like these Venn diagrams that let's just say they don't touch. Just to make it simple, but they're both good. Like I know you both make very good investments. Is that basically like, uh, you know, you can kind of cultivate any set of tastes as long as it includes the good stuff. Like, is that basically what you shake out to? Or is it like?

• 39:14Speaker 02

  There is a lot of overlap on the people though. Like, if you look at the people in these Venn diagrams, the four of us have.

• 39:20Speaker 01

  Yeah.

• 39:21Speaker 02

  There is overlap in that, in the quality.

• 39:23Speaker 03

  In the qualities of people.

• 39:24Speaker 02

  Yeah.

• 39:25Speaker 03

  Yeah.

• 39:25Speaker 01

  Something Keith and Vinod said that was interesting when I talked to them together is they're like, they're really different people, which is very apparent when you talk to them. And, um, but they said one thing that we basically always agree on is did we walk out of the meeting with a founder and was that person special or not? Which I thought was an interesting thing because I wouldn't have expected that out of the two of them because they are quite different. So I would have thought that there would be these very different tastes in there. That doesn't mean they always want to make the same.

• 39:49Speaker 02

  It's very rare that one of us thinks a person is special and the other person is like, absolutely not.

• 39:55Speaker 03

  Yeah. Yeah.

• 39:56Speaker 01

  I mean, another question I always have here is like, are really special people? Is it like, can you miss it? Like, are like?

• 40:03Speaker 02

  Yes.

• 40:03Speaker 01

  Is it a special ability to tell special people? And like, I was like, let's take Max at La Guera. Like, do you think that a hundred reasonably, at least okay VCs who are, you know, been doing it for a while? Do you not think most of them would have come out and been like, this guy is great? Is it unique to be able to see greatness early or is it more about getting into the right room with Howie and Jack Dorsey at the right time?

• 40:27Speaker 03

  That's a good question. I think most of the time people react similarly, like people who are good at this will identify or see that specialness. Like we, and we miss it, like everybody misses it sometimes, but do it. But I, I think there's a bigger thing that happens, which is I think people talk themselves out of stuff. For other reasons.

• 40:45Speaker 01

  Yes.

• 40:45Speaker 03

  Like they'll, the competitive situation, it, you know, this company or like can the outcome for what they're working on be big enough and like, you know, like those kinds of things. Like I, I have that in like, I'll take Alex at scale. Like you met Alex and you were like.

• 41:02Speaker 01

  Something's going on.

• 41:02Speaker 03

  This guy is a winner. Like when we saw it very, very early, like we saw it together. And, um, and you know, and, and those were particularly painful. Because it's like, we absolutely recognized that he was amazing and a super special person. We absolutely recognized that the autonomous vehicle labeling revenue was bullshit and going to go away and, and like not that long. So the facts and the read was correct and the conclusion was incorrect. And it's like, damn it. And so like, you know, that's like a particular painful one is good lesson for me, which is just like.

• 41:35Speaker 01

  But you thought he was special and you, you thought he was special in the past anyway?

• 41:38Speaker 03

  Yes.

• 41:38Speaker 01

  Have you ever done that? And like, have you ever passed on a special person because you didn't like something else about the setup? And then like, I'm still glad I did that. Or is the lesson just always back if you feel that way, no matter what else?

• 41:50Speaker 03

  I mean, at this particular moment in time, I would say like, yes, I did. You know, with the, the hindsight benefit, it's like, if you feel that way. And, and I think you have chemistry with person. Like that's part of it, which is like, who do we respond to?

• 42:04Speaker 00

  We're focusing on the positive case. The negative case, which is useful also to think about, and it's actually true, I think, if you're an entrepreneur, is this word inauthentic. And, and I, I think it's easy over time, over many decades to see the masks, the fakeness, the posing. And if there was one trigger for all of us in general, I think this is true in entrepreneurship, it's true for the employees you're recruiting, is that they think you're faking it.

• 42:32Speaker 03

  Yeah.

