Benchmark Part II: The Dinner

I've spent a lot of time in Europe, and the dinners are about three hours, maybe three and a half hours long.

That's an acquired episode.

Yeah.

There you go.

And that's the whole point, is that social connection is not something that's a transaction.

It's fluid.

It's fun.

It's playful.

And so the idea is people are coming out beaming, smiling after a dinner, as opposed to this sort of rigid structure of a typical dinner with an agenda. There is no agenda.
Yeah, I don't have an agenda today. The agenda is to come together.
Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way.
Who got the truth? Welcome to Season 11, Episode 5 of Acquired, the podcast about great technology companies

and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and

managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

And I'm David Rosenthal, and I'm an angel investor based in San Francisco, where we were for this very episode. Indeed.
And we are your hosts. Last episode, we told the four-hour story of Benchmark, the legendary venture capital firm that stayed small while all their competitors ballooned in size.
At the end of the episode, we mentioned that their partner meeting

had this dinner at the end of it,

where the five equal partners of Benchmark

sit down for an open-ended discussion,

sometimes with a special guest.

Well, we were talking with the Benchmark partners

about that last episode,

and they invited us to be their guest

for one of these dinners,

and for the first time ever,

record it, even on video. So we are so pumped to share this with all of you.
We got to ask them about a lot of the open questions we had about the future of balancing those out there consumer investments with their B2B portfolio, how they think about making sure that they see that next world-changing company, the pressure of inheriting a top venture firm

and trying desperately not to mess it up. And of course, there's some good war stories from

the portfolio companies in there too, David. Indeed, indeed.
But this was such a special

episode on so many fronts. This by far is a record on an acquired episode for a number of guests

that we have concurrently. Oh, we had seven microphones running.

We had to buy like $5,000 worth of gear just for this episode. I think it was worth it.

I'll see you next time. episode for a number of guests that we have concurrently.
Oh, we had seven microphones running. We had to buy like $5,000 worth of gear just for this episode.
I think it was worth it though. Next time I need to account for the fact that there will be a violent laughter when I'm setting the audio levels because we just had a blast and you'll definitely hear it when you listen.
Okay, listeners, now is a great time to introduce a new friend of the show who many of you will already be very familiar with, Claude. Claude is an AI assistant built by Anthropic, and it's quickly becoming an essential tool for us in creating Acquired and the go-to AI for millions of people and businesses around the world.
Yep. We are super excited to be partnering with them because Claude represents exactly the kind of step change technology that we love covering here on Acquired.
It is a powerful tool that fundamentally changes how people work. And Ben, I know you have used Claude for some Acquired work here recently.

Yes. So I used to take four to six hours to put all the dates from my raw notes into a table at the top of my script on recording day.
You know, this is a hundred different dates that are all sort of laid out. It's a tedious task, but all the data's there in my raw notes.
So on the Rolex episode, I tried just feeding all of that into Claude and asking it to do that for me, which worked perfectly. And I could just export the table and paste it right into my notes, super easy.
So that freed up an extra half day that I used instead to focus on explaining the section on how a mechanical watch actually works. Oh, so awesome.
Made the episode so much better on both fronts. I was just chatting with Claude today to brainstorm ideas for something big that you and I are working on for this summer, and it was insanely helpful.
Listeners, stay tuned on that front. Yes.
So listeners, by using Claude as your personal or business AI assistant, you'll be in great company. Organizations like Salesforce, Figma, GitLab, Intercom, and Coinbase all use Claude in their products.
Whether you're brainstorming alone or building with a team of thousands, Claude is here to help. Yep.
And if you, your company, or your portfolio companies want to use Claude, head on over to Claude.ai or click the link in the show notes. Well, we have an update to the merch store.
We got many requests about this. Gosh, why isn't there a dad hat? Well, we called up the good folks at Cotton Bureau and we did some horse trading because I wanted a really good one.
You know, I wanted one that was embroidered that felt nice. So for the next couple of weeks, there'll be a limited edition dad hat embroidered with ACQ right there on the front.
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The LP show has been on fire recently. For those of you who are paying LPs out there, we just dropped an interview on the profitable growth playbook for B2B companies with Jale Rezaei, the CEO and co-founder of Mutiny.
That is live just for LPs right now for another week or so, and then it will hit the public feed. So you can become a LP at acquired.fm slash LP or get those episodes after they're made public by searching for the LP show in your favorite podcast player.
Now, without further ado, on to the dinner. And listeners, as always, this show is not investment advice.
David and I may have investments in the company we discuss, and this show is for informational and entertainment purposes only. Okay, so our first question is, what are we doing here? Like, what are we at? And Peter, it feels like you would be the best person to explain this dinner tradition.
Why do we have a dining room in the office?

On the 19th floor. When I joined Benchmark, there was great optimism between Bill and me about, you know, injecting new practices, new habits, new ideas into the firm.
And Bill had just read the Ben Franklin biography. And Ben had four dinners, if I recall, a week.
But they were like going deep on finance and then on chemistry and then on life sciences. And he took the catalyst to say, like, why aren't we doing dinners? And anyway, we had this like playful, you know, experiment where we said, well, let's try a few of them.
And we did a big dinner towards the end of the year. And I think it was like 2007, maybe 2006.
2006, that was actually my first year. And it was amazing.
Like time stood still. And we realized like- Just the partners? No, we had four outside guests, Katerina Fake, Mike McHugh, Gideon Yu, and Martin Mikos, if I'm not mistaken.
And it was electric. And we came out of that.
Bill had this habit. He'd always call me in the car after, like, what did you think of the dinner? I'm like, ah, I think it was fun, but I want to go to bed.
He's like, ah. Alcohol had been served.
People were in a fit. Like it was his baby.
He wanted to, like, keep working on the concept. Well, we danced with this idea.
And so the concept that I came to is that firms are full of strategies that aren't coupled to reality. And if you look at a venture firm, eventually it's just a collection of habits.
And this is stealing from William James, who I think was the greatest American thinker, that we are nothing but an amalgamation of our habits. And habits show character, they show everything.
So the idea that we should be nurturing curiosity, which is the essential lifeblood of the firm, needed a habit. And Mondays, as much as they're an attempt at that, you sit around the office and you joke around, you try and dive into topics, they're limited.
And so the dynamic range of a dinner, an open-ended, no agenda, wild explorations of the most bizarre things your partners might be curious about. And I've definitely gotten a few, you know, rat holes with this group and they pulled me out.
You know, it just became one of those things that honored the purpose of the firm, which is the sense of like constantly learning and activating our curiosity. but in a collective effervescence of a group that we could never get in a one-on-one dinner.
One of the challenges, which is being manifest right now, is that in a table, you know, where there's a head of the table, you can get a dominant participant in the dinner conversation. But the problem with the table is that you either have a rectangular structure, which carries power structure embedded in it, or you have a circular table, which atomizes the group.
And so I'd seen this table, The Seven, by Jean-Marie Massoud, who's a French designer, and ran with the idea. Something that would be organic, that could expand and collapse, but most essentially destruct or deconstruct power centers and create a non-hierarchical construct with intimacy.
But this table ends up being, Ole Lundberg designed it. I gave him a hand sketch, and he ran with it.
And it's allowed Ole's lifestyle to meaningfully upgrade because the number of people with means that have sat at this table that decided they need a table just like this. Well, and the people you have at this table, just for listeners who don't understand the gravity of this dinner, it tends not to just be the five partners.
You have pretty esteemed guests come to these. It's the spotlight of attention, which is the biggest gift you can give to another human being on an individual.
And more often than not, it's somebody that we haven't worked with or invested in. And I think you guys might have mentioned this in the podcast that we've had dinners

with people like Dylan Field.

And, oh, you come away.

You're swept off your feet.

You're like, this is why we exist, to serve people like that.

Toby from Shopify.

Jeff Bezos has been, we travel to Jeff. Do you bring the table? Unfortunately, it's not portable.
Medina side, Seattle side, LA. We've been in LA.
We've been in Seattle. And I think you can tell just from, you can see the ethos of the firm in the structure of the table too, which is that you can't have a sidebar conversation at this table because everybody else can hear it.

And so it's all one conversation.

and that um you know sort of coming from from the outside and then being part of benchmark like the one conversation element of everything that we do on monday is so powerful because

we're all tuned in on whatever's being discussed. And sometimes it's not great news.
Sometimes it's good news. Sometimes it's tough news, whatever it is, getting the whole group tuned in, I think is like the, is the essential power of this structure.
And I really like the table for that. I mean, I remember, I'll never forget early in my venture career, when I was a venture capitalist, I remember an older partner taking me aside and saying, like, if you want to bring something up at the partner meeting, you need to have had a side conversation with everybody else before you bring it up at the table.
Which is so funny, because Bruce, when we were talking to Bruce Dunleavyleavy he was like our one rule was no pre-selling a deal like you can't walk around the hallway and say like hey i'm super excited about this one later like if you you know i think you'll be excited too like vote for it that's uh one of the great perks especially for somebody who's come from another venture firm to benchmark so you don't write a a memo. And it's because the memo, you know, when you're, a memo really is a vehicle to, you know, obviously give background on a company, all the work you've done, but it is also a little bit a pre-sell before the company comes in to present.
It's persuasion. Yeah.
And so, you know know a lot of hours get consumed by the writing of it

and the reading of others and not to to have like a founder come in then and there's none of that it's a blank sheet and you just get to have the experience of the founder it's uh it's a it's a nice sarah uses this phrase which is treat seeking which i think is a really good one which is it's like, yeah, is the company incredible?

And does that company have a chance to be one of these few extraordinary companies every decade?

And that's actually all that matters.

That's all that matters for all of us.

