Acquired - Benchmark Part II- The Dinner

0:00I'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. And that's the whole point is that social connection is not something that's transaction. It's fluid. It's fun. It's playful. And so the idea is people are coming out beaming, smiling after dinner as opposed to...

0:23You know, this sort of rigid structure of a typical dinner with an agenda. There's no agenda. Yeah, I don't have the agenda. The agenda is to come together. Welcome to season 11, episode 5, acquired. The podcast about great technology companies and the stories and playbooks behind them.

0:55I'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.

1:23At 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 benchmarks 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.

1:47So 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.

2:13But 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 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. All right, listeners.

2:41Now is a great time to talk about a new partner of ours here on Acquired. Lagora, the agentic operating system that is redefining how the world's best legal teams work. Yup, it's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Lagora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

3:09So the founders did exactly what great founders do. Operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done. And that's how you get features that customers love like tabular review where you.

3:28drop in a folder of hundreds of contracts, and it pulls every key term into a grid a lawyer can actually work with. Lugora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work, and this means that the pie can grow even as each individual task takes less time.

3:48And they recently launched LaGora agent offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And LaGora works where you already work. You can use it within Microsoft Word while redlining or drafting the early LaGora numbers essentially.

4:16speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Legora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months. Truly insane numbers. And that is the real test.

4:40Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in house at a company, you can learn more at logora.com slash acquired and just tell them that Ben and David sent you. 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 weeks, there'll be a limited edition dad hat embroidered with ACQ right there on the front. So get them before they're gone at acquired.fm slash store.

5:27All right, join the Slack acquired.fm slash Slack. 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 Rizahi, the CEO and co-founder of Mutiny.

5:43That 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 acquire.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.

6:10Okay, 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 or tradition Why don't 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 I fire a call a week but they were like going deep on finance then on you know chemistry then on life sciences and and he took the catalyst to say like why are we doing dinners and anyway we had this like playful you know experiment where we said 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 there's actually my first year and

7:05It was amazing, like time stood still and we realized like just the partners or we had four outside guests, a Katarina fake, Mike McCue, Gideon you and Martin Miko's from Not Mistake 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 do you think of the dinner? I'm like, I want to go to bed. He's like, alcohol had been served. People were like, it was his baby. He wanted to like, keep working on the concept. Well, we we danced with this idea. And so the concept that 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 so I think was the greatest American thinker that you know we are nothing but an amalgamation of our habits and habits so character they saw everything so the idea that we should be nurturing curiosity which is the essential lifeblood of the firm needed a habit and 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

8:14they're limited. And so the dynamic range of a dinner with 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 rat holes with this group, and they pulled me out. It just became one of those things that honored the purpose of the firm, which is the sense of constantly learning and activating our curiosity.

8:41in a collective effort of essence 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, where there's a head of the table, you can get a dominant participant in a 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.

9:06And so I'd seen this table the seven by Jean-Marie Mossoud, who's a French designer, and I ran with the idea. Something 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.

9:35allowed all these lifestyle to meaningfully upgrade because the number of people with means that have sat at this table to decide that they need a table just like this. Well, 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, somebody that we haven't.

10:01worked 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 why this is why we exist to serve people like that Toby from Shopify Jeff Bezos has been We traveled to Jeff. Do you bring the table? Unfortunately, it's not portable. We've been in 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 in this table because everybody else can hear it. And so it's all one conversation. And that...

10:50you know, sort of coming 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 essential power of this structure.

11:18And 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...

11:39When we were talking about Bruce Dunlavy, 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 one of the great perks, especially for somebody who's come from another venture firm to benchmark, so you don't run a memo. And it's because the memo, you know, when your memo really is a vehicle to to 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. A lot of hours get consumed by the writing of it and the reading of others and not to have a founder come in and there's none of that. It's a blank sheet and you just get to have the experience of the founder.

12:31It's a nice phrase which is treat seeking which I think is a really good one which is it's like Yeah, does it does the is the company? Incredible and does that company have a chance to be one of these few extraordinary companies every decade and like that's that's actually all that matters like that's all that matters for 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 an art, 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

13:29Yes, 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 you 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 reeling the calls you have, reeling 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 roll through this market, or we found some challenges. And so it's that sort of like

14:28And 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. Yeah. 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 a agenda. You got to go through the CRM update the CRM. If you haven't updated your CRM, you're going to get.

14:53Negative points. Negative points? Yeah. Like, I don't see all these calls logged into the series. I was like, the artifacts, like they live in the memories in the live 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.

15:23Um, success. And one of my first experiences this unbounded agenda on a Monday was I brought up a so uncomfortable, a new part of it. Actually, it could just be for like you, you know that that's going to be what Monday is like coming when you're first Monday. It's more of the five of you were GPs of the first. Yes. Yeah. Yeah. Yeah. So we've already boys and like you talked to Bruce or whoever. And it's like, just Monday has no agenda. I get that.

15:50But you can intellectually get it. Yeah, and then I remember my first Monday, and say, I interrupted it on your first Monday, but you sit there and you keep on waiting. We're like, well, when are we going to talk about pipeline? And when are we going to talk about, you know, the schedule updates? Yeah, and it doesn't happen. And instead, it's like these random roving conversations, but then...

16:13but then the you know 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 into 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 psychedelic. For a deal. Expensive. There may be one. But it is critical to then what happens on the Mondays and everything in between. Sarah, you and Tatham both mentioned.

17:05lack of structure, lack of memo is not a replacement for doing the work that I seem happens during the week. I'm curious, what does the work mean? And then the meeting itself. There's no reason why we can't call somebody that we want to talk to or work together. Did you put them on speakerphone? Yeah. It's like, hey, we grew on speaker with all of us. We have a couple questions for you. How do entrepreneurs react when they get a call from the partnership? Hey, it's Benchmark. Yes. No, I think it's...