• 42:32Speaker 00

  And, and, and if there's, there's the whole fake it till you make it thing, put that aside. I think that's broadly bad advice. If someone's not willing to be vulnerable with us in the meeting and expose what they don't know and, and be real, then we, how can we have a relationship? So there, there have been people come in here who've done well, who've raised money. And particularly now in the cycle, I think you get people who are playing a promotional game. Because there's something that's attractive in the external metrics. It could be research background, pick your favorite. And they, and they, okay, we got to sex that up a bit and then we'll flip these people. One of, if there was a common thread in the benchmark investments is that very low representation there are exceptions of the promoter. And, you know, the case where you find someone who's like really talented, but they're in

• 43:16Speaker 00

  the wrong market and we don't back them because we love them, that happens. But, you know, when we get in trouble as an industry, I think is when we start to become quite accepting of the, this, this is forgive me, the distinguishing trades between founders and entrepreneurs. When you find it in a, in a market like we're in, the number of founders increases geometrically. I think the number of entrepreneurs stays as a fixed constant. So what happens, we have a lot of founders, because anyway, I could be a founder, you could be a founder, you were a founder.

• 43:46Speaker 03

  You're gonna make all the entrepreneurs.

• 43:48Speaker 00

  Entrepreneurs have this guile, there, there's a sense of, of leverage. Like Brendan and Merkort to me is a, an entrepreneur in any cycle in any market. He happens to also be a founder right now. I think that's not the case for a number of people who found companies who would otherwise, if, if the market was shitty, they would be employees at big companies, Y or Z. So a, as, as, as a founder, you have to, I think introspect, do you have the entrepreneurial qualities and to study entrepreneurship, the vast majority of entrepreneurs drop out. The, the phenotype of the personality is they don't want to be validated by a system they didn't create. They're not looking for, you know, fancy brand names and they're not attracted to big,

• 44:30Speaker 00

  you know, fancy whatever, they, they, they look for things that are substantive and.

• 44:34Speaker 03

  The dropout's not straightest.

• 44:35Speaker 00

  Yeah, and there are exceptions, you know, Brett got great grades.

• 44:41Speaker 03

  Brett's in that Venn diagram, like in that six people in the universe kind of stage.

• 44:46Speaker 00

  But I think this, this market right now, because it's so attractive to be a founder, has brought in a degree of promotion and the sorts of stuff that get people into trouble over the mid to long term. And, and you know, our whole system is identifying and getting proximate to the entrepreneurial energies, which are, you know, kind of, as we know, these forces beyond all measure.

• 45:06Speaker 02

  There was a period of time between Q4 of 2022, we call it like end of 2023. There was like a broader macro tech correction where like a whole bunch of like public tech stocks corrected. There was like a tightening of the late stage market and like, you know, interest rates were going up and like all the sort of like tourist capital had like fled the scene for a little bit of time. And capital just like got a little bit harder to raise. And at that time, what was really interesting is if you look at all the seed and A deals that we did and where those companies are now, like it will look like our hit rate went way up. But I actually think what happened is that if you were willing to start a company at that point in time in AI,

• 45:48Speaker 02

  you were a true believer, like there was some natural inspiration for what you were doing. So it's like Leonard fireworks, Brett Sierra, Harrison and Langchain. Like it's, it's companies where the entrepreneur had some fire that was like, I need to do this.

• 46:04Speaker 00

  Done in that era, not one year.

• 46:06Speaker 01

  I think you're right. And I think a lot of people read it as what happened here is they just got to the blue ocean thing first.

• 46:11Speaker 02

  Yeah.

• 46:11Speaker 01

  Maybe there's a degree of that, but a lot of it is if you want to do this at a time when it looks really painful, that's just a different subset than people who are going to do it at a time when it looks incredibly attractive.

• 46:20Speaker 02

  That's right.

• 46:21Speaker 00

  Yes. Yeah. 2008, 2011, when we did series A at Uber, Instagram, Twitter. Snapchat. Snapchat, like, yeah. And it was, but then by the like 13, 14, it became very.

• 46:33Speaker 01

  Yeah. And it's funny because all the like think pieces and essays about this stuff are always like, there was a, there was a new technology and on top of that new technology came X, you know, you get cloud, you get blah, blah, blah. You get mobile, you get blah, blah, blah. You get AI, you get blah, blah, blah. Which I think is true, but you don't really see people talking about in the moments where the psychology requires a different kind of hardness.

• 46:53Speaker 02

  It's just. And I think in that moment.

• 46:55Speaker 01

  It's probably a bigger explainer.

• 46:56Speaker 02

  Like 2022, 2023, early 2024, if you wanted to be in AI applications and AI application enablement, it actually took a, took a special kind of person that truly believed regardless of what anybody else thought. Because at that time. It was quite unpopular and weird to decide you wanted to build an AI application.

