Ben Sun, GP at Primary VC: Building World's Largest Seed Firm

Hi, Ben. Welcome to Injurth Grace. Hey Grace, thanks for having me. Well, I'm so excited for you to be here because I feel like you represent the New York seed ecosystem. And since you guys are both such an amazing brand there. And before we dive into the conversation, I want to give a shout out to our sponsor. This episode is brought to you by Verivine. If you are GP or LP looking to simplify capital racing and deployment process, Verivine is here to help. Trust it by over 800 funds and managing more than $2 billion transactions. Verivine offers a secure streamlined payment platform design, specifically for private capital markets. So go back to manual reconciliation and repeat follow ups, race and deploy capital faster and with greater transparency. Ready to make your fund operations smoother, visit Verivine.com and see how easy it can be. Okay, so to start the show, I would love for the audience to continue a little bit more. So you create it your own like company and then basically I think like it was you race like 20 million back then. I feel like that basically means like you raise like 100 million back then. Absolutely pull out today's market, but why don't you talk about the core lessons from the founder era that kind of like transform you into a founder of a VC firm. Sure, yeah, I mean, I was born and raised in New York after college, I worked in investment banking for two years. I was working during the beginning of the dot com era and fell in love with what was happening with tech and realize that I didn't love banking. So I became a founder. I bootstrapped my company on my one better apartment in midtown Manhattan, starting back in 1996, so a long time ago. And then after bootstrapped for two years, eventually raised about 20 million dollars of venture money, got through the dot com crash. And got the business reprofable had about 150 employees here in New York and then ran the company a CEO altogether for 12 years until we sold it. And you sold it to a modestly good exit, but getting your back to your question of like the learning's there. I'd say the number one learning and maybe this is kind of what's created my arc as an investor of what I kind of you know, anchor it on. Is this kind of saying that we have at the firm, which is startups are hard and founders deserve better. And what we mean by that, when I look back upon my journey as a founder, I said, you know, with my investors, you know, kind of beyond the capital, actually really that helpful. And in reality, unfortunately, it was, it was basically, you know, not really. And I always felt like because they actually weren't that hands on and helpful, I think they didn't totally understand my business. I didn't want them running my business. I want them to be better partners and more aligned. And I think if you don't really kind of dive in and really understand the business, I think you, I think to be a really great strategic thought partner to a founder. I think it's hard to do. And so I had a pretty much a simple premise of like, how do I kind of build a venture firm that I kind of wish I had, you know, when I was a founder. And that kind of took me to the next step of my career. Totally. Okay. So I want to start with like one thing I thought were like really interesting is like, obviously right now you guys are very well known in New York, but starting the fun over, you know, like 12 years ago, technically, like, how do you think about, let's separate. You're like the 12 year journey into like first chunk, which is the first four years of like you trying to like get the best from their building a brand. And then to the middle trunk, which is like scaling and like, you know, scaling the team, the font size, like investing, helping founder. And the third pillar right now, I feel like you guys built such iconic brand, though like I feel like it sounds like a overnight success. I mean, obviously I've heard of you guys. So LinkedIn and other people on the outside, you got they all went to like a primary summit or like, you know, all that kind of stuff. So how do you think about like the journey look like for you as a founder of this phone. And how did you kind of like visualize the vision back then was it like very similar to like you have thought of like 12 years ago. Yeah, that's a great question. So I think where I started off grace was knowing that like I wanted to focus on like how do I be, you know, a real incredibly aligned partner and value add partner to the founders I work with. I realized that like number one was I need to pick a sector. You know, I remember initially when I decided to invest and help founders. I mean, I was getting I was getting pitches for everything right like a new way of doing wire transfers or, you know, it was just to, you know, social networking companies to, you know, some martex software. And I kind of realized that like well, to me to be a really good thought partner, I have to go kind of really deep. And so I started focusing not only on just consumer, but a more fun kind of e-commerce and e-commerce broadly defined as like it doesn't have to be a transaction. It's like a product that should be shipped in the box, but it could be, you know, something you transact digitally for something, you know, more digital product or service. And I started just getting kind of really deep there, even though my previous company was a consumer company, but it was a more of a social media business. And so I started really kind of getting deep there, talking to investors that have invested in the space, talking to the founders and it, learning why companies failed, as well as why some companies succeeded. And kind of picked the sector of our own e-commerce because I often felt it was like fairly overlooked right like I realized that there were a bunch of companies that were basically got crushed by Amazon. You know, like I'd meet some company that, you know, did e-commerce and camping equipment or, you know, hair products and they seem to be a good business and then Amazon suddenly got into it and I realized, yeah, Amazon had just the efficiency of scale and owning customers across all these categories that it was hard to compete. And then you realize that we're like, we're Amazon, you know, wasn't going to compete or paying other categories that you weren't going to get into that they thought were very big. So I think number one was kind of going deep in a certain sector. Then number two, I think in kind of building a brand, I think I was mostly leveraging around the fact that I ran my company in New York for 12 years. And I had already built a good network of, you know, kind of founders and operators that knew me. And so I basically said, you know, I should make really kind of New York my beach head, like make sure, you know, I really continue the network, especially around New York. And New York was an interesting time, you know, when I started doing this basically on the investing and incubating side back in 2000 and basically end of 2009. New York wasn't the tech ecosystem it is now. It was a lot smaller. And it was just burgeoning because really the financial crisis, right? Like New York was always a great magnet for talent, but all the best people were in investment banks and PE firms and hedge funds and Bane and McKinsey or law firms. And that started this change after the financial crisis where you saw a lot of people leave their Wall Street jobs are their consulting jobs to start companies, right? So Mark Laurie left his job at Deutsche Bank to start diapers.com and jet.com Dave Cabo left Allen and code to start Warby Parker, Alexa Vantoba was at Morgan Stanley before she learned best Jason finger was a corporate lawyer here in New York before