17:32It's surprising to everybody whether it's entrepreneurs or whether it's like people that we call the industry versus like hey, 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 and 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 in the industry naturally tend to be one person. There's like, the venture capitalists 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.

18:31One of the things we spent a bunch of time talking about on the first episode was what the psychology must be like been an I speculating of being a 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 for 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

19:30really bring it. So right before Sarah was joining. Do you remember this? Yeah, of course. This is like five and a half, six years ago. Yeah, something like that. So she texted me on a Saturday. She's like, so it hadn't been announced. We hadn't decided anything. Like it was like, but we were close. And she's like, do you have time tomorrow? Okay. And so anyways, we got brunch.

20:00at the pub, and she's like, Eric, okay. What's our job? This is V3 or whatever, benchmark. 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 the next the next great the next great entrepreneur and and believe me, I wake up every fucking morning.

21:05Like Hungry that I don't want to be the beginning of the end. Yeah, you want to contribute and Where does that come from for you personally? Why are you because you don't have to be because I'm a failed entrepreneur I think that's I think that really is 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 and so I think you just like realize like how how difficult it is there's a lot there's so the privilege of the job is there people out there who are super smart who have an idea that's often against the grain that want to change the world

22:03in some way. And, you know, it's doing what you can help them. And so, I think about that all the time. And I think that is a chip on your shoulder or whatever to go prove. They're different motivational systems. Fair enough. Fair enough. I think some part of them, all of us, some of those motivational systems are fear-based. I don't fuck it up.

22:33Some are joy-pissed. 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 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, pure 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 the 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

23:29benchmarks like we didn't try and start this so it outlive us. I mean, it was sort of an accident. They didn't name the firm benchmark though. So they didn't attach to its name, which I thought was telling. And, you know, but the idea that this is a femoral. And you said, like everything's a femoral. 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 brand is that we want to destroy the incumbents. And I think we're collectively aligned around being anti-authoritarian, destroy the incumbent. So the last thing you want to be done. Absolutely was the DNA of the founding of benchmark. As we talked about in the past. 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.

24:26then you fire yourself because there's a day where you realize I will not give to the firm more than I take. 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. I think it's also partly because the minute you're in a position to be the incumbent on 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. That's also joy. 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.

25:23We got to call Bruce. We got to call the old guys. 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 there you call and they want to see you succeed for all the reasons Peter is talking about.

25:51And 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 are great. That's perfect.

26:12And for listeners who don't know because I didn't know until chase and just showed us the benchmark partners, none of you have offices like you all sit at this crazy.

26:21round 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 so far. But, but you have like, there are aunts and uncles with computers over there. Like it, there were not five computers. There were seven, eight, nine. I mean, it's not fast enough, but they'll be gone soon or not.

26:49So yeah, you're saying that's, I shouldn't read into that, like they're here still. For instance, uncles, it's fine if they visit. But not stay too long. They can watch the kids every now and then. But as soon as there's a real problem, it's funny, because aunts and uncles say, here's your baby. And that's really that's what happens.

27:10This 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 intern uncle. You know, I have five children and I can tell you, I should have learned that lesson. I love my children really, 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.

27:39What are examples of the hard work like real examples? I know you have a story here a very recent one What are the ways in which you get put to work by your portfolio companies, Chathen? Well, this to Chathen and part of the reason he's discombobulated and has a cold brew in front of him Five PM is he got an international flight three hours ago, four hours ago. But was with us on Monday. Which was with us. And decided to go on Monday and today's Wednesday. So here we are. 48 hours. I'm not just coming. Yeah, I'm not doing great. So what are the circumstances that lead to you suddenly lead to something that you need to be in? I think this is a great story of

28:38how the firm and we as a group operate, which is there was a portfolio company that was going through an important decision. There was a decision that was made Friday morning. It felt like there was a finality to that decision. I was like, okay, this is what we're gonna do. And then people go to the weekend, emotions rise up, they have conversations with their friends.

29:06And, 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 11.30 pm. And we talk for 30, 40 minutes. Or we're just walking through everything.

29:36And 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, it's a good news. That'd be a pressure. I know you take them with you, but it's right, right? Which is, if you weren't in the moment, you would make the phone call and say, hey, this is your decision. I'm here in 100% supportive no matter what. So we got off the phone. I made that phone call. But also here's what I think.

30:35Yeah, well, no, I think because you've gone through all that. I think part had already been done, which is- There is no more thinking. It's your call. We're a 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.

31:01This is Sunday night. This is Sunday night. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning. Monday morning.

31:31And so, here we go, like time to go to San Francisco Airport. And then as I was leaving, Eric goes, are you gonna come back for the acquired thing? I was like, oh yeah, okay, don't worry, I'll find a way 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.

32:00That 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 change 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 And that was it, it changed the tenor of the conversation completely. I would say it's like also...

32:36Broadly a manifestation of like the orientation to investing right like there's a lot of people who would say of investing all like we made this bet like you might hear that word a bunch of times all like Well, it's a good bad or is a good risk adjusted bad or hopefully it'll be good and there's a there's a very passive I like to own that asset. I like to own that asset It's a matter of play But it's sort of like pavades 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 we'll never talk in that way. When we think about partner with the founders, it's not, oh, we want to make a good bet. It's like, we want to make a commitment. And that commitment manifests 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.

33:30big years and even a couple times that every year there's important moments where you can tell we can't transform necessarily when I say we got some silver bullet but that commitment can really change the odds. You know each of us make one or two of these commitments a year and right they're not that's there and there's a level of relationship that then happens with the founders because there's only one or two.

33:55a 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 or something that we we just expect of ourselves and that's a relationship that we'll have with these teams. All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you proved that you were secure once a year on audit or a static PDF that everyone would not and you're done. But in an AI first world, that doesn't hold up anymore.