• 47:18Speaker 01

  Yeah.

• 47:19Speaker 02

  Because the natural assumption was that fundamentally, the foundation models were so powerful. And as they reached more and more intelligence, like they would just start to gobble up the applications themselves.

• 47:29Speaker 01

  Even if you look at the people who worked at the labs in the like late 20 teens. Yeah. And now you compare those people to the people who are working at the lab. I mean, not the obvious people are brilliant now, but like you look and you see like Ilya and Greg Brockman and all these people. It's like they were doing it when it was really not cool. Yes. And those are still, I think, the most brilliant people. Yes.

• 47:48Speaker 02

  Right.

• 47:49Speaker 01

  There's something there. The last topic I want to get to is basically how you all are thinking about AI, which I realize is sort of like something that we've probably all talked about a lot, but I do think it's like the most interesting thing going. And I don't think any of us want to talk about politics right now. Going through sort of a lot of your recent investments, it's actually clear that you guys caught the AI wave in like a pretty substantial way. A lot of them were not obvious companies, you know, even Legora, which is sort of like a middle of the fairway venture type of company, was not an obvious thing to do from Sweden and, you know, there was already Harvey. I think Manus was a very unusual investment as well. I think Cerebrus is extremely interesting. Obviously, like Sierra was like before it was happening. And I think when it happened, it's like, wait, Brett Taylor is doing customer support.

• 48:34Speaker 01

  Like, I don't think you guys were loud about AI, but I think just empirically speaking, you look back and you caught a lot of it. So I guess what I'm curious about is as you're thinking now and you're looking at companies today, what are you excited about? Like, what are, you know, to the point of you guys are having these conversations as a partnership and you're being really curious? Like, what is at the top of your curiosity list in AI right now?

• 48:55Speaker 02

  I think you just have to roll back to, you know, call it end of 2022, when we happened to get involved with these spectacular entrepreneurs. I think the thing that it became clear to us sitting around the table was that AI was the thing. And even if it wasn't the thing, it didn't matter. That was like where we were drawn to. Like, it was the thing that had this like gravity pull for us. And so all we wanted to do was spend all of our time talking about it, thinking about it, meeting all the people, working on it, all that kind of stuff. And then you have to overlay your value system on the thing that you're excited by. And the thing that we laid on top of that was what kind of relationships do we want to get into with companies in that moment in time?

• 49:37Speaker 02

  And we decided we wanted to be in business with companies where that ethic of being the primary partner, board partner, lead investor, first investor, principal investor, principal believer in the mission is how we wanted to practice investing in AI at that time. And so that meant that we were looking for just really spectacular entrepreneurs with unique approaches to the market. And if you want to do that in a place where you want to be the first investor, and you want to back teams with two people, three people, four people, five people, whatever, you're often meeting people that are probably a little bit early on whatever the next curve was.

• 50:19Speaker 02

  And so if you remember what was happening in 2022 and early 2023, everybody wanted to start a foundational lab, and everybody wanted to aggregate GPUs. And so there was like a big drive to aggregate capital to basically buy GPUs, which then would be utilized for training runs and stuff like that. And it wasn't that we had some hypothesis or some macro view of why we don't want to do that or do want to do that. We were looking for companies and entrepreneurs that resonated with us, that wanted to partner with us. And in that moment, we met a lot of people that were working on really aggressive ideas

• 51:01Speaker 02

  that we thought were just spectacular people with spectacular approaches. And as a result, you saw this list of companies that we compiled at that time. So that was when we did Sierra, when we did Fireworks, we did Langchain, we did Merckor, we did Levelpath, we had Legora, Manus, et cetera, et cetera. All of that came together. And when Eric did Cerberus, the Series A, like it's all of that same stuff, which is partnering super early with founders, working on something that they're deeply passionate about. And frankly, it's cliche to say it, but all of those investments at the time were a little bit non-consensus.

• 51:42Speaker 04

  Yeah.

• 51:43Speaker 02

  I think you have to be.

• 51:44Speaker 04

  It's interesting because from the, from the outside in, before I joined Benchmark, I think if you look at the investments that were made in that kind of 22, 23 time period, you had like an inference cloud with fireworks. You had a data infrastructure platform with Merkle. You had a horizontal AI play with Sierra. You had a vertical AI play with Lagora. And obviously, it's only four of, of the, the kind of 10 great investments that were done in that era. It was easy to ascribe kind of like a thematic nature.