And if you find that, then you really don't need to sell it. You don't need to sell it.
Do you have any sort of format of codifying your thinking? Because like memos serve the purpose of forcing you into clarity of thought in addition to creating a sales artifact. And so what things do you do in your partnership to gain clarity of thought? I would say the memo is a crutch often because, yes, it can force you into clarity of thought, but it also allows you to fill in blanks that the entrepreneur themselves are not saying.
And it pushes a sort of bias and perspective that maybe the firm has, or maybe have a sector thesis and it's like there's a lot of manifestation of ego when you put a memo together not having a memo does not replace work and does not replace the calls and does not replace the conversations and what i find so amazing about our monday discussions when you're relaying the calls you have, relaying the notes you took on those calls, you're actually telling exactly what you've discovered. Without the overarching bias, without your ego pushing into it, you're not pushing anything into the firm.
You're just saying, like, this is what I've discovered. We all just heard from the entrepreneur.
It either confirms their views and sort of like how they want to rove through this market. Or we found some challenges.
And so it's that sort of like, and I think you all mentioned it on your podcast, which is that when you talk to benchmark partners, it feels like we don't have some hard stop. We can just keep going.
And that is the beauty of that Monday meeting, which is that we don't have a next topic to jump to. It's not like we're working through a list.
And so we allow ourselves to have that open discussion. There's an agenda.
You got to go through the CRM and update the CRM. And if you haven't updated your CRM, you're going to get negative points.
Negative points. Like I don't see all these calls logged in the serial room.
I also think that, like, the artifacts, like, they live in the memories and the lived stories of the partners. And so, like, if there's a curiosity in that direction, call up Mac, call up each other, call up Mac, call up Bill.
And so those learnings, those stories, that wisdom sort of still walks. And one of my first experiences of this unbounded agenda on a Monday was I brought up a – It's so uncomfortable.
Actually, it could just be four. Like you know that that's going to be what Monday is like coming when you're first Monday.
Four of the five of you were GPs at other firms before this. Yeah, yeah.
So we've all read, you boys. And you talk to Bruce or whoever, and they say, just Monday has no agenda.
You're like, I get that. You can intellectually get it.
Yeah, you get it. And then I remember my first Monday.
And sorry, I interrupted you on your first Monday. But you sit there and you keep on waiting for like, well, when are we going to talk about pipeline? Or when are we going to talk about, you know, the portfolio updates? And it like doesn't happen.
And instead it's like these random roving conversations. But then the topic of substance will come out in a natural way.
You have to really enjoy being around each other in order for that to work. One of the things we didn't talk about for our dinners is like, we really, you know, you just, by getting to engage on these topics that aren't just the business of our day, you know, what we do every day, you just get to enjoy being together.
And then, and you get to know each other in different dimensions. Some of the stories I get told.
Last week was a deep dive in psychedelics. For a deal or for a deal? No, no, for a deal.
Expansive Monday. There may be one, yes.
But it is critical to then what happens on the Mondays and everything in between. So, Sarah, you and Tathan both mentioned lack of structure, lack of memo is not a replacement for doing the work that I assume happens during the week.
I'm curious, what does the work mean? And in the meeting itself. There's no reason why we can't call somebody that we want to talk to when we're together.
Do you put them on speakerphone? Yeah. It's like're on speaker with all of us we have a couple questions for you what is it how do entrepreneurs react when they get a call from the partnership hey it's benchmark yes no i think it's it's surprising to everybody whether it's entrepreneurs or whether it's like people that we call in the industry we're just like hey we're all we're all together.
This question came up and we want to talk to you about it. It's like, Oh wow.
Like that's actual teamwork. Like you're working together as a team.
And I think you, you both have investigated the venture industry so much that sort of like all the stories that are told at benchmark are all about the group going and accomplishing something. there's a lot of like we did this we did that and then this happened and then we did this and then i think broadly the stories are natural in the industry naturally tend to be one person like there's like the venture capitalist is the hero and the truth is that's hardly the truth and part of that is all five of us deeply engaged on that and working as a team for that.

And so when you call somebody together, you're exercising that motion, you're exercising that muscle.

So one of the things we spent a bunch of time talking about on the first episode was what the psychology must be like, Ben and I speculating, of being around this table here as a partner with you guys. And our thesis was that for a ordinary group of people, it would trend towards mediocrity.
But if you have a cultural norm of we are all bringing it all the time, then it trends towards greatness. And why would it trend toward mediocrity? Well, because it's the line that a bunch of other GPs said about Benchmark when it was getting started was that's communist capitalism.
And it's going to trend. It's going to end up like communism.
Right. But obviously, that is not the case here.
I'm curious what that feels like for you guys on a day to day, week to week basis, knowing we've got this partnership, this relationship, we spend all this time together. But obviously we each need to like really bring it.
So right before Sarah was joining. Do you remember this? Yeah, of course.
This is like six, five and a half, six years ago. Yeah.
Something like that. So she texts me on a Saturday.
She's like, so it hadn't been announced. We hadn't decided anything.
But we were close. And she's like, do you have time tomorrow? I was like, okay.
And so anyways, we got brunch at the pub.

And she's like, Eric, okay.

What's our job at Benchmark?

Like this is V3 or whatever, Benchmark.

Like what is it?

And I was like, Sarah, job number one, don't fuck it up. No pressure.
Don't fuck it up. Because I think there is a real risk that you could imagine a risk where you feel like you're born on third base or whatever the analogy you want to use is.
And I think one of the things that you have to hope for is that

every single person who you add feels like, hey, I'm in service of the entrepreneur and it's my job to find and work with and help. The next eBay, the next.
Yeah, the next great entrepreneur. And believe me, I wake up every fucking morning hungry.
I don't want to be the beginning of the end. You want to contribute.
Where does that come from for you personally? Why are you... Because you don't have to.
Because I'm a failed entrepreneur. I think that really is it for me, which is I know what, I know how hard it is because I did it and failed.
Did not live up to expectations. Did not live up to expectations.
And I started a company and it was really hard and it didn't work.

And so I think you just realize how difficult it is. There's a lot.

The privilege of the job is there are people out there who are super smart, who have an

idea that's often against the grain that want to change the world in some way. And it's doing what you can to help them.
And so I think about that all the time. And I think that's a chip on your shoulder or whatever to go prove.
There are different motivational systems. Yeah, fair enough.
Fair enough. I think some part of them, all of us, some of those motivational systems are fear-based.
Don't fuck it up. Some are joy-based.
And I remember saying to Bruce, we had a long conversation about, well, you know, you guys are moving on. I really don't want to, you know, I'm going to leave the firm in a better place than I joined.
And it doesn't get to the core of your question, which is how do you maintain standards of excellence? Well, peer pressure is a really powerful mechanism in a lot of directions. So why does it bend towards excellence? And I think we had this sort of insight that the joy you feel, the total complete joy of working with a great entrepreneur is contagious.
It's energizing. It's the lifeblood of, it's the currency of our firm.
And if we look up towards that, we can all recognize that Benchmark probably isn't going to be around in 30 years. And Bruce said to me, you don't need to keep me like Benchmark.
It's like, we didn't try and start this so it would outlive us. I mean, it was sort of an accident.
They didn't name the firm Benchmark though. They didn't attach your ego to its name, which I thought was telling.

But the idea that this is ephemeral and you said like everything's ephemeral like the structure we don't have any we're an institution franchise all those words make us nauseous because it's really the nature of the business we're in is that we want to destroy the incumbents. And I think we're collectively aligned around being anti-authoritarian, destroy the incumbents.
So the last thing you want to become- Which absolutely was the DNA of the founding of Benchmark, as we talked about in great detail. And so we want no part of this firm to become the incumbent.
And so how do you do that? Violent rejuvenation with a common culture of collective joy in serving entrepreneurs. And if you stay true to that and ruthlessly true to it, then you fire yourself.
Because there's a day where you realize, I will not give to the firm more than I take. And in the case of everyone who's left this firm, and I've never seen this in the history of investing, you study all these firms, every single partner fired themselves.

And it was that ethic that was recursive.

And you feel it.

And it's intrinsic. And I think it's also partly because the minute you're in a position to be the incumbent, I'm the last man standing.

I want my partners to destroy me.

That's joy, which means I've succeeded. Now we're big limited partners.
So that's also joy. One thing I'm curious, what is the relationship of past benchmark partners to this group? We talked about one of the things I remember from the research and hearing Eric, you and Bill both talk about is with Cerebris, we got to call Bruce.
We got to call the old guys. Yeah.
What is that relationship like for you five? I mean, the official relationship is their LPs. That's the official relationship.
There are LPs with us like other LPs. I think the more the feeling relationship is

like they're their LPs with us like other LPs. I think the more the feeling relationship is like you call them and they want to see you succeed for all the reasons Peter's talking about.
And so they pick up the call and help and put their network at work to help you. And they have a lot of insights and have seen a lot of stuff.
I would say one shorthand, they feel more like uncles and aunts than they do like parents or grandparents. That's a great thing.
Yeah. That's perfect.
And for listeners who don't know, because I didn't know until Chathan just showed us, the Benchmark Partners, none of you have offices. Like you all sit at this crazy round table.
It looks like you're going to war and you're like, you're like, you know, trying to put the strategy up on the board. And like, you guys need a hollow deck in the middle.
We had a poop emoji sofa. But, but you have like, there are aunts and with computers over there.
Like, there were not five computers. There were seven, eight, nine.
We're getting rid of them. Not fast enough, but they'll be gone soon enough.
So, yeah. You're saying that's, I shouldn't read into that, like, they're here still.
Our aunts and uncles, it's fine if they visit. Yeah.
But not stay too long. They can watch the kids every now and then.
Right, but as soon as there's a real problem, it's funny because anson uncles say, here's your baby. And literally that's what happens.
Whoa, whoa. This is going to be hard work.
Oh, no, no, no, no. You're the parents.
I got to go home. It's great being an aunt or an uncle.
You know, I have five children. And I can tell you, I should have learned that lesson.
I love my children dearly, but my brother's in a good position. Okay, so picking up on that theme, one of the things that I always have appreciated about you all having done some co-investments in past lives and just your reputation in the industry, the hard work.
What are examples of the hard work, like real examples? We're going to dish this to Chathan because I know a story. Yeah, I know you have a story here, a very recent one.
This guy got off a plane. But the aunts and uncles are not going to do anymore.
What are the ways in which you get put to work by your portfolio companies, Chathan? Well, Chathan, and part of the reason he's discombobulated and has a cold brew in front of him, for those of you who are watching the video, at 5 p.m., is he got off an international flight three hours ago, four hours ago. But was with us on Monday.
Which was with us. It decided to go.
It decided to go on Monday. And today's Wednesday.
So here we are. 48 hours later.
I'm doing great. I'm not just coming.
Yeah, I'm doing great. So what are the circumstances that lead to you suddenly deciding that you need to be in Europe? I think this is a great story of, you know, how the firm and we as a group operate, which is, you know, there was a portfolio company that was going through an important decision.

And, you know, there was a decision that was made Friday morning.

It felt like there was a finality to that decision.

It was like, okay, this is what we're going to do.

And then, you know, people go to the weekend, emotions rise up, they have conversations with their friends. And, you know, stuff starts to get off track.
And I get a call, you know, Sunday night, that's just like, you know, things are getting off track, what do we do? And, you know, we're all on a group chat. And so I put it immediately in the group chat that says, here's what's going on.
I'm looking for advice. It was late at night and Eric called me at 11 or 1130 PM.
And we talk for 30, 40 minutes where we're just walking through everything. And what was so incredible about that moment is when you're in it, it's really hard not to get wrapped up in the emotion and sort of stop thinking logically.
And what was great about that conversation is Eric was able to zoom out and say, look, we're in the service of entrepreneurs. We only recommend and guide entrepreneurs.
It's ultimately their company. It's their decision.
And so what Eric said on the call is what I would do is, and what I know you would do is... That's a good inception.
Here's the peer pressure. I know you, Tathan, would do this, right? Right? Yeah.
Which is, you know, if you weren't in the moment, you would make the phone call and say, hey, this is your decision. I'm here and 100% supportive no matter what.
And so we got off the phone. I made that phone call.
But also here's what I think. Yeah, well, no, I think because you've gone through all of that.
The think part had already, yeah, it had already been your call all we're sounding board you make the call all the facts all the reasoning all that had been laid out there was no more logic and there was no more explanation required it was at this point it was emotional and you know after that conversation with eric i made a call. Just said, it's your company.