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35:33Which is exactly why more than 16,000 companies today run on Vanta. Companies like ramp, cursor, and snowflake all stay audit ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment. And that's the real value.

35:51Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at Vanta.com slash acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off and just tell them that Ben and David sent you. 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 of way. We talked about Uber on our episode, but I want to abstract it to, you know.

36:30How do 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 that because sometimes those things are at odds. You're representing all shareholders on the company's side and with your LPs you're representing, you know, 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, it's people go to therapy often. They only talk about the shit that's going wrong.

37:27And 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 this functions. We could open that book up and we can all sorts of flavors. 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 sort of vital to any durable founder benchmark partner relationship is vulnerability. And if there's ever caution or pause, 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, we could, I have every reason to believe Travis's purpose was

38:27the biggest, most extraordinary Uber imaginable. And 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 firm 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 as you and me, it's my agenda and my LPs and general that, And I suddenly 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 that. And I see it. I'm like, Oh, man, I adore you. But your partners, I have different feelings about it. And you're here trying to rally 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, OK,

39:25So we'll have an off side bar with them and say, what's going on here? How can I help you with your partners? And as much as 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 racked somewhere between two to three hundred million dollars of capital. And I'm pretty accountable. Now, I should be fired if this job actually had a standard in government practices. And that company's called Docker. And I was just in Miami yesterday at their all hands meeting.

39:54I remember the last time when you invested it was called .Cloud, right? .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, four billion, five 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, bailed.

40:24And I mean, this is okay. What was different with benchmark? Inside's 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 well, at this point, it was a pretty big loser.

40:48But 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 on the purpose of Docker, we're literally at this is cliche. It's the beginning. You know, 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.

41:18My two partners, I came in and I said, maybe 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 true 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? I thought, well, that's crazy. It's like, but you're right, if you believe you have to have that founder level.

41:47those 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, you know, trust, all these things that come to stress, the LPs agenda, the founders agenda that come.

42:14It'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 this stuff out. It's the, you know, basis thing. The long term, there really is no conflict, but creating, you know, delighting in a while. Yeah. I'm pressing 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. That's the customer.

42:41Yeah, 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, it's going to get developers to program the global computer. Okay. So then you could dust off $300 million in a long time. 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.

43:09not 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 is 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 ones. Well, it was a new response to Benchmark. That was a response to, there's a crap ton of fees to make on. And the founders were taking our money and we have the brand. Yes. That was like, Benchmark stayed so true to their thing. Okay, I think there are three classes of firms. There's a class firm that fit that. Yeah.

44:07There's benchmark and then there's a class of firm that actually We're making a strategic decision. We care about Carrie. We're playing for Carrie. We think we can 100% Yeah, and those were valid decisions on that their 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 to join? I'm gonna try and change that Well actually to it now. Yeah. That's more rough. We've got an even bigger name right there. How far can we stretch this track? I think there is there is certainly all of those all of those opportunities to do that. I think Sarah says it nicely in part like our job.

45:00We're really focused on how do we scale the company, those companies, right? And how is part of that having a relationship that doesn't get sort of adulthood 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.

45:21how to maybe make a strategic core of the company that optimizes for a moment for us to get more capital. Like there should be one of 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, we'll scale, we'll all success, we'll scale through that success. And we don't need to scale ourselves independently of those company scaling. And so, I think we'll all, the beauty of being small is like, we'll all 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 companies, I totally agree with Maelsen. I would just add one thing is like, it doesn't feel like work if you love doing it.

46:19What 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 you don't want to spend your time meeting investments that are outside of your purview. It's just like that's like 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.

47:20But I think the question of like what do you love doing really? Resonates and one thing that's super nice is you know the cycles turn and strategy persists through cycles and so I also don't worry about $100 million whole right and We were joking before we started like I would have met him 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 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 this can be worth more than $100 billion. And it seems to be independent of the cycle. So yeah, I think it'll crazier when things are, and they get a little depressed. But the growth fund thing, I'll come back to answer a little differently, which is that

48:20I would like this group, I guess I'm part of this group, to set at high water mark 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, could we get a fixed 50x fund? I'm not sure we can do that. If we start, all we're doing, we're investing more money on lay stages, we're lowering our returns. That's all we're doing, because our commitment is fixed. It's not like we're gonna be more committed.

48:48Where you could say you're getting more cash from cash, but 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 it pure and I will say like what would make me proud as 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 like, should we care? That's cash and they're like, yeah, but I also want to know with our limited partners, say, 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 the, there's the, which is a quote, Sarah and I used to the team the other day, the Johnny I've quote, yeah, I have like, you know, what's focus is like focus is when

49:41In some ways, every bone in your body thinks an idea is a really good idea, but you don't do it. It's a fine idea. We would, I think it's not to say we don't have opinions on later stage. If you've had an idea, it's a billion dollars. The opportunity fund stapled to benchmark with the same team. You would for sure have good results. It would be one of the best growth funds in the industry. We like to think so, but we're going to do it. But I think to be able to have that focus that you know, a conversation on Monday and our time together on Monday.

50:15is an hour of roving curiosity of, like, futile ideas, the right at the edges that seem weird and bizarre. Or at least you gotta be weird. Instead of, instead of, okay, what's the growth pipeline and, you know, is that a good valuation? Is now a good moment to sort of get in? And I think it's the, the focus is. And we sometimes have a CRM, we did a girl. Sorry, like that, it's, you know, for us, it is, and we're all here because we want to part, with founders as early as possible in that kind of relationship on the board and anything you know to this Johnny I you know just the focus like anything that distracts from that and we we've five people like this is it and like the capacity take on more things would take away from

51:09are getting in the room with that founder who is going to build that next iconic company and supporting the ones that we have. We're forced in a way by the constraint of how many people, the CL team of six people never being more than that to be ruthlessly focused, and that's what we're here for. That's super real. Just to validate it, there's lots of opportunities that you can always pursue.