• 52:10Speaker 03

  Then you got here and were like, oh my God.

• 52:12Speaker 04

  Oh, they had no idea what they were doing.

• 52:14Speaker 03

  That is correct. That is correct.

• 52:16Speaker 04

  But, but I think you come in, you're like, oh, wow. They had like a vertical, they had horizontal, they did it. It was like,

• 52:21Speaker 03

  They must have done a market map.

• 52:22Speaker 04

  Like, they must have done a market map. And then you come in and you start asking about each of the investments and the story behind each of the investments. And like 90% of the story on every single one of the investments is the person, is the founder and the entrepreneur. And the relationship that they built and why the entrepreneur was so special. And that was, that was so revealing to me. Coming into this organization and this partnership was like, wow, like the founder centricity just like bled off the page in terms of the stories of all those investments. And so I think that's the way that we're approaching it today is obviously we love to talk about all of the newest and greatest things that are going on in AI every single week. But in terms of the actual investments, it's always, and I think

• 53:02Speaker 04

  it lends itself especially to this era where I think because the sands are shifting beneath the founders' feet so quickly in AI and things are changing so rapidly. Like founder centricity as an investment strategy matters more now than, than, you know, any time in the last decade.

• 53:19Speaker 03

  I think the underlying like technology substrate is changing very quickly with AI in a way like anything, any software that you could have built in like 2022, you could have built in 2010, plus or minus. Like, once we have the cloud, you know, we got little APIs here and there, but for the most part, for 12 years, like it was pretty stable. If you compare that to today, you're getting more change like every quarter than, you know, we did in a decade in terms of the substrate. And so a founder's ability to navigate that and actually like understand where their edge is and where their edge is going to come from and how quickly the moats are deteriorating because they're deteriorating really quickly and how do you build the next one? Like, it's just, it's critical. And so I think it becomes even more important. And so if I look forward, I'm like, You know, we see all the same things like it sure feels like the infrastructure

• 54:04Speaker 03

  cycle is going to continue. It sure feels like, you know, five years from now, or, or, or maybe even sooner, we're going to have really interesting things in robotics. It, it sure seems like

• 54:14Speaker 01

  Agents are getting

• 54:15Speaker 03

  Agents are going to get really good and the applications are going to get better. And like it, all these things like seem like really clear, but I don't know that that that isn't enough, I don't think, to make an investment.

• 54:23Speaker 01

  It's impressive to me that it would be, it would have been so tempting to answer my question with some high minded thesis about like, and you all just said founders.

• 54:33Speaker 00

  Well, I think it's also, if you step back and you just think of these as, as forces, not, not like specifically AI or social or mobile.

• 54:45Speaker 00

  There, there are windows where the disruption is so high that, that entrepreneurs come in and they see something with such clarity that they can't not do it. And then there's this lag effect, years of like, all the other people then come in afterwards. And, and in a sense that happened already with AI. It happened with the first generation. It happened with people doing, okay, now we gotta do our model company. Now we got, but, but when your brother and the team of people were at OpenAI, and that was before it was obvious, then lightning struck. My belief is that that is likely to happen again, at least one or two times in the AI cycle, where there's something so disruptive that no one can fully understand it. And then there's a completely new kind of entrepreneur that emerges. What

• 55:26Speaker 00

  we've been watching for the last three months, um, post Opus 4.5, is the force of that disruption has awakened a whole group of entrepreneurs that were otherwise not seeing things they were seeing that now they weren't seeing them three months ago. I'm a big believer in what you're doing with Sunday and robotics, because that's a world where we all know that in a decade, we're going to have these things in our house. But the path from here to there, is that an incumbents game where the big companies are going to push down complex products? Or will there be entrepreneurs? It seems likely that it will bring, so, so much of this is like, okay, where is there's a disruption that, but then the lag effect of industry is that, you know, 90% of the capital flows in afterwards, after the entrepreneurs have figured it out. By the time it's sort of figured out and there's the next thing,

• 56:09Speaker 00

  like, it's not for us. And, and that's our faith that the Silicon Valley is an adaptive landscape that will continually have these disruptions that, that make, as soon as there's a winner, like, we're kind of uninterested, we move on. So.

• 56:23Speaker 01

  It's a great place to end. Thank you, guys. This was really fun.

• 56:25Speaker 03

  Thank you.

• 56:26Speaker 00

  Thank you.