I'm going to support you.

This was Sunday night.

Then Monday partner meeting.

This was like midnight I made the call.

So you're all in the circle on Monday.

And so we come in Monday morning.

We're talking.

And then at some point during the conversation, Peter said, this is not a conversation that should happen on the phone or on Zoom. It needs to happen in person.
I was like, okay, let's do it. Okay, yeah.
And then I was like, okay, I should get on a plane right now. And so here we go, like time to go to San Francisco airport.
And then as I was leaving, Eric goes, are you going to come back for the choir? I was was like, oh, yeah. Okay, don't worry.
I'll find a way to get back. Not only am I getting on a last minute flight to Europe, yeah.
And you have to come back by a certain hour on Wednesday. And what transpired was as I was getting on the plane, that meant so much and set such a positive signal that by the time I landed, everything had just like gotten in place.

Like I didn't say anything.

I didn't do anything.

Just showing that level of support and commitment changed sort of like all the dynamics, which is like, hey, this is, oh, you actually meant what you said, that you're here to just support me and support us and support the team. And you're right.
It is our decision. And that was it.
It changed the tenor of the conversation completely. I would say it's like also broadly a manifestation of like the orientation to investing, right? Like there's a lot of people who would say of investing, oh, like we made this bet.
Like you might hear that word a bunch of times. Oh, like, well, it's a good bet or it's a good risk adjusted bet or hopefully it'll be a good bet.
And there's a, there's a very passive. I'd like to own that asset.
Yeah, I'd like to own that asset. It's investment banker speak.
It's a metaverse play. But it sort of like pervades a very passive view of almost like trying to super forecast a set of odds.
And you did the diligence to super forecast those odds. And like we'll never, we never talk in that way.
It's like when we think about partnering with a founder, it's not, oh, we want to make a good bet. It's like we want to make a commitment.
And that commitment manifests like as a group to be vulnerable and honest here and collectively get that feedback. And then with the founders to be on the field, denting those odds, right? Each year, big years, and even a couple of times every year, there's important moments where you can tell, you can't transform necessarily when I'm saying we've got some silver bullet, but that commitment can really change the odds.
Each of us make one or two of these commitments a year. Not bets.
Right. They're not bets.
And there's a level of relationship that then happens with the founders because there's only one or two a year. And what you end up feeling is that you really just care about every company that you work with and the founders and the teams and everything.
And so when these moments happen, it's not a transactional thing of one of a lot of companies with which you work. It's a founder that you really work closely with that you know so much about and that level of support doesn't feel like something unusual for us to do.
It's something that we just expect of ourselves. And that's the relationship that we'll have with these teams.
Can I ask, and this may be, you know, drifting into an area that's harder to talk about. And so we can abstract it a little bit away.
We talked about Uber on our episode, but I want to abstract it to how you think about this generally. The role of a general partner in a venture capital firm, traditionally, is that you have a fiduciary responsibility to your LPs to maximize their returns.
And you have a second fiduciary responsibility when you join the board of a company to the company. And it's hairy enough trying to balance the trade-off because sometimes those things are at odds.
You're representing all shareholders on the company's side. And with your LPs, you're representing their interests.
And so you then introduce this third thing, which is the thing you care the most about, which is support of the founder and empowering the founder. When do those things get hard? How do you balance those things? I assume most of the time you're indexing strictly to we're partnering with this founder and we trust them.
But when do you have to juggle those things? Yeah. I mean, people go to therapy, often they only talk about the shit that's going wrong.
And I think it's useful to think about what's going right.

And if there's not a DSM for flourishing, there's a DSM for dysfunctions.

We could open that book up and we can have all sorts of flavors of dysfunctional family.

And I think we could do that.

And that would be illustrative and informative about how it can go wrong.

I would flip it and say when it works well, what are the preconditions of where

you have alignment? And then you look at degradations from that. I think one of the words that's sort of vital to any durable founder benchmark partner relationship is vulnerability.
And if there's ever caution or pause that I can't share this information with my, then we've

degraded

the relationship and we have to fix that. And you fix, trust is fixed intimately one-on-one.
You have conversations that allow you to zoom up to say, okay, what's the collective purpose? And I think that we could talk about Uber. I have every reason to believe Travis's purpose was the biggest, most extraordinary uber imaginable.
And, you know, we had a collective gaze on that together. And in many situations, this was one of them, pathologies creep in.
And you learn this through a course of experience, which is when you start to see that happening, you need to act immediately. Because the minute we get othered, and it's not about us and this joint purpose, but it's you and me, it's my agenda and my LP's agenda and all that.
And I sadly see that with a lot of the other firms in the industry, because it's not necessarily the partner in the room that's got the issue. It's their partners that have told them that they need to do this or they need to do that.
And I see it. I'm like, oh man, I adore you, but your partners I have different feelings about.
And you're here trying to rattle because they've said, why aren't we meeting our plan? And so the entrepreneur immediately, vulnerability snaps like that and it closes and then you have no trust. And now they come to us typically and they say, we got a problem with one of our directors.
I'm like, okay. So we'll, you know, have an have an off sidebar with them and say, what's going on here? How can I help you with your partners? And as much as, you know, you look at situations where it falls apart, let me give you an inverse story, which is where it really only could work, I think, in this firm model.
I was on the board of a company that wrecked somewhere between two to $300 million of capital, and I'm pretty accountable. Now, I should be fired if this job actually had a standards and governance and practices.
And that company is called Docker. And I was just in Miami yesterday at their all-hands meeting.
And I remember the last time- And when you invested, it was called dot cloud, right? Dot cloud. So the last time I did an all-hands meeting at Docker was three years ago.
And there were 60 employees that we'd spun out of the prior company. And the valuation was zero.
So we'd gone from over a billion, 4, billion, 5 to zero. And I was working with some of the great venture capitalists in the industry on that company.
And aside from insight partners, crickets gone all left bail. And I, this is okay.
Um, what was benchmark? Insights, another story. There's a very fun quote that we don't often talk about on the show.
I don't think we ever talked about this on the show, but a very prominent firm has a, one of their mantra quotes is focus on your winners. And I think that's what you're talking about here.
Yeah. And, and, well, at this point it was, it was, it was a, it was a pretty big loser.

But the vulnerability that I was able to have with the team that remained to say we made mistakes, we're accountable to it, here's how we work through this. Because you know what? If you look up in the purpose of Docker, we're literally – this is cliche.
It's the beginning. We have 30 million developers that use this product every day.
Yeah, that's the craziest thing. Unbelievable product success that completely changed the industry, but like business model and strategic failure such that there wasn't effective value capture.
There was value destruction, hundreds of millions of dollars of value destruction. My two partners, I came in and I said, I may be drinking my own bath water.
I don't know what to do here. I was really vulnerable.
And I said, if I've gone off the deep end, no part of that truth-seeking exercise would allow me to spin, position, blame, be a victim. I was being accountable.
And I said, like, what have I done? And they said, not only do we believe in this company, can we put it in the new fund too? And I thought, well, that's crazy. It's like, but you're right.
If you believe, you have to have that founder level. I always joke, you know, employees can quit.
Founders can't unfound a company. And I think we feel that way in our commitments.
We can't uncommit that founder permanence. And oftentimes, it outlives every executive that gets recruited.
Not every, but like a hyper majority of executives. And so this case of flourishing, and then that was a case of um you know trust all these things that come to stress the lp's agenda the founder's agenda the company it's not that hard you just look up and say what's the purpose of the company let's resolve around that and that'll sort the rest of the stuff out as the you know bezos thing the long term there really is no conflict but creating you know a delighting and a wowing and yeah impressing the customer and creating shareholder value our customer isn't it's not the founder we say it is but it's really the purpose of the founder yeah and it turns out that purpose if that's the customer yeah one of us may be deviating from that and we can keep each other accountable and that happens internally like my partner said no the purpose of Docker is just the beginning.
My God, they're going to get developers to program the global computer. Okay.
So then you could dust off $300 million of lost capital. So I want to do a big topic we really wanted to cover with you guys in this session is staying focused on early stage, not having a growth fund, especially when your entire peer set has become lifecycle capital providers.
And I actually think this is a good entry into it. So Peter, the story you just told of like when things are not going right, the benchmark approach, I'm actually really curious when things are going right.
Your competitive set has said when things are going right, we should go long. We are going to interpret that, I think in large part, as a competitive response to you guys during the fast Fab Four era.
We are going to become lifecycle capital providers. We're going to put a ton of money round after round after round into our best.
That wasn't in response to response to benchmark. That was in response to there's a crap ton of fees to make on.
And the founders will keep taking our money and we have the brand. Yes.
That was like a benchmark stayed so true to their thing. Okay.
I think there are three classes of firms. There's a class of firm that fit that.
Yeah. There's Benchmark.

And then there's a class of firm that actually we're making a strategic decision.

We care about carry.

We're playing for carry.

We think we can.

100%.

Yeah.

And those were valid decisions on that third class.

But you guys have not done that, despite, I assume, every opportunity in the world to do so.

Why?

Can we ask Miles? You were the newest to join. He's going to try and change that.
Well, actually, this is a great point to announce. That's Mark Ruff.
We've got an even bigger dining room upstairs. How far can we stretch this triangle? Look, I think there is certainly all of those opportunities to do that.
I think Sarah says it nicely in part. Our job, we're really focused on how do we scale those companies, right? And as part of that, having a relationship that doesn't get sort of adulterated by this question of us making another commitment decision.
It's like we're in and we're not evaluating anymore. We're not deciding what a fair price is anymore.
We're not trying to decide how to maybe make a strategic call with a company that optimizes for a moment for us to get more capital in. Like there should be, we want to remove any chance of doubts or alternative incentives or questions in that relationship, right? So it can be fully vulnerable.
And if we do that well and we've partnered with ideas with great purpose and a long, endless runway to work on, our success will scale through their success. And we don't need to scale ourselves independently of those companies scaling.
And so I think we'll all, the beauty of being small, it's like we'll all do perfectly well when all our founders do perfectly well. But they're literally like million-dollar bills on the ground for you to pick up if you were to just put more money in your own company.

I totally agree with what Mal said.

I would just add one thing is like it doesn't feel like work if you love doing it. What do you love doing? And I think that's the biggest thing, which is if you love working with founders, then you want to spend your time working with founders.
And that means you don't want to spend your time managing a staff that's scaling. You don't want to spend your time doing marketing to LPs or others.
Like don't want to spend your time meeting investments that are outside of your purview. You want to spend your time with those founders.
And I think that's the, what do you love doing? And I think that's the biggest thing. I don't think there's any question that over the last few years, the growth investors have done extraordinarily well.
Extraordinarily well. And there was millions of dollars to be picked up doing that.
But I think the question of what do you love doing really resonates.