51:37And that seemed like good ideas. And we have this struggle required. We're two people. And there's a thing that we know is uniquely differentiating, which is these ridiculous deep dive podcasts that are just us. And sometimes we have guests like 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.

51:59Every 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. It's funny to use that phrase. In 2008, there's a first time somebody said to me, you should consider a venture capital. I didn't join benchmarking until 2014, so 2008.

52:29A very famous, nameless venture capitalist said, our early stage program is our golden goose. How much are you with that famous venture capital? That early stage, that's everything that we do, protects that golden goose. Long time less nearest, so we'll probably know exactly what you're talking about.

52:54Peter, 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, that's a clarifying mindset about the way that you guys look at this. I think of it as an LP, and the benchmark fund, again, the purpose is not, we don't come show up and say, let's drive returns. It would be alienating.

53:22everything we stand for to think about 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 benchmarking? And I say, oh, yeah. Can you save the number of year your largest LP, like what, what their dollar per fund? They're like 25, 30 million. I could get it wrong. I probably pissed one off. I've listened to this. In the context of a That's barely worth their time, right? Some of our retired partners are large in self-fugusness. Indeed. There are some discussions among some people in the firm that over time is the way the model sort of endures is that the LPs become the former GPs. Anyway, it's not.

54:19It'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. I want this to be, and I'm already, many of us are this place where we pay.

54:49Crazy. 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, this, this is, you don't get like a GP allocation that doesn't, I get a tiny, in my view, tiny little bit. Now we expose the tension. But for this, for the super majority of my investment in benchmark, I'm paying limited partner rates.

55:17and management. I would say that's where it's not a tax position. But just it's the point. We have aunts and uncles. We don't have overlords that are there getting there to the point of equality, right? Like an equal partnership. That is taking it to every extreme along the way. So the 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?

55:44the worst year economic deal gets. It's it's the same. That's a horrible way. As your L.T. commitment goes up and you're paying fees and carry on. You know what? I think the camera argument which I think is is 100% right? Is it isn't the worst economic? It's not a worst economic arrangement because the returns will be higher.

56:13So you'd be happy to pay the fees. This is the way it's the thesis of every successive generation of technology should be bigger outcomes because you're addressing bigger markets. And make it more simple. You can't get allocation to the benchmark funds. And so getting any allocate is going to be better. So you're in 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. I see. Your marginal economic deal goes down, but you're aggregate economic deal. You're cash on cash, even more. Yeah, there we go. You're cash on cash. Yeah, it's different about this than we did. Well, we did spend a lot of time. We all learn from them. Wow. Okay, 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.

57:01on the strategy before we move on. 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.

57:29then 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 be have a conflict as that investor when things are going well to put more money in at a better advantage valuation for yourself.

57:53and you don't have that complex 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 preamp their round and I'm going to 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.

58:23your companies tend to go raise better series b's 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.

58:51This is a question we're just selling for benchmark. I didn't think they would say it but I think it's important 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, 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.

59:45I 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 help them through that part of it. And that outcome results in de-risked Like, the subsequent rounds are debrished, 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, I think, should yield better outcomes. Strategy is just all about making trade-offs.

1:00:40aligning all of your trade-offs so that there are a force multiplier rather than in conflict with each other and if I had to sort of summarize why benchmark works it seems like every all the trade-offs are actually just thought through very clearly and tried to align them all so they sort of like they play well 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 like 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, all the other firms outside of us, have built machines around that.

1:01:37You know, you have legions of people at these firms. I grew up doing this. I was, you know, an analyst at Bessemer. Paul 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, like they have this machinery that's smart because it's all about making sure that every deal, every round that happens.

1:02:06they're going to be in the mix. We, there's five of us, you know, and there's always the risk that like a found that one of those founders who, you know, kind of mistake basically our lack of outreach for a lack of interest, but it's really just a constraint. And we do everything we can, of course, like 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 than an hour. More limited. And so that is the big constraint that I know keeps, I think, all of us up. It's just making sure the founder that is going to raise that round. Many are intentional about how do I make sure that I'm going to find the right partner for me for the arc of this journey that we're all going to be on together. But we're still not there. You guys at this point have such a

1:03:05for better or worse mystique. Yeah. 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, but like, am I going to call benchmark? Like, that seems to be like, wow, that's a lot of pressure. And that's potentially lethal risk for us because if you think about that being the incumbent and come back to the fact that like, you know, a number of the people at this table have a lot of capacity.

1:03:34and the sense of they could dive in, they can give their all, and they're very available. One of the things you think about is the shift in the last 15 years since I've been here, the investments that are occurring before we get engaged have gone up by about an 100X, at least 30X. I mean, seed was not an asset class. I didn't know why I was a seed investor, but I guess I was a seed investor. But a third of what I've done is for formation of a company investments.

1:04:04So weird when people say to us, I didn't think you're at this early stage because then some people say, you're like, no, like was incubated. We thought we're too late for you. Yeah. Yeah. You know, okay. I think our challenge, and I think you say it well, is that I would love to know, which is why if someone sends us something and anybody who listens to your podcast, but I start with the premise, and fat, yes, let's meet, because I have always will create time.

1:04:31as 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 sent 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 use high quality experience, they're going to get. It's going to stretch their thinking and there's so many times and someone comes back even when we don't say yes and say, I'm so glad we've met. I've heard something that really helped shape the course of the company. So the point of this is that

1:04:59Our competitors, if we call them that, there are peers most of the time, have tried to build vertical systems, which is to say integrate into the variance section of the company all the way through to the last drip of capital going in as they go off of whatever from seed to IPO and beyond. And one of the strategic vulnerabilities we have is that people tell stories.