And one thing that's super nice is the cycles turn and the strategy persists through cycles.

And so I also don't worry about a hundred million dollar holes. Right.
And we were joking before we started, like, I would have met him and we're here eating dinner. You guys must be licking your chops right now.
Like this is your time to shine here in late 2022. So, well, yeah.
Um, with the caveat that I think we sort of, because we're early stage, what does that mean? It's moved in terms of its definition. We have faith that every year, some number above zero, companies will be founded that are going to be worth more than $10 billion.
And then about every two or three years, a company is going to be found out that's going to be worth more than $100 billion. And it seems to be independent of the cycle.
So yeah, things get a little crazier when things are, and they get a little depressed. But the growth fund thing, I'll come back to answering it a little differently, which is that I would like this group, I guess I'm part of this group, to set a high watermark for a multiple on a fund.
And I think it's kind of fun to think about, okay, it's great. You can scale capital, but if we had a 20X fund, can we get a fixed 50X fund? I'm not sure we can do that.
All we're doing when we're investing more money in late stages, we're lowering our returns. That's all we're doing because our commitment is fixed.
It's not like we're going to be more committed. So you could say you're getting more cash on cash.
Yeah, but we're lowering our returns. And the hack of the venture business, which is coupling capital from other people and ourselves with the partnership that it comes with, I think it's a little more inflamed when you're stuffing large sums of money into a company as it gets, as opposed to keeping keeping it pure and i will say like what would make me proud is if this team maybe after i'm gone you know sets a new high watermark they won't do that with a growth fund and the rest of it you know it's it's like should we care that's cashling on yeah but i also want to know with our limited partners say um there's nothing like a benchmark fund and when it works it sets the pace in the industry and so you know it's sort of like there's a there's the with a benchmark fund.
And when it works, it sets the pace in the industry. And so, you know.
And sort of like there's the quote Sarah and I used with a team the other day, the Johnny Ive quote, right, of like, you know, what's focus? I was going to say this. Right, it's like focus is when, in some ways, every bone in your body thinks an idea is a really good idea, but you don't do it.
Yeah. about saying no.
And it's a fine idea. We would, I think, it's not to say we don't have opinions on later stage ideas.
If you guys had a billion-dollar opportunity fund stapled to benchmark with the same team, you would for sure have good returns. It would be one of the best growth funds in the industry.
We like to think so. But that's not interesting.
If we're going to do it. But I think to be able to have that focus, that conversation on Monday and our time together on Monday is an hour of roving curiosity of fertile ideas that are right at the edges that seem weird and bizarre.
Or at least you've got to be weird. Instead of, okay, what's the growth pipeline? Is that a good valuation? Is now a good moment to get in? And I think the focus is...
And we'd have to have a CRM if we did a growth pipeline. Sorry.
For us, it is... We're all here because we want to partner with founders as early as possible in that kind of relationship on the board.
And anything, you know, to this Johnny Ive, you know, just the focus, like anything that distracts from that. And we have five people.
This is it. This is it.
And like the capacity to take on more things. We got to ask you about the principal program, but we'll come back to that.
Yeah, but the capacity more things would take away from our getting in the room with that founder who is going to build that next iconic company and supporting the ones that we have. And so we're forced in a way by the constraint of how many people, the SEAL team of six people never being more than that to be ruthlessly focused.
And that's what what that's what we're here for that's super real i mean the the just to validate it like there's lots of opportunities that you can always pursue and that seem like good ideas and like we have this struggle at acquired we're two people oh my god and and and there's a thing that we know is uniquely differentiating which is these like ridiculous deep dive podcasts that are just us And sometimes we have guests. Wonderful to be here.
Thank you for doing this with us. But we know that the most differentiating thing that we do is this unique format that just we can do.
And every time we start taking on more stuff, I'm like, oh, man, the golden goose is getting worse. I can feel the golden goose getting worse because we're doing other stuff.
You're really good about keeping us both honest on that too. That's a, it's funny that you use that phrase.
I, in 2008, I was, there's a first time somebody said to me, you should consider venture capital. I didn't join benchmark until 2014.
So 2008 so 2008. And a very famous nameless venture capitalist said, our early stage program is our golden goose.
How much AUM does that famous venture capital firm have now? That early stage, everything that we do protects that golden goose. Long-time listeners will probably know exactly what you're talking about.
So, Peter, I just want to clarify something that you said. It's interesting.
You define the scoreboard as fund multiple, and it's not total cash return to LPs. I think that's an interesting, like that's a clarifying mindset about the way that you guys look at this.
I can tell you, I think of it as an LP. And the benchmark fund, of course, again, the purpose is not, we don't show up and say, let's drive returns.
It would be alienating to everything we stand for to think of it that way. It's the outcome, right? Not the input.
But I think the cash and cash multiple, both as an LP, and it's a real problem for LPs, I will say, because we have large LPs who look at us and like, why do we waste our time with benchmark? We're a toy. And I say, oh, yes, you're right.
Can you say the number of your largest LP, like what their dollar per fund? They're like 25, 30 million. I could get it wrong.
I'd probably piss one of them off if listened to this. In the context of a Harvard or a Stanford, that's nothing.
That's barely worth their time, right? Except for when we get a high multiple. Right, except for when it works, it matters.
Some of our retired partners are our largest selfPs, I would say. Indeed.

Painful fees.

There are some discussions among some people in the firm that that over time is the way the model sort of endures, is that the LPs become the former GPs. Anyway, it's hard to say that the LP construction has much to do with anything of our day-to-day performance.
I do think this idea, though, of the principle of the firm being standards of asymmetry in our exposure to the volatile material of the startup.

Asymmetry is a 20x, 50x, 100x fund.

And if we degrade that, it sort of misses the point.

And I want this to be, and many of us are at this place where we pay crazy. As a GP, I pay carried interest and management fee to my fellow GPs as an LP.
And that's, well, that's crazy. And this is- Oh, you don't get like a GP allocation that doesn't- I get a tiny, in my view my view, tiny little...
Now we expose the tension. But for the super majority of my investment in benchmark, I'm paying limited partner rates and management.
But I would say that's where... It's not tax efficient.
But this is the point. We have aunts and uncles.
We don't have overlords that are there getting their... To the point of equality, partnership.
Like that is taking it to every extreme along the way. You never want the new partner to feel like they're working for Peter, in this case.
Am I understanding this right, that the longer tenure you have as a benchmark GP, the worse your economic deal gets? It's the same. Oh, that's a horrible way to characterize it.
What? As your LP commitment goes up and you're paying fees and carry on. You know what? I think the counterargument, which I think is 100% right, is it isn't the worst economic.
It's not a worst economic arrangement because the returns will be higher. So you'd be happy to pay the fees.
This is the Mike Moritz thesis of every successive generation of technology should be bigger outcomes because you're addressing bigger markets. I'll make it more simple.
You cannot get allocation to the benchmark funds. And so getting any allocation is going to be better than the alternative.
You're happy to pay the fees. I see.
I see. You're happy to pay the fees and carry because it works and it's still the best investment you can make.
I see. Your marginal economic deal goes down, but your aggregate economic deal gets back.
Your cash on cash, even though your multiple goes down. Your cash on cash.
Yeah, it's different about this than we do we do well we did spend a lot of time we all learned from the podcast okay wait one more thing i want to say because i think i kind of think only we can say this you can't really say this um on on the strategy before we move on um i think one of the most persuasive things that we heard in our research for part one about maintaining the model is we definitely talked to entrepreneurs in the current benchmark portfolio who believe that aggregate in the long run, they took less dilution by having benchmark invest and you guys not having your growth fund and having to put more money into them, then they would have had you or whatever early stage firm they had taken money from been wanting to put more money in in subsequent rounds. Because just to connect the dots, if that had been the case, then you would have a conflict as that investor when things are going well to put more money in at a better advantaged valuation for yourself.
And you don't have that conflict versus and what you actually have is quite the opposite. It's not even because this happens all the time where someone is an investor and they're like, Oh, this company is doing well, I'm going to preempt their round and I'm gonna see if I can get a slightly lower basis than if they went to market.
And so that's firm A. Firm B is a not benchmark firm who also doesn't have a growth fund.
They go out and they raise at market rates. But then there is a benchmark brand.
So like option C is take benchmarks money. And I think, and you guys probably are sure of this, your companies tend to go raise better series Bs at higher valuations with more certainty than your average series A funded startup.
Is that the dot? Is that the picture that you're sort of? Yeah. I'm just speaking purely in the realm of when things are going right.
A company is super hot. The fact that there's not a conflict in a future round allows the entrepreneur to optimize valuation for future rounds better than if you were to try and put more money in.
Yeah, I totally believe that. So this is a question we're just selling for benchmarking.
I didn't think they would say it, but I think it's important. We literally heard that from multiple entrepreneurs.
I believe that the founders own more of their companies at exit, at S1 time, whatever it is in this case, for those reasons.

And one other really important reason, which is a founder is going to raise a Series B or Series C or Series D or IPO one time in their career, maybe two times in their career.

If we're doing our jobs and the people around this table have all done this multiple times,

Thank you. maybe two times in their career.
If we're doing our jobs and the people around this table

have all done this multiple times

and you will help them

raise better rounds

from better investors,

have a better process

and get to a better outcome.

You'd have to talk to the entrepreneurs

that I've invested in,

but I suspect if you were to talk to them,

the value that I can provide to them since I stopped being a professional venture capitalist as part of a firm, exponentially higher than when I was within a firm. Totally.
Because there's no conflict. Because there's no conflict.
And you can do that. You can do that.
You can help them through that part of it,

and that outcome results in de-risked,

like the subsequent rounds are de-risked, sure.

I think there are a bunch of brands, firms,

that can say that same thing.

There's no conflict.

I think there's very few firms that can say that part,

and the multiplicative effect of those two plus the help

Thank you. there's no conflict.
I think there's very few firms that can say that part. And the multiplicative effect of those two plus the help, I think, should yield better outcomes.
Strategy is just all about making trade-offs and aligning all of your trade-offs so that they're a force multiplier rather than in conflict with each other. And if I had to sort of summarize why benchmark works, it seems like all the trade-offs are actually just thought through very clearly and tried to align them all so they sort of like amplify each other rather than conflicting with each other.
There is one big trade-off with our model, though, that I think about all the time just because I'm a paranoid person, which is, at the end of the day, our job starts. The thing that we have to be paranoid about every day is, how do we make sure we have that first meeting with the founder that's going to build that next iconic company? And so much of what we do is about maximizing that probability that we do get to meet that founder and then end up partnering with them.
And a lot of firms, I mean, all the other firms outside of us have built machines around that. You have legions of people at these firms.
I grew up doing this. I was an analyst at Bessemer.
Right at Collins, right? Cold Collins startups. Yeah.
And so you have all these firms who have built these big teams to do that. They nurture relationships with seed funds, invest in the seed funds, relationships with angel investors, incubators.
They have this machinery that's smart because it's all about making sure that every deal, every round that happens, they're going to be in the mix. There's five of us, you know, and there's always the risk that one of those founders who, you know, kind of mistake basically our lack of outreach for a lack of interest when it's really just a constraint.
And we do everything we can, of course. It's not like we're just resting on our laurels and waiting for calls.
We're doing everything we can to make sure that we are in the mix. But at the same time, we are limited.
Even if you work 24-7, you still have a lot less hours. We're limited.
And so that is the big constraint that I know keeps, I think, all of us up. It's just making sure sure how do we, the founder that is going to raise that round, you know, many are intentional about like, how do I make sure that I'm going to find the right partner for me for the arc of this, you know, the journey that we're all going to be on together, but we're still not there all the time.
You know, you guys at this point have such a, for better or worse, mystique. I think for a lot of, especially first-time founders that are younger, that are earlier stage, they're probably like, oh, I'm not going to call.
I've got these other firms calling me. That's great.
I'm going to go with it. But like, am I going to call Benchmark? Like, that seems like, wow, that's a lot of pressure.
And that's a potentially lethal risk for us. 100%.
Because if you think about us being the incumbent,

come back to the fact that a number of the people at this table have a lot of capacity in the sense that they could dive in, they can give their all, and they're very available. And so one of the things you think about is the shift in the last 15 years since I've been here.
You know, the investments that are occurring before we get engaged have gone up by about a 100x at least 30x and so i mean seed was not an asset class it wasn't necessary i thought i didn't know i was a seed investor but i guess i was a seed investor but a third of what i've done is like formation of a company investments right and so when it's so weird when people say to us i didn't think you're at this early stage because then some people you're like new relic was incubated yeah and it's like what you know okay um i think our our um challenge i think you say it well is that um i would love to know which is why if someone sends us something and and anybody who listens to your podcast but i start with the premise emph's meet. Because I have always, we'll create time as much as it may impact week.
When I don't have enough time to take that next marginal meeting, I shouldn't be practicing. And what I would love to know is the people who send it to us say, this is the biggest favor I can do to this entrepreneur is to open this door because the gold plated, whatever terms you want to, high-quality experience they're going to get, it's going to stretch their thinking.

And there's so many times when someone comes back, even when we don't say yes,

and say, I'm so glad we met because I learned something that really helped shape the course of the company.

So the point of this is that our competitors, if we call them that, they're our peers most of the time, have tried to build vertical systems,

which is to say integrate into the very inception of the company

all the way through to the last strip of capital going in as they go off of the whatever. From seed to IPO and beyond.
And beyond. Yeah.
Familiar to me. From seed to grave.
Yeah. And one of the strategic vulnerabilities we have is that people tell stories that we're this way or that way.
No, we're just like everybody else, but we're highly available to meet and we're quite responsive. And the last two or three investments I've made were an example of the following, which is that there was an angel in the ecosystem who saw a deal going down and they said, you know, you probably should talk to Benchmark.
And when they did, we committed in the last two instances in less than a day. Oh, if we knew it was only a day, we would have talked about it.
Then you would have taken a week if you had one. But this is illustrative because the system we built is to do just that.
And so our biggest risk is that people tell stories. And I think sometimes the stories are propagating their agendas.
We're widely available and open. We're most times an emphatic yes for somebody who introduced something to us.
And what we'd love to know is the person who makes the introduction, and we honor this, says, wow, I just did a huge favor for the founder. Now, we have to earn that every single time we meet the founder.
And we don't always get it right. We've screwed up in the past.
We've been less and fully present. Okay, we take that seriously.
But that's the vulnerability of the model, which is that capital always carries its

agenda. Oh, let me tell you about the way we're this, we're that.
And it's always threatening and

attacking other layers. And we're hoping that we play a different game, which is serving the

founder's purpose and show up and be decisive less than a day. That's pretty common.

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What do you do besides the five of your 24-7 being on?

What things do you do to keep your radar operating to try and address this problem?

Yeah, how do you solve that problem?

Yeah.

Thank you. of your 24-7 being on, what things do you do to keep your radar operating to try and address this problem? Yeah, how do you solve that problem? Yeah.
We all have different ways. I mean, there is no single way for us, I would say.
I mean, I always talk about having an air game and a ground game, you know? And for me, it helps me learn to write. And then you write about things, areas that you're interested in.
And it tends to be this kind of virtuous loop also of then the founders who are thinking about building a marketplace or a next social product, social network, will see something that I wrote or Bill wrote or whoever wrote and then kind of come into the fold that way. And then there's, I mean, I think like you have the consumer, you know, the consumer lens that you have, you have a little bit of a wider funnel that you have to kind of keep.
You never know where these things are going to come from. There's so many different domains where the next consumer company might come.
I think like the B2B stuff, the developer-oriented companies are closer to the ground. Yeah.
I think we all have our own strategies. And I would say the one thing that's always interesting is to compare sort of our different strategies of sourcing and how we source investments.
I was sharing this note internally, which was that I found that 100% of the investments that I've made as a benchmark partner were all sent to us by an entrepreneur and not necessarily an entrepreneur that we had backed. It was oftentimes an entrepreneur who had met with us once or twice or we engaged in their process and we didn't get to the finish line with them.
But they enjoyed the process so much. Going back to what Peter said is they went to the next entrepreneur and said, you should go to the process.
Like just talk to them. That's the most meaningful introduction we can get.
Yeah. That carries so much weight.
You have them to one of these dinners. I think it's in part because there isn't really a process.

If there's diligence, people are like, oftentimes founders will ask,

what's your process?

It's the funniest question.

I don't know.

We're going to explore this together and we'll do a chat together. And I think to what Sarah Sarah said...
So what you're saying, it's like the Elon Musk's tweets. Yes, it's exactly like that.
Let's just text back and forth a bit. What did you do today? But to frame it more precisely, so for founders who are like, I don't know, what does that mean? You do as much diligence as you need to do to get conviction.
Yeah, and I would say I think of it, the experience hopefully is great for the founders in part because we're not trying to sell internally. We're trying to truth seek.
And the coming in, meeting with all of us or meeting in small groups of us is not us like trying to get some information, again, to super forecast some odds.

We're putting ourselves in the shoes because we make a commitment

to start working on this and work together to say,

okay, how will we think about navigating that?

Where could full starts or local maximas be

and how could we realize the full purpose?

And that comes with dynamic sharing of stories and history and learnings from the past. And I think you find, hopefully, that sort of leads to a lot of the introductions and come out of that as in part because it was sort of this reverberation of discussion around the potential that they had and how to navigate that correctly.
And they got an interesting view on their own business together. I think the best founders ask questions on these things.
And so one of the things that I've noticed is the great founders will often use their fundraising process to get connections and introductions.

And sometimes it's customer introductions, sometimes it's just like luminary, like people, connections to people who've been there before you. We just went through this process on a recent investment and we introduced the founder to other CEOs who were further along.
and she extracted knowledge basically from them and in not in a in a reference context but in a literally like how do you build the company how did you make this decision how did you know when you had product market fit how did you raise the next round and and and pulled and build connections that way and i think i think that's a sign of that's what it's like whenever you meet with someone who's worked at Amazon for a long time. It's scary.
You sit there and they're silent and they manage to just extract all this information from you. But you said our process is as long as it is for us to get conviction.
But actually, I think it's really important that it's a process of getting conviction on each other. And that should be the greatest part of it is like this is you know i like one of the things that makes me sad about kind of some of the conversation in the industry is this like come up like just the idea that a board member is just somebody who shows up it's kind of like it feels like that's what everybody's been reduced to.
And we hold a higher bar for ourselves. Like we, we, we, you know, try to have that level of commitment that ends up manifesting in all different ways for the company, whether it's helping close like an IC engineer, or, you know, whatever, you know, having those like late night conversations, or whatever it is, like, that is in the best form can be a really meaningful relationship for the founder from the and from the company from the very beginning and a founder should realize that that is like you know of course you get into the the anxiety and the stress of am I going to get funded what are the terms going to be all things.
I want to get back to building my business, all that. But at the end of the day, it is this relationship that you're beginning.
And it's really important for the founder to recognize also that they are getting conviction through the process on what it's going to be like to partner with that person. There's this trope in the industry, right? Which is, you want to be founder's first call.
And it's like, I've never really liked it insofar as it's like very reactionary. It's like, oh, they'll call me, I'll pick up the phone and respond.
It's a low bar. I think it's a low bar.
I think that hopefully founders would say of us, like, we're their best caller. Like, they've been proactive and had the space and thoughtfulness and context and trust to be able to do that.
I remember when Peter and I worked on Airtable pretty close to the initial investment right after it happened. Peter, you could imagine it was a decently high price in some ways, like a high multiple.
You know, okay, let's press sales. And Peter came in and was proactively sort of shattering the frame and saying, let's give away more for free, right? Like why constrain this and squeeze juice from what we have? Let's unfurl this even further.
It's a database at the end of the day. Why would you constrain people putting stuff in a database? There's so much that happens on top of that.
As you're evaluating mutual fit on an investment between the entrepreneur and benchmark, in e-boys, there's some famous line about venture capital is more a ball's business than a brain's business. And let's stop using that phrase immediately.
But it's so e-boys. It's the most e-voice thing ever.
It seems to me Benchmark has shifted to become much more analytical over time. Do you think about that? Do you think about what the right balance of gut feel and courage versus...
Having done analytical things, I would disagree with that completely. I would say that we're not particularly analytical.
So it's still a courage more than a brain's business. No, I think it's very gut-driven.
And I would characterize it as like it's a set of discussions that you have that resonate or don't resonate. And it's like I really want to commit to this and this puzzle for the next 10 years.
And let's go do it. And there's going to be a lot of like fulfillment here.
And if everything works and we serve that great purpose that we're all aiming for, then the financial returns are going to be excellent. But there's no sort of like outcome scenario analysis here that says like, here's the 10% upside, bull case, bear case.
These are all things that, right you know those of us that came from other

places had all done and one of the interesting things is you know watching the firm externally and seeing how this works inside of boardrooms like miles just talked about an example you know i was on a board with peter for a long time before i joined here and one of the elastic yeah that's That's right.