1:05:27that were this way or that way no we're just like everybody else but we're highly available to meet and 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's there's 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 and in the last two instances and less than a day oh If you knew it was only a day, we would have talked about it. Well, you would have taken a week if you had one. Right. 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 in most times an emphatic yes, for so many of you to introduce something to us.

1:06:12and what we'd love to know is the person 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 founders every meeting and we don't always get it right we screwed up in the past we've been less employed present okay we take that seriously but um that's the that's the that's the vulnerability of the model which is that capital always carries its agenda oh let me tell you about the way where this were that and it's like and it's always threatening and attacking other layers and like We're hoping that we play a different game which is like you know serving the founders purpose and like show up and and be decisive less than a day. That's pretty common All right listeners now is a great time to thank our longtime friend of the show service now if you are running a large enterprise AI agents are likely spread across every team and deploying them is no longer the hard part

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1:08:25So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com slash acquired and tell them that Ben and David sent you. What do you do? Besides the five of your 24, seven being on, what things do you do to keep your radar operating to try and address? How do you solve them problem? We all have different ways. I mean, it's, you know, there is no single way for us, I would say. I always talk about having an air game and a ground game. For me, it helps me learn to write.

1:09:05And then you know you write about things like areas that you're interested in and that tends to be it's kind of virtuous loop also of then the founders who are thinking about you know building a marketplace or the next you know social product social network will see something that I wrote our 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 you have the 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 up. There's you never know where these things are gonna come from. There's so many different domains where the next consumer company might come I think like the engine 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

1:09:59investment, 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 when we went back to what Peter said.

1:10:29is they went to the next entrepreneur and said, you should go to the process. Just talk to them. That's the most meaningful introduction we can get. That carries so much weight. You have them to one of these dinners. I think it's in pop because there isn't...

1:10:48really like a process. Like, you know, like, if there's diligence, people are like, oftentimes founders will ask, what's your process? It's the funniest question. I don't know, like, we're just, we're gonna explore this together and we'll do a chat together.

1:11:04And I think to what Sarah said. So what are you saying? It's like that Elon Musk's tweet. Yes, exactly like that. Let's just text back and forth a bit. What did you do today? To frame it more precisely. So for founders who are like, 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 and meeting with all of us, or meeting some more groups of us, is not us trying to get some information, again, to try to super-focus some odds. We're putting ourselves in the shoes because we make commitments to start working on this and work together to say, okay, how will we think about navigating that? Where could sort of...

1:11:57you know, full starts or, you know, local maximas be, and how could we realize the full purpose? And that comes with dynamic sharing of stories and history and learning from the past. And I think you find hopefully that's 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.

1:12:27And 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 Lumnet, like people, connections to people who've been there before you. We just went through this process on a recent investment.

1:12:55and we introduced the founder to other CEOs who were further along and she extracted knowledge, basically from them and not 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 a product market fit? How did you raise the next round and pulled and build connections that way? And I think that's a sign of That's what it's like whenever you meet with someone who's worked in Amazon for a long time, it's like scary. You sit there and they're silent and they manage to just extract all this information from you. But you know, you said like 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 gain 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

1:13:52kind 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 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 an IC engineer or whatever, having those late night conversations or whatever it is, that is in the best form can be a really meaningful relationship for the founder and from the company from the very beginning. And a founder should realize that that is, of course, you get into the

1:14:40Anxiety and the stress of am I going to get funded? What are the terms going to be all those 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. Is this a trope in the industry, right? Which is you want to be the founders first cool?

1:15:06And 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. And I think- It's a lot more. I think it's a lot more, and I think that hopefully founders would say of us, like, we're the best caller. Like, they've been proactive and had the space and thoughtfulness and contacts and trust to be able to do that. I remember when Peter and I worked on the air table, pretty recently, 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. 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. 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?

1:16:03People putting stuff in a database is so much that happens on top of that. As you're evaluating mutual fit on an investment between the entrepreneur and benchmark, you know, in e-boys there's some famous line about venture capital as more a balls business than a brains business. And like, let's stop using that phrase immediately. But it's still an e-boy.

1:16:25It's the most evilest 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, you know, gut feel and courage versus... Having done analytical things, I would disagree with that completely. I would say that we're not particularly analytical. And... So it still occurs more than a branch. No, I think it's very gut driven. And it's like, 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 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, you know,

1:17:24Those of us that came from other places had all done. And one of the interesting things is watching the firm externally and seeing how this works inside of boardrooms, like Miles just talked about an example. I was on a board with Peter for a long time before I joined here. And one of the elastic, yeah, 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 aspire 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 about.

1:18:21like any other board member that I had 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 you 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 got feeling emotion commitment etc etc but it's not analytical I think most of the investments we make differs consumer enterprise marketplace like all of them are different in different ways there's just very little data to analyze period

1:19:12But when you're looking at something that's like a consumer social app that seems to be catching fire like there are things you can know like viral coefficient or like You know a lot of the thing to lead you the wrong way 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 it is. Which is different than 10 years ago. 10 years ago, benchmark was made in commitments when there was like Uber, like Instagram, like it was early, but there was data proving. I think I think of it more as like, I always think, you know, in a way to make green investments, you have to be okay looking crazy, maybe even stupid in the short term, on the outside. And then, but it comes from a place of deep conviction when you're

1:20:04when you're in front of the entrepreneur and they have 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 and so from the outside and you see all the time like it could be people always critique other people's you know investments like oh I can't believe that person did this I can't I looked at that deal and that's exactly what I remember when we we invested in in channels this was when all the ICOs were going Crazy everybody was thinking about tokens and two people I remember calling me after we announced is like you invested in a like a sass company like shouldn't you be putting the money in tokens or like And you know not wrong but also not right like it looked like You know a stupid investment the beginning and before it can have the room and so I think part of the relationship that we then have with each other is

1:21:02that comfort that something, you know, seeing something that can be contrarian or misunderstood from the outside and you have to nurture that. When benchmark, no pun intended, I guess, when measure of quality for the firm will be how good our failures are. WebVAN was a really good failure. WebVAN was awesome. You should make that bet a thousand times better. The shame that most venture capitalists felt towards Maybe contempt towards the venture firm because before I was here and it's laughable. It's stupid and if we start to look like we're We should probably 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 universal I think we pulled it off in the last funder to Like real stinkers

1:21:56The fact that we are still just as gullible, just as naive and fallible 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, weven is a good venture investment. Great. And I think 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.