And one of the things that, because I was on a number of boards, and I would see all sorts of board members. And one of the things that stood out to me that I aspired to, and I modeled a lot of my behavior after, was every board meeting, the amount of preparation that Peter would do ahead of the meeting.
I mean, he was by far the best prepared board member I had ever worked with, ever. And the number of discussions he would have, the number of calls he would make, and just how present he was in the board meeting itself was just so far and above like any other board member that I'd worked with.
I was like, I need to model my behavior to that because that is the model board member. And I don't think that work, that dedication, that commitment comes from any sort of analytical work you do on the macro.
Because if you do, then you start getting tied to your own biases and never let the company, the founder, the team breathe. because there may be a thesis, but you rapidly pivot to something else because it's working or you're getting different signal.
And so I think that there's so much of this that is just instinct, gut, feeling, emotion, commitment, et cetera, et cetera, but it's not analytical. I think most of the investments we make differs consumer, enterprise, marketplace.
All of them are different in different ways. There's just very little data to analyze, period.
But when you're looking at something that's like a consumer social app that seems to be catching fire, there are things you can know, like viral coefficient or week-over-week growth. And I think that a lot of those things will lead you the wrong way you know the the truth is in this market oftentimes you're making a commitment before there's enough enduring data to really know know what it is but the way which is different than 10 years ago which is 10 years ago benchmark was making commitments when there was like like uber like instagram like it was early but there was data proving it like like.
I think of it more as like, I always think, you know, in a way to make great investments, you have to be okay looking crazy, maybe even stupid in the short term on the outside. Like, and then, but it comes from a place of deep conviction when you're in front of the entrepreneur and they see something that other people don't see, you feel it too.
And nobody else who hasn't had that conversation sees it. And so from the outside, and you see all the time, like it could be people always critique other people's investments.
Like, oh, I can't believe that person did this. I looked at that deal remember when we invested in Chainalysis which was your first deal either right? all the ICOs were going crazy everybody was thinking about tokens and two people I remember calling me after we announced it you invested in a SaaS company shouldn't you be putting the money in tokens or Bitcoin? They're going to the moon.
What are you doing? And, you know, not wrong, but also not right. Like it looked like, you know, a stupid investment in the beginning before it can have the room.
And so I think part of the relationship that we then have with each other is that comfort that something, you know, seeing something that can be contrarian or misunderstood from the outside. And you have to nurture that.
One benchmark, no pun intended, I guess, one measure of quality for the firm will be how good our failures are. Webvan was a really good failure.
Webvan, we talked about this a lot. Webvan was awesome.
You should make that bet a thousand times. The shame that most

venture capitalists felt towards maybe contempt towards the venture firm just before I was here

and it's laughable, it's stupid. And if we start to look like we're, which is why we get worried

about the long-term degradation of eventually we go away so it all doesn't matter. But I would love for us to be...
I think we pulled it off in the last fund or two. Does that include fund seven? A real stinker.
Honor the fact that we are still just as gullible, just as naive, infallible as the prior generations. Not yet more so, but we're working at it.
I think some of those are really, like, that's a good, WebIn is a good venture investment.

Great.

All day long.

There are a set of them, I think of them in my head in recent funds, where, like, it's

definitely a good venture investment.

It was a good use of venture capital dollars.

It was a worthwhile endeavor. An entrepreneur pursuing that should get funded, and they should get funded by the best, and they should have...
We should do everything we can to give them the best odds of success. And have another partner be on the board.
And more follow-up. And I think that if you just look at you know the last yeah i joined right before

our ninth fund and so i've been here through fund nine and we're now deploying fund 10

um there's a lot in there that that wasn't i mean most of it is not analytical and i would say like

if you just look into it you know there are going to be some bad investments that come out of it

Thank you. that wasn't, I mean, most of it is not analytical.
And I would say if you just look into it, there are going to be some bad investments that come out of it. But it doesn't mean that had we gone through the process and we looked back at how we made those decisions, it's exactly what Eric was talking about.
That was worth the shot. It was like, that was worth the effort.
Well, and the pivots validate why you can't be super analytical. It's like, did you think that the game was going to become Discord? Like multi-billion, you know.
Discord, Nextdoor, Docker. Docker.
It's like Uber. I mean, like learning from Lyft's discovery of the UberX model.
Like, that's the business. I think it's like you have some starting theories and you get in the mud.
Yeah. And it was always funny reading my old investment memos.
And I've only been doing this four or five years. But the amount of wrong – I don't think I could have predicted how wrong I was about what the businesses would ultimately go on to do when you're doing this ridiculously early stage stuff.
100%. That's why we don't write memos.
There's no artifacts of how stupid you are. We don't do portfolio reviews.

At least they try and do portfolio reviews, and I don't show up.

I do remember one attempt at a portfolio review a while back,

and it was like the apex of failure at Benchmark.

I think I have one of those in my portfolio now.

You guys can guess. And Kevin Harvey said,

this one has the dual benefit of being a bad idea poorly executed it turns out that a bad idea well executed is a problem because then you give it more money but or a good idea poorly executed well that hurts because you think oh i mean we can think of companies like friendster and think, oh. But the bad idea probably actually is kind of an apex of work.
It's so true. Those are the second best investments in venture.
Like, clearly that was wrong. Yeah.
It's the middle ones that are. Totally.
100%. I love more McDonald's joke.
He was, like, trying to explain the fact. When you get in front of you doing a stand-up, bless his already died, of course.
And nobody laughs. And he says, then I start laughing to myself.

He's like, here I am. These people have paid money.
It's a whole thing. And I just did this thing just to make them laugh.
And nobody laughed. And we have a few of those.
If we're not doing that. That was the early days of Aquarius.
For sure. We're not doing that, but you'll never be great.
Can I ask, I had a really dumb question prepared that we sent over. And I want to try and ask a smarter question.
The dumb question was, well, to maximize your chances of getting that great decade-making company in the portfolio, double the partnership. Keep the same number of board seats, raise twice as much money, double the partnership.
That way, everyone's managing the same amount of capital that they are now on an average basis. But I want to ask the opposite question.
If the thing that makes this all work is the fact that all of you can be ridiculously focused and say no to most distractions on your time, could you raise less money and have a more concentrated portfolio? I've thought about this. And I think it's an interesting provocation.
There's the extreme, of course, which is to raise no money and just go on the boards and say, we tired of the hack it's a hack to take i'm gonna i mean tell this is a funny story because you say okay well oh it's nice to meet you it's imagine dating and then you have a relationship and it's like by the way a bunch of people that you don't you and i i don't really know them very well you definitely don't know them they're going to be moving in and they're going to take up about 20% of your cab table. And they're pension funds.
They're very decent people. Noble causes.
We do work for noble causes. Whoa, whoa, whoa.
Why are they on my cab table? And it's like, because you've got to work with me. But I didn't choose them.
Well, you kind of did because I bring them along where I go. And they're unpacking their stuff right now in your basement.
And they're going to have more equity in this company than your VP of sales or your VP of engineering. Well, that doesn't seem right.
And so you play with this idea. And as an LPM benchmark, I don't like, you know, there's a limit to where you're going to take this idea.
GP, I think. As a GP, yeah.
But I think this interesting construct is that what's the residual value that is separable from the capital? Bruce used to joke, we can pay a higher price because we add more value. So isn't there a benchmark? I don't think you paid a lower price.
But we can afford to pay a higher price and get better returns if we add more value. It's a joke.
But the point is the same, which is that we've confused these two things. Capital, which seems to have been free.
Now it's not free. Okay.
So now they maybe are fused again in capital and partnership. And I think that you get- You guys have done some deals, right, where you put no capital in.
There have been examples. And we don't- There's some awkwardness to talking about it publicly.
One of the ones that's probably a good example is Tinder. And, you know, Barry Diller said, what do you want? And it's like, well, we want equity in Tinder.
He was like, shut up. What do you want? We want equity in Tinder.
And like, I said, I don't need cash. It's like.
I'm just imagining being the fly on the wall of benchmark negotiating with Barry Diller. I would pay a lot of money to watch that.
It's more bizarre than your imagination can allow. So go there and then go past that, and you'll get close.
So this question of can we decouple is something that I kind of look at as like the residual value of the firm is are we generating multiple equity points for our contribution? I think that's what I would love to know is our best reference, which is a founder is able to say, I look at my cap table and I look at where the equity went. And this is what burns me, which is there's a lot of people on that cap table that say they, they bought a ticket.
You know, they got a ticket versus they made a huge impact on our total success. And that's equity that was the best return on my allocation of that equity.
And every time you're taking on Dilution, you're asking that question of like, what's the return on that allocation? I think a lot of times the return is like it's a hundred percent towards the person who got on the cap table, not the other way around. And that's our ethic.
And it may be, there'll be a model where we're not going to be CAA, where we take 10% and all that, but you know, the capital light, you couldn't raise less. Why not? I bet if you raised 400 million in your next fund and you have five fewer companies, your scoreboard number, that multiple could go up.
I'm the person that the last discussion of like, we were going to do it the same size fund. I'm like, why don't we cut it in half? And people thought, well, then people, others will say we're becoming irrelevant.
I'm like, oh, no, but it's so different than they say now. Anyway, we might one day.
Yeah. Who knows? It's a 425, go down to 200.
Yeah. Okay.
So 40. Was it 40 per partner per year? Oh, the old benchmark website.
That was such a good line. Other firms are overfunded with over 20 million per partner of capital.
The Wayback Machine is such a gift to humanity. Yeah.
Okay, so last big topic. I think a lot of folks, we asked a lot of folks in the ecosystem, what do they want us to ask you? We're the vehicle for that.
Universally, everybody responded. They want to know what is the process? What's involved? How do you think about who's taking the next seats at this table so how does that work here i think it's like 250 hours of board meetings together it's a 10-year-long process you have to serve on the board with one of us we have to watch you grow and then we say you know that person would be you think you think mitch was an exception bill and mitch had you know 200 hours of board meetings together maybe, you know?

Eric, you didn't have any. You're the only one who didn't have any.
I was just joking. No, no, no.
I know. But literally, that seems to be the model of, like, serve on a board with a benchmark partner.
And that's how you get to know people and build really deep relationships is you need to go through shit together. Like, I mean, the shit can be the company is going really well and we have to react to a super dynamic environment.
But like getting coffee every once in a while is not a great way to get to know should I take someone on as my spouse effectively. I think that's right.
And I actually think it's actually – I was just thinking about it because it's been different for everybody, I think. I think the story with Peter is he was repeatedly showing up competing for investments that Benchmark, before he was here, was working on.
You were walking out the door as they were walking. Yeah.
And so that you know, the story with miles is miles was there before.

Like he, he invested in benching before us and super great before us.

And was, was early on air table at the same time.

And so like, that's a really important like signal, like, okay.

You know, Chatham had worked with Peter on the board, Sarah.

I just glowed by myself yeah actually sarah how sarah and i i think both had no like no professional overlap in that context um but who made the first phone call to? I've lost track. Peter, what's that? I'm like, I don't think he's lost track.
I don't think Peter loses track. I think the way in is something that's common what we've heard for the people we've recruited and maybe Eric's an example of this.