1:22:25an 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 I think that if you just look at, you know, the last, yeah, I joined right before our ninth fund.

1:22:54And so I've been here through Fun9 and we're now deploying Fun10. There's a lot in there that wasn't, I mean, most of it is not analytical. And I would say like if you just look into it, they're 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 look 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.

1:23:22why you can't be super analytical. It's like, did you think that the game was going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be going to be The amount of wrong, like, 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, like, ridiculously early stage stuff. 100%. That's why we don't write memos. There's no artifacts. We don't do portfolio reviews, at least they find you portfolio reviews. And I don't show up. So I do remember one attempt at a portfolio of you a while back. And it was like the apex of failure at benchmark.

1:24:18You know, 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. Or a good idea poorly executed, but that hurts because you think, oh, I mean, we can think of companies like Friendster and think, oh.

1:24:45But the bad idea prox. I'm so choosy. That's the best investment in venture. Like that clearly that was wrong. Yeah, it's the middle ones that are total. I love Armored Donald's joke. Well, he was like trying to explain the fact. When you get in front of you doing a standup, my blesses already died, of course. And nobody laughs.

1:25:03And he says, then I start laughing to myself. There 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 then we have a few of those. If we're not doing that, that was the early days of the coin. Yeah. I like doing that. 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, you know, great decade-making company in the portfolio, double the partnership. Keep the same number of board seats raised 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 would 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.

1:26:03And just go on the boards and say we're 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, but it's nice to meet you. It's a 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 gonna be moving in and they're gonna take up about 20% of your cap table and and they they're pensioned funds are very decent people and they're noble cause Why are they on my cap table? It's like, because you get to work with me. But I didn't choose them. Well, you kind of did because I bring them along. 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 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,

1:26:56There's a limit to the real thing as I do. GP, I think. As a GP. But I think this interesting construct is that what's the residual value that is separable from the capital? Breast use to joke. We can pay a higher price because we add more value.

1:27:13They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money. They should take a lot of money.

1:27:43There's some awkwardness to talking about it publicly. One of the ones is probably a good example is Tinder. Yeah. And, you know, Barry Diller said, what do you want? And it's like, well, if you 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, so it's like, I'm imagining me in the fly on the wall of benchmark negotiating with Barry Diller. That must have just like, I would, I would pay a lot of money to watch that. It's, it's more.

1:28:11Bizarre. Then your imagination can't allow. So go there and then go pass that. And you'll get questions. So, this question of, like, can we decouple, is something that I kind of look at as like the residual value of the firm?

1:28:28generating multiple equity points for our contribution. And I think that's what I would love to know is our best reference, which is a founders 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, they'll say, they bought a ticket. You know, they were in the, they got a ticket versus they made a huge impact.

1:28:52on our total success. And that's equity that was the best return of my allocation of that equity. And every time you're taking on delusion, 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 100% towards the person who got on the cap table, not the other way around. And that's how I think. And maybe there'll be a model where we're not going to be CAA where we take 10%, but the capital light, you couldn't raise less. Why not?

1:29:16I 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 in the last discussion of the like, we were going to do it the same size fund. I'm like, why don't we cut it in half and people that will 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, it's 425. Go down to 200. Yeah.

1:29:42Okay, 40. Was it 40 per partner per year? Oh, the old benchmark website. Other firms are overfunded with over 20 million per partner of capital. The live action machine is such a gift to humanity. 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.

1:30:13Everybody 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 on one of us. We have to watch you grow. And then we said, you know, that person, we think you think Mitch was an exception, Bill. Mitch had, you know.

1:30:44200,000 board meetings together. Eric, you didn't have any, you're the only one who didn't have any. I was just joking. No, that seems to be the model of serve on a board with the benchmark partner. That's how you get to know people and build really deep relationships. You need to go through shit together. The company is going really well and we have to react to a super dynamic environment. But 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 you know I think the story with Peter is like he was repeatedly showing up competing for investments that benchmark before he was here.

1:31:36Was working on you were walking out the door as they were walking yeah, and so like that's a that's that's telling, you know the sort of miles Is miles was there before like he he invested in? Benchling 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 this glow. Yeah, actually Sarah how Sarah and I think but had no like no professional in that context But who made the first phone call to issue I've lost track I don't think he loses track

1:32:35I 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. 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 one.

1:33:02romantic, but it's intended that way. I left Stanford Business School embarrassed that I went there, maybe it's some level. And I dreamed about getting a job at Punchmark. 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 with the note set. And then, and then like, you know, I think you gave me like a t-shirt. Not in a seven years pass.

1:33:28I think I sent the typical guy sent 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 we think in the vacuum I mean I feel like I do when you're wall I think Kevin and I went on a board together A company that was not particularly successful and I was wondering why he's Kevin doing this investment. I said, what does it say about benchmark? He later confessed that he felt the same way. Then you get to work with the firm and there's something that I would say underneath it which is that 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 2005 when you around the time he presented Facebook to us at Excel you knew immediately that he was going to be in an entrepreneur business. There 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

1:34:42partner in a god, 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 are doing with Bennett Pinterest, I of course knew about Sarah because we both try to invest in GitHub.