But it's that they don't want to join a venture firm that like the only firm they could imagine

being at would be benchmark. It's the last job you're going to take.
So there's this underlying

love of the craft. And it sounds again, a little romantic, but it's intended that way.
I left

Stanford Business School embarrassed that I went there maybe at some level. And I, and I

Thank you. sounds again a little um romantic but it's intended that way i i left sanford business school embarrassed that i went there maybe at some level um and i and i dreamed about getting a job at benchmark and bruce canceled his meeting with me and then i waited and then you know another time he was late he sent me a handwritten note saying oh i have bigger things to deal with basically is what the note said and uh and then and then like you know i think he gave me like a t-shirt i not And then seven years passed and I think typically I send him a note saying hey I'm working at Excel just to see if I could catch his interest and he said good luck did that motivate you? like were you thinking in the back of your mind? do you know Peter Fenton? I mean I feel like I do put it out up out up on your wall? Oh, man.
And then Kevin and I went on a board together at a company that was not particularly successful. And I was wondering, why is Kevin doing this investment? And I said, what does that say about benchmarking? And he later confessed that he felt the same way.
But, you know, and then you get to work with the firm and there's something that i would say underneath it which is that um the the totality of like i would do the job even if i didn't get paid that sense of all in this is a craft and i so am oriented towards that when i first met matt in in 2005, around the time he presented Facebook to us at Excel, you knew immediately that he was going to be in the venture business. It wasn't like, well, one day maybe.
No, Matt was going to be a great venture capitalist because the single most important thing we have to do in our job is to partner with, earn the trust and respect, earn the ability to be a partner and a guide, in his case, to both Reid Hoffman and to Mark Zuckerberg. So you think, okay, he's overqualified at some level because these are giants of our industry.
And if you're doing that, if you're really close to one of the great, and you were doing it with Ben at Pinterest. And I, of course, knew about Sarah because we both tried to invest in GitHub.
And that's a funny story for another, maybe for drinks later. Yeah, so I think if I remember right,

another firm did that at a very high valuation.

For the time.

And at the moment that seemed crazy

and was actually a good idea.

It was like 100 on...

750, I think was the post.

100 million on 750 post.

But like at the time for a series,

like that was the first institutional capital in.

There might have been some secondary selling.

One of the things I found is when there's secondary selling, it does tend to clarify people's interest in price. That's what they optimize for.
It's one thing if you're just selling equity on the cab table. But when you're selling your own shares, you start to get really focused on the, but we're not running an auction, but it is the highest price.
All of a sudden, that seems to be the right answer. Anyway, so the point is that we orient towards extraordinary.
So to get close to benchmark, get close to extraordinary. Who are the best entrepreneurs? Build that rapport and relationships.
And the single best thing that we can see is that you've earned that trust and respect and to be a confidant, to be a partner to the great ones. Or serve on a board with us with one of those entrepreneurs.
I guess there's some self-serving interest we could say, send us your best investments. That will help.
But our responsibility is to be, you know, the best introduction that you make if you're looking at a great company. And if we don't, if we fall short of that, we deserve to be told and punched in the stomach.
Maybe I can ask a related question, which gets to Eric's, this is what we love to do and wake up and focus on every single day. And that's, if each of you have a sort of bias on things you're obsessed with, like, Chathan, you wake up in the morning and you look at net retention rates.

I'm trying to come up with some

boring enterprise software thing.

Chathan just

eats, sleeps, and breathes sales kickoffs.

This is getting

better for me.

Chathan is

so far underground right now. Well, he showed up.
I I'm really grateful for. He did.
He's here. He came all the way here for this.
Are you looking for, there are probably a dozen people on a short list that you're like, gosh, we would kill the work with that person. And ultimately a factor in that probably needs to be there's a thing that they're obsessed with that we need on our team at this moment in the technology industry.
Is that part of the calculus? Do you look for where do we need additional strength? Loosely. I mean, I think about it and it happened.
It wasn't intentional, at least for the part. When I joined Benchmark in 2014 at the end of the Fab Four era or at the whatever, as you called it, the partnership, the four were predominantly consumer investors.
Peter was working on Twitter at the time, obviously Bill with Uber, Mitch with Snapchat and Discord, and Matt having just come off Instagram, among others. And like- Which all that just that you just listed is ridiculous.
It's ridiculous. And so you join that group.

And in a way, it was just like the perfect time as someone who had some enterprise exposure.

You go do confluent.

And then, lucky enough, the first investment that walked in the door was confluent for me.

But now if you look at the group, it's almost turned – it's almost turned, right, in the sense that there's a lot more enterprise heaviness. That wasn't intentional, I don't think.
Like it didn't come up, but it happened over time naturally. And I think this is just a big element of benchmark overall, which is the entrepreneurs lead the way and the markets lead the way.
And we're following that in some sense and hopefully seeing it in conjunction with the market evolving, but it's less intentional. So when Chathan joins and does modern treasury, as an example, or Sarah joins and does chain analysis, that wasn't intentional.
Like, oh, there's this big crypto thing and Sarah's an expert in crypto. I don't think she knew anything about crypto at the time.
Or maybe she knew a little bit. I don't know.
But that wasn't part of it. And so I think the firm evolves.
And if you go back even further, obviously, the firm had semiconductor expertise. Like we have no semiconductor expertise anymore.
I guess you do. Well, I have a semiconductor investment.
Different thing than having expertise in it. And so I think it's just the market takes us and entrepreneurs take us.
We make a mistake repeatedly, probably once a week in the portfolio of confusing phenotype and genotype, meaning we hire people because of the phenotype that has been expressed because they have experience in areas X, Y, or Z, and the underlying genotype doesn't actually get our attention. So you would tend to lower your selectivity when someone has some background of relevance.
The issue that you're seeing at Benchmark today is sort of a question of, like, where has the equity value been created? Where are the $10 to $100 billion outcomes of the last 7 to 10 years? Well, consumer has been a little more ephemeral in that regard or a little harder to capture because of the incumbency effects. So what's going on in the phenotype of the firm is it may look more tilted enterprise, but I can tell you the genotype is we are total generalists.
So I can say very explicitly, I think that somewhere between AI, crypto, and not ARVR, sorry for the future ARVR, but I think those areas don't have the incumbency of some of the traditional network effect, giant trillion dollar market cap companies. And so our genotype is such that we will then go populate those arenas and you'll see us become what looks like experts in those areas, but that's not who we are.
So is our next partner likely to have some background and experience in an area with high disruption? Absolutely. Yeah.
And it'd be great. We got Kohler to join the firm at still the beginning quarter of the social and the social over.
Who knows? I mean, you could say the issue with like a social over is like we have a big problem with incumbency. Yeah.
And distribution being constrained. On top of that, yeah, I mean, it's, you know, capitals was at least for a long time limitless.
So you're looking at things that are little increments at the end. It's sort of like, you know, Feynman complained about this in physics, which is like if you came 30 years after the theory of relativity, you were sort of cleaning up the mess.
You missed it. Yeah, whereas the people who are there, the first three years look like geniuses.
Even they were third-rate physicists. They're working on first-rate problems.
We can be first-rate, you know, whatever, working on third-rate problems if we're not in areas of high disruption. So what are the areas of high disruption right now is something that we obsess over.
You're totally. And, you know.
But you don't think about it as, like, we need expertise in that area. I think the genotype is we want somebody that is a roving curious there's no great venture capitalist in my view that isn't aspiring to be wide dynamic range this is why eric is going to become one of the great consumer internet investors of the next decade he doesn't know this no pressure but you know john dore mike muritz we so my former partner and Jim Getz, those are the people who've shown that you can do both.
Because the underlying connection with the entrepreneurs, they're not so different. They're similar gestalt.
And Chathan's next to them. He'll probably beat Eric to the internal dynamic.
Chathan's still going to be the sales kicker. They're already across the line with SaaS.
I think even if you look at the greatest companies, right? Amazon, Microsoft, Shopify, Adobe, Square. Like, they're all crossover, right? And even if we took something of high disruption like AI, right? What's happening in generative media and large language, it's unbelievable.
Right. Are LLM's just going to be a consumer thing? Absolutely not.
Exactly, right? The first version of it might be something like Jasper, right? Which is actually a B2B product. But there's a really interesting opportunity of what's the version of a Twitch relationship that starts to form and sort of a parasocial relationship, but it's with a bot potentially, right? An artificial character that has a relationship with you.
And is that a consumer thing or is that an AI thing? We just did an LP episode with Mutiny and they're using GPT-3 to like generate landing page copy. Yeah, yeah.
I think the technical, like we're not, it's not our, the founders and entrepreneurs know the product. They know the technology.
Like that's what they bring. That is the thing they bring.
That's their invention.

And they've discovered the insight. And they've discovered the insight.
Here we go. But there's a whole bunch of things that come to turn that technology into a product and that product into a company that's really valuable.
And like that's the part that we can partner on. How many success stories are there in venture?

And even through Benchmark's history of that market was dead.

That market is done.

Or that market doesn't exist.

That market isn't real.

That's the best time to invest. Yeah.

And it's like the founder figuring something out.

Having that insight.

That's the part where you're like you're sitting in the meeting. That in the meeting you're sitting in the meeting and you're like three minutes in and the founder says something that you've never heard anywhere else nobody else has said nobody's put a blog post out on nobody it's an insight and that insight is it that's the magic.
Yes, obviously.

Yes, that's obviously how it should work. And that's why I think I would say, like, to say there's a specific sort of set of experience one needed, like, would imply we'd be maybe thesis driven.
It's like, I don't think anyone here is terribly thesis driven, but, like, we're very change aware. and there's the question of that pulling the curiosity and sort of roving into it not like

with physicists with a set of rules we've got a check or a net dollar attention that's got to be a set but like i was like i was like net dollar retention how do you guys deal with so in my you know prior life i was trying to do that for you know a living poorly um of the hardest parts I found about early stage events, I totally agree with everything you're saying. You guys, and you vote with your feet, you only have one of those moments in the first three minutes of a pitch once, maybe twice a year, maybe zero times a year.
The rest of the day can get kind of depressing. You can learn something at every moment.
You can learn something at every moment. That's the amazing thing about the job is every day people come in and talk to you about something they're experts in.
Or you can help someone who is great. Maybe you don't see it entirely, but like someone who's fantastic and help them.
And they'll teach you something and you'll learn something. And you'll just ask questions and, you know, they'll tell you.
And you, like, learn. There's a firm that shall remain nameless.
Came in and they said, why don't you have a clock on your wall? I'm like, I don't know. Because then maybe we're in a meeting and we don't want to be in and we look at it and it's not so good.
And this person said, no, no, no, no. We move all our clocks six minutes forward.
So if it's a bad meeting, we can get out. Because we can say, oh.
So that's one way to deal with it. We didn't do that.
Like, people suggested this. And it happens.
I would just, any time you go to a venture firm, check the clock on the wall and look at your, and then you know, are they playing that game? This clock doesn't work, by the way. I was looking at it earlier, and David and I made a comment to each other.