1:35:02That's a funny story for another, maybe before it drinks later. So I think if I remember right, another firm did that at a very high valuation. And at that time, a moment that seemed, that that seemed crazy and was actually a good idea. It was like a hundred on...

1:35:16750 I think was the post 100 100 million on 750 post but like at the time for a series like that was the first institute There might have been secondary selling one of the things I found is when the secondary selling it does tend to clarify People's interest in price One thing you're just selling does you know you know equity on the CAD table But when you're selling your own shares you start to get really focused on them But you know, we're not running an auction, but it is the highest price you see all the sudden, you know, that seems to be the right answer Anyway, so the point is that you know, we orient towards extraordinary. So to get close to benchmark, get close to extraordinary, who are the best entrepreneurs, you know, build that rapport in 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, you know, or serve on a board with us with one of those entrepreneurs.

1:36:08I guess there's some self-serving interest, we could say send us your best investments. That will help. That our responsibility is to be the best introduction that you make if you're looking at a great company. 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. That's If each of you have a sort of bias on things you're obsessed with like Chathen you wake up in the morning and you look at net retention rates like it's just you're I don't know what I'm trying to go with some boring enterprise software thing But like Chathen just like eats leaps and breathes sales kickoffs

1:36:59This is getting better for me. This is, you're just digging really. Yeah. The chase that is so far underground right now. Well, he showed up. I'm really grateful for it. He did. He's here. He came all the way here for this. Yeah. Are you looking for, there are, 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? Like, do you look for where do we need additional strength? Loosely. I mean, I think about it and it happened. It didn't, 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,

1:37:55you know, the partnership the four were predominantly consumer investors. Like Peter was working on Twitter at the time, obviously, Bill with Uber, you know, Mitch with Snapchat and Discord, and Matt having just come off Instagram, among others. And like, which that's just, 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. And then the, you know, lucky enough, the first investment that walked in the door was confluent. And for me, and so, but now if you look at the group, it's almost like, it's almost turned, right? And in the sense that there's a lot, lot more enterprise heaviness. That wasn't intentional. I don't think. I don't, like it didn't come up, but

1:38:55It 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 Chathen joins and does modern treasury as an example, Like, or Sarah joins and does chain analysis. Like, that wasn't intentional, like, oh, there's like 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 semi-conductor expertise. Like, we have no semi-conductor expertise anymore. Like it's you do. Oh, no, no, no. A semi-conductor investment. Different thing.

1:39:52then having expertise in it. And so I think that 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 it's been expressed because they have experience in areas x, y, or z. And the underlying genotype doesn't actually get our attention.

1:40:20So you would tend to lower your solitivity when someone has some background of relevance. The issue that you're seeing at benchmark today is sort of a question of where is the equity value been created? Where are the $10 to $100 billion outcomes of the last seven to 10 years? Well, consumer has been a little more femoral in that regard or a little harder to capture because of the income and CFX. So what's going on in the phenotype of the firms that 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

1:41:16what it 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 the still the beginning quarter of 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. 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 a little increments at the end. It's sort of like, you know, a Feynman complaint about this in physics, which is like, if you came 30 years after the theoretical relativity, you were sort of cleaning up the mess. Yeah, whereas the people were there the first three years looked like geniuses, even there were thorough rate physicists. They were working on first rate problems.

1:42:06We 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. 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.

1:42:35This is why Eric is going to become one of the great consumer internet investors of the next decade. No pressure. But, you know, John Doer, Mike Meritz, my former partner in Jim Gatz, those are the people who've shown that you can do both because the underlying connection with the entrepreneurs, they're not so different.

1:42:52There's similar Gestalt and Chathen's next to him. He'll probably beat there. Chathen's still going to beat the sales kick. Already crossed the line with SaaS. Even if you look at the greatest companies, Amazon, Microsoft, Shopify, Adobe, Square.

1:43:13Like they're all crossover, right? Like 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. Our LLM's just going to be a consumer thing absolutely not. Exactly, right? Like the first version of it might be something like Jasper, right? Which is actually a B2B product.

1:43:31But there's 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 do an LP episode with Mutiny, and they're using GPT-3 to like generate landing page content. Yeah, yeah. I think the technical, like, it's not art.

1:43:57The founders and entrepreneurs know the product. They know the technology. 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 that's the part that we can partner on.

1:44:24How many success stories are there in venture? And even through benchmark 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. And having that insight, that's the part where you're like, you're sitting 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.

1:44:55Nobody's all has said nobody's put a blog post down on it. Nobody. It's an insight and that insight is It that's the magic I think like if you did Yes, that's obviously how it should work And that's why I think where I would say like to say there's a specific specific sort of Set of experience one need it like would imply would be maybe thesis driven. That'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 to check or a net dollar attention that's got to be a sort of like, what was I talking about? A net dollar attention. How did you guys deal with so? In my prior life, I was trying to do that for, you know, a living poorly. One of the hardest parts I found about early stage of it, I totally agree with everything you're saying. You guys can vote with your feet.

1:45:52You 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 days can get kind of depressing. You can learn something in 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 at. Or you can help someone who is great. Maybe you don't see it entirely, but someone who's fantastic and helped them. And they'll teach you something.

1:46:21And you'll learn something and you'll just ask questions and You know they'll tell you and you'd like learn. There's a firm that show our main nameless Came in they said why don't you have a clock in your wall? I'm like I don't know because then maybe we're in a meeting when all would be in and we look at it It's not so good. And his person said no we move all our clocks six minutes forward. So if it's a bad meeting, we can get out. So that's the point of deal with it. We didn't do that. Like people suggested this and they did that. So I would just any time you go to enter from check the clock on the wall and look at you and then you know, are they playing this clock? Doesn't work. Yeah. I was looking at it earlier and David and I made a comment to each other like that is a really subtle.