That is a really subtle way to put a clock in the room. But if it doesn't work, then it doesn't work.
Oh, look. It's not a working call.
It's 2.30. It's time for dinner.
It's way twice a day. We got to ask before.
Another thing we can't let go. What's the purpose of the principal program? to honor the statement that forced consistency is the hobgoblin of little minds.
Was it Theroux who said that? Okay, you got to

unpack that. God, Peter's just on another level.
I mean, I feel like I'm... I don't know if the

level's here or there. For context for everybody who doesn't...
So you all are deeply committed to the equal partnership model, clearly. We don't have principles, so we have principles.
I think it's a way to surround ourselves with a person who we want amongst us all who pushes us and challenges us as well. Yeah, maybe I'll loosen up the response.
We don't know what we're doing. And Blake is is amazing and you meet blake you want to work with blake so you find a way find a way and and i think that is it a program no but you know miles seems to like uh miles he's got a british accent it's a little hierarchical so he should hire an associate i don't want to work with that associate bless his heart but.
But remember, you call him a junior partner, a baby partner? You can go hire a baby partner. Baby TV, that's all you're doing.
But he won't be coming to... I'll spare you.
Blake is amazing. And so you meet Blake and you say, you find a way.
And it's been a pretty good launch pad, it turns out, for people who come in for our non-principle principal program. The principal program that you don't talk about that you're talking about.
Yes, because you don't want to have forced consistency. Is it false consistency or forced consistency? It was Thoreau who said that, or is it Emerson? It's exactly right, though, which is that when you have a little inner fundamentalist, you need to have a conversation with that person and tell them to calm down.
Because, you know, now that doesn't mean we're going to have eight partners and a growth fund. And then there's some hard lines.
We just say, but this is, you know, getting closer to people who embody our values but are at a different stage in their career. That's okay with us.
You got to break your rules when you find an incitivating circumstance. You do.
I've definitely found too, like maybe this is like an institutional version of this. Like the times in my life when I've held too tightly to something is when like that's like you're effed.
And so like is this a way to like hold tightly to the thing that's like a core value of the firm but not too tightly. I think we should call it a fellow.
It just wouldn't mean anything to anybody. We're constantly oriented to special people.
And sometimes there's a special person like Blake. I'd wanted to work with Blake for quite some time, and I'm Sarah had too.
And we said, Blake, you want to come work together? Yeah. Like, let's do it.
I would say that we don't have associates, but one of us may hire an associate. We don't have principals.
a principal we have eirs we have venture partners it's just you're trying to figure stuff out we have venture partners you don't do growth stage investing but you guys did dropbox like like we just it's just you come to the table and you say i want to i want to do this i want to go explore this area i want to go work this person. And you just kind of figure it out.
And it's not always straightforward, right? Because people have their own constraints. And so you're trying to fit their own model of how they can engage with you.
And so you just figure it out. And so...
None of that should violate the authenticity of what we do and how we interact with people.

And I think that's the biggest thing that we have to be protective of.

And that is what we're protective of and the relationship we all have and how we work together as a team.

And I think if we preserve that than anything else, the fees are to be used for exactly those kinds of experiments and those types of trials.

And you can do anything you want with that. I think this is the longest discussion we've had on the idea of a principal program.
Well, hey, we're here to provide value to you guys. This is the most thought we've had.
How can we help? How can we help? Yeah. And then, you know, I also think about how we think about EIRs.
So, you know, Eric at BenchLink, and Josh was going to leave BenchLink and just explore ideas. And I was like, okay, well, why doesn't he just come hang out with us and explore some ideas? And we called it an EIR.
I knew Ravi from Heap, and he had left Heap, and he wanted to explore ideas, so I brought him in. Those two knew each other from prior lives, and then they were like, oh, we're both at Benchmark exploring ideas.
Why don't we share ideas that we're exploring? And then they decided to start a company together. It was like, if you were to...
Which is an airplane. Which is an airplane, which Eric is on a board of.
And that wasn't sort of like this, we have a hyper thesis. You have a funnel you're managing for the EIR program and we need to go attack this thesis

so let's go recruit some EIRs

and let's go set them up

none of that

there's so much beauty

and amazing things that can come out of

organic development

and opening yourself up

to organically finding cool things

is I think ultimately the goal

alright what did we get wrong

on the episode

or what could we have

Thank you. organically finding cool things is I think ultimately the goal.
Yep. All right.
What did we get wrong on the episode? Or what could we have done a better job? I'll start. I think one of the things that you all talked about on the episode was swim lanes and areas of focus.
And I think what we had just alluded to. Which I got to say, it felt extremely weird to be naming each of you in that episode.
When we did our Sequoia and Andreessen episodes, these things were about firm strategy and institution building and programmatic, thoughtful. And then we got to the end of the episode and I was talking about each of you as individuals and articulating things that you care about and invest in.
And on the one hand, I'm like, I feel gross. This feels really reductive and strange and pointed.
And on the other hand, it's kind of the point of Benchmark that like it actually is just about you as humans and not about this like institution and strategy. So I think like if you look at even when it was Bill, Peter, Mitch, Matt, you know, it's, if you just look at the kind of work that they did, they were all generalists then.
I mean, Peter was doing consumer and deep developer tech, and Matt was working with consumer companies, and he was on the board of Duo, which was a security company. And Asana.
And Asana, right? An AI company. So no swim lanes.
Right. And I think as you just as you just.
You're all in the pool with no. Yeah.
And if you just look at the kind of companies and ideas that we're bringing to the table on Mondays, that's the thing that you see. And there's a lot of encouragement around the table, which is like, if you're interested in something, something's like really hitting you at the moment, just go for it.
Go meet all the relevant people. Bring them in.
Let's all learn together.

Let's figure this out.

And it's never the conversation that I've seen in other places, which is like,

whoa, whoa, whoa, whoa, whoa. Stay in your sector.

Well, I went on a drone

kick and definitely

Peter was like,

stop it.

Stop droning up. The only way to kill the conversation about drones is if we brought in D-drone.
Was that the shooting down the drone? Eric's like, okay, I got the point. We didn't do that.
It's probably done pretty well. Yeah, probably wouldn't have done well.
All right, other stuff we missed? You know, when you look at anything from the outside and you were there, you can't help but say, particularly like books are written. Because journalists tend to write the story from the perspective of a loner who's projecting this sort of Shakespearean plot.
If I was there, what was the intention? I've read these books about us at Uber or Twitter or WeWork. I'm like, it was so much more interesting.
You guys did a remarkably good job of capturing the essential primitives of the firm. I don't know if it's interesting to other people, but it is right that this, you know, deep commitment to equality that Bob feels permeates to this day through everything we do.
And from the way we treat our people that aren't in the investment team and to the notion that, you know, we book most of our own meetings. Like, you know, we do so ourselves because we're not below anything or above anything.
And I think that that's the through line that you captured so well. And I think it was, as you say, asymmetric.
And was it in reaction to the era's leading venture capitalists? I don't know. But I can tell you that there was a humanity to it that always felt, to me at least, something you really, you want to honor.
Like if benchmarks anything, it's that we're available, we're flat, there's no arrogance. And you guys got to the central core of that.
And that comes now really from Bob's history. And they say this about our companies, right? The founding two or three employees set the culture.
And it doesn't change unless there's some catastrophic event where it has to get reborn. But good luck with Elon at Twitter.
That culture was set in motion. And its root system goes so deep.
We'll see what happens. I'm very interested.
It's a good lesson. And if it does transform, then that's an example of one form of transformation.
If it doesn't, then you'd say, okay, believe me, people have been trying to fuck up the benchmark culture. And we haven't done it yet, but we're trying.
I thought you meant Twitter. I was like, yeah, we had Twitter.
No, no Twitter.

Actually, there's been a lot of discussion in the quiet Slack about like,

why have you guys not covered Elon on Twitter?

And just like, no, that's not what we do here.

To TMZ.

Yeah, we're not the TMZ of Silicon Valley.

We all have eight years of experience there.

Oh, boy.

All right.

Well, we should end it on that now.

Yeah.

Thank you all.

Thank you. Thank you.
Appreciate it. That's a lot of fun.
Let's eat. All right, boy.
All right. Well, we should end it on that now.
Yeah. Thank you all.
Thank you. Thank you.
Appreciate it. A lot of fun.
Let's eat. All right, listeners.
It is time to talk about one of our favorite companies, Statsig. It's funny, David.
Statsig has gone from this little startup when we first started working with them a couple of years ago to this total powerhouse now. I know.
It's wild. I was looking it up, and they have added all these customers since we started working together.
OpenAI, Figma, Atlassian, Vercel, Notion, tons more. At this point, if there's a growth stage tech company out there, there's pretty good chance they're using Statsig.
Yep. So listeners, if you are unfamiliar with Statsig, they basically took what was the standard product infrastructure at every big tech company and they built it as a standalone company.
This includes advanced experimentation tools, A-B testing, feature flags, product analytics, session replays, and more. So if you're building the next great software company, this sort of infrastructure is essential because it allows your product and engineering teams to release things quickly, measure the impact of them, and track progress over time.
Totally. So, I mean, as we've talked about on the show forever at companies like Facebook or Netflix, data was just a part of how everything was built, which contributed to all the crazy bottoms-up organic growth that they had.
Now with Statsig, you can get that from day one at your startup. And today, they're not only trusted by startups, but also by more mature enterprises like Bloomberg and Microsoft and Electronic Arts.
Turns out that a single system for data-driven product decisions is useful at any scale. Yeah.
And by the way, the scale they're operating at is completely insane. They process over 2 trillion events per day now.
By the way, David, this is updated. The last I checked, it was 1 trillion.
And then this morning I pulled it up $2 trillion. And they handle releases to billions of end users.
If you're listening to this podcast and you've used software in the last few years, there is a very good chance you've been a part of many experiments orchestrated by Statsig. Yeah, it's just awesome.
And as they've gone upmarket, they've also started to offer some interesting deployment models, like being able to run the whole thing natively inside your existing data warehouse or just using Statsig's fully hosted solution.

If you want to leverage Statsig to grow your business, there are a bunch of great ways to get started.

Statsig has a very generous free tier for small companies, a startup program with a billion free events that's $50,000 in value, and significant discounts for enterprise customers.

To get started, go to Statsig.com slash acquired and just tell them that Ben and David sent you. Thank you, Statsig.
Ah, so fun, David. Man, what a special experience.
Thank you to the Benchmark Partnership, too, for inviting us, doing this. Having a pretty candid conversation with us.
That's not what I was expecting going in. No, no.
They're great. They're very gracious hosts.
Yes. Well, we'd love your feedback too.
Please chime in at acquired.fm slash slack. Come hang out with us.
Get your sweet t-shirts from the merch store at acquired.fm slash store. We also have a dad hat that is limited edition in part because that is the only way we could embroider it.
And so

I wanted them to be great hats. And so you can go in and get that just for the next couple weeks.
So make sure you get your order in if you want one. See, this is how we know that you are not a dad, because you're like, actually like caring about the details of your hats.
Once you become a dad., you show up like wearing appropriate hats whenever we go visit various people around San Francisco. I often see you in their merch.
Like it's a premeditated decision. It is, it is.
But that's without the kit. That's true.
That's true. All right.
Well, LP show, if you want to listen, the episode with Jale was awesome on the B2B profitable growth playbook. Her story is super impressive.
So check that out. Becoming an LP at acquired.fm slash LP or searching LP show in the podcast player of your choice.
With that, listeners, thank you. Our thanks to the very good people at Benchmark.
And we'll see you next time. We'll see you next time.

Who got the truth?

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