1:47:07way to put a clock in the room, but if it doesn't work, it doesn't work. It's two-thirties time for dinner. All right, it's my choice today. We got to ask before we can't let 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. Okay, you got to unpack that.

1:47:35God, Peter's just on another level. I mean, I'm feeling comfortable. For context for everybody who doesn't, so you 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 to challenge us as well.

1:48:00Yeah, maybe I'll loosen up the response. We don't know what we're doing. And Blake is amazing. And you meet Blake, you want to work with Blake. Steve, find a way. And I think that is it a program? No. But, you know, Miles seems to like, Miles just got a British accent. It's a little hierarchical.

1:48:21And he should hire an associate. I don't want to work in that associate. Bless his heart. But, uh, what do you call my junior partner, baby partner? You can hire a baby TV, but you won't become too, um, I'll spare you. Blake is amazing. Yeah. And see me, Blake, you say you find a way. Yeah. And, um, It's been a pretty good launch pad that turns out for people come in for our non-principle principal program. You don't talk about that you're talking about. Yes, because we don't 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 inter-fundamentalist, you need to have a conversation with that person and tell them to calm down.

1:49:05Because you know now that doesn't mean we're gonna 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 are In body or values, but in a different stage in their career that's okay with us. You got to break your rules when you you find any set of encircumstances. You do. I've definitely found two like maybe this is like an institutional version of this like the times in my life when I've held to tightly do something is when like, that's like your head. 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, but a fellow. It is 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 to. And we said Blake.

1:49:55You 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 principles. We have a principle. We have EIRs. We have venture partners. It's just you're trying to figure stuff out. That's true. We have venture partners. You don't think they're going to try investing, but you guys did Dropbox. It's just you come to the table and you say, I want to do this. I want to go explore this area. I want to go work with this person, and you just kind of figure it out. And like, it's not always straightforward, right? Because there's 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, you know, 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

1:50:52the relationship we all have and how we work together as a team and I think if we preserve that then anything else the fees are to be used for exactly those kinds of experiments and and those types of traps and then and you can do anything you want with that. I think this is the longest discussion we've had on the idea of a principle program. Wait, we're here to provide value to you guys. How can we help? How can we help? I also think about How do we think about EIR? So, you know, Eric had worked with Josh at Benchling, and Josh was going to leave Benchling 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 call 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...

1:51:47at 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, which is airplane, which Eric is on the board of. And, you know, that wasn't sort of like this. We have a hyper like thesis. Yeah, yeah. And we need to go attack this thesis. So let's go recruit some EIRs and let's go set them up. And let's give them a, it's not of that. There's so much beauty and amazing things that can come out of just like organic development and opening yourself up to 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? I think that's our 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.

1:52:40And I think we had just a little to it. I got to say it felt extremely weird to be naming each of you in that episode. Like when we did our Sequoia and Andreessen episodes, like these things were about firm strategy and like 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 like you care about and invest in. And on the one hand, I'm like, I feel gross. Like this feels really reductive and strange and pointed. And in 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 and so I think like if you look at even when it was Bill, Peter, Mitch, Matt, you know, it's 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 you know, Matt was

1:53:34working with consumer companies, and he was on the board of duo, which was a security company. And a son, right? And so, um, hey, I company. All right, so no swindlers. Right. And I think if you, 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 were 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.

1:54:04Let's all learn together. Let's figure this out. And it's it's never the conversation that I've seen in other places, which is like, whoa, whoa, whoa, whoa, whoa, stay in your sector. Like, well, I went on a drone kick and definitely Peter was like, stop.

1:54:22Stop droning up. The only way to kill the conversation about drones is we brought in D-drone. That's the like the shooting down the dude. It looks like, okay, I got the point. We didn't do that. It's probably done pretty well. Yeah, probably was a little... 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, something like books are written, because journalists tend to write the story from perspective of a loner who's projecting this sort of Shakespearean plot. If I was there, what was the intention of it? I read these books about us at Uber, or Twitter, or we work on 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,

1:55:19Deep commitment to equality that Bob feels per me. It's to this day through everything we do and from the way we treat our People that are on the investment team and to the notion that you know, we book most of our own meetings like I you know, we do see ourselves because we're not below anything or above anything and I think that that that's the through line that you captured so So well, and I think it was, as you say, asymmetric. And was it in reaction to the era's leading venture capital? 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 it's, you guys got to the central core of that. And that comes from now, really from Bob's history. And it's, you know, to say it's about our companies, right? The founding two or three employees set the culture.

1:56:12and it doesn't change unless there's some catastrophic event where it has to get reborn. But good luck with Elon at Twitter. You know, 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.

1:56:37at the benchmark culture, and we haven't done it yet, but we're trying. I think Twitter, I was like, yeah, we have a, we have actually, there's been a lot of discussion in the acquired Slack about like, why have you guys not covered you on Twitter and just like, no, that's not what we do. We're not the TMZ of Silicon Valley. Well, I have eight years of experience there. All right, well, we should end it on that now. Yeah. Thank you all.

1:57:05Thank you. Thank you. That's a lot of fun to eat. All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig. Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale. Yep. In the...

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1:58:09Ah, 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 were great. They were very gracious hosts. Yes. Well, we love your feedback too. Please chime in at acquired.fm slash slack. Coming out with us, get your sweet t-shirts from the merch store at acquired.fm slash store. We also have a dad hat, this 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 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.

1:59:03Now, you show up like wearing appropriate hats whenever we go, visit various people around San Francisco. I often see you in their merch. It's a premeditated decision. 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.

1:59:32of your choice. Without listeners, thank you or thanks to the very good people at Benchmark, and we'll see you next time. We'll see you next time.