he started seamless, seamless grow up. So you started seeing that kind of transition of talent and then when those people had success, people in the New York community that were kind of a young hungry talent said, you know what? I may not want to work at Bane and McKinsey or. It's acts and let me go join the next kind of cool start and I started seeing that bubble up and I said, look, I just got a network in kind of this New York ecosystem where New York was hitting this like big inflection point. But then we looked at kind of the investors in New York, you'd say, all right, who is based in New York that was focused on New York that can lead a seed round or do a seed round. It was actually really small like you can kind of on one hand, so. And you're kind of looking for that as an investor, it was like, hey, I can go try to chase stuff in the Bay Area, but my network doesn't run deep there. I'm not based there. New York, it's like my bread network ones deep here and it was a lot less competition and it was a market that was at this big inflection point. So I thought about that as sourcing with a focus, a geographic focus on New York as a way to also get leverage and better use of your time and focus. I tell people, you know, the initial focus on New York, it's not a constraint. It's not like I was saying, I can't do deals outside New York and I put my constraint on it. That's where you want to focus your time and your energy and where you get the most leverage. I tell people, I'd rather be cherry picking the best things in New York than be mediocre globally, right? So that's a big that's that's how I thought about it. And so the combination of those two on sector and then. And then sourcing is the first step, then there's the winning and support, right? I think winning and support are really tied to how I want to approach being an investor, which was. I didn't want to just, you know, write a passive check around and maybe do a check in once a while. I was like, look up and it'd be, you know, a board member, maybe a strategic advisor to these companies at minimum and actually get my hands dirty and really try to help these companies. And so, you know, in that early parts of my journey, when I started doing this, I was doing this with my own capital, starting after I sold my company. So about the end of 2009. And one of the early successes I had was meeting. This founder playing pickup basketball at the weekends of a local high school gym here in New York. And this entrepreneur was working on basically an e-commerce idea and help them with that became an early investor became one of the first board members. And that business became, you know, this company coupon, which is the largest e-commerce company in Korea. It's about a $50 market cap. And I'm still on the board. It's now been, you know, 15 years. I would say the work that I kind of did in helping bomb in the early days was really, how can I help in things like marketing or product recruiting reason capital. And being much more hands-on than normally you would see from an early stage investor. And if you then become that kind of helpful, I think you become a better strategic thought partner to that founder as well as then you start gaining a reputation of being really helpful. And the founders learn about that and they sniff that out of they, you know, they're thinking about having me as a investor they would talk to a bomb. And then they would say, look, you'd be kind of insane not to have them help you. And that's when you, that's when the winning and the support kind of come together, which they augment the sourcing and the deal flow side of it because I tell people, I think reputation is your best form of marketing. Again, I take this step back and I always thought like the, the, the key nor start to all this is this nice notion of start of the hard fences are better. How do you, how do you be the most helpful guy in the cap table and then post that you just start working with your resources and focus areas to figure out how to best execute on that. That was really the first kind of arc in the journey of me investing. I did that for four or five years with my own capital about 10 deals altogether had, you know, four unicorns out of that business with coupon, you know, 50 billion dollar market cap. So just build a great kind of initial track record and then, but I was doing it one man show and I knew I couldn't scale that. And then that's when I co founded primary with my partner Brad and we co founded primary and basically into 2014 and started investing in 2015 under the moniker of the firm we co founded primary. But then thinking about how we can really kind of scale and build in the resources so it was no longer a one man show. And in charter path on like how we can try to build, you know, the best see firm in the world. So, and so that was really kind of what took me on to that that kind of next chapter. I have so many questions there. So like I'm just going to start with like I've been furiously taking notes. OK, so I have like so one of my questions like you are on the panel with Mar right so like Mar was a prior gas on our show as well. So like I think like pair strategy from my I this is like not from our or anything, but like I'm just saying like I feel like from the Bay Area ecosystem I feel like they're very, very popular in like the Stanford network or you know, I feel like the Bay Area ecosystem for like women founders and so like that. But is there like a easy target in New York. So for example, Columbia is there like in my use there like do you guys just, you know, have like a scout program there or like. Or also I guess like the deeper questions like since you mentioned about like you also said about this on a different podcast about like you know in New York. For example, you just name about like you know where we partner and other people like people hate consulting and they're like OK, you know, I'm going to do my own thing and then that's like when they started on a subscription business in the commerce space. So I guess like that's like a second target like who are the main startup founders identity in New York. It's not just like the banker turn founders or is it like student turn funders because in in the Bay, I feel like the angel talent or like primarily coming from like the big tech and Stanford or Berkeley ecosystem. And on the other hand, so like that's like covers like the younger people and then the. And then obviously there is like the big tax spin off. So like let's call it like. Open and junior or did XYZ that's like kind of like another popular area right. So for New York, is this more towards like student founders or is this more towards like banking founders or is this more towards like founder funders like. What's like the whole vibe there and then is there like a easy like group. And I think I think what's been interesting about New York and if you look at the founders now and I mean the most of them came because there was no existing technical system right it's not like hey I left oracle a starter company. I think most of them came from traditional industries right they worked in the best banking they worked in they worked in you know Bain McKenzie they worked in a retail business or whatever. And then they started the company. But then what's happened from there on and then people that were for them is. I think how we kind of think about sourcing is there are all now these really good startups in New York City right now you have companies that are publicly traded like you know like 100 plus of that right. So you have like on go DB data dog in Oscar health and X and Etsy and you know you can war be Parker I mean I can go on and on and on. And there are now hundreds of thousands of people that work in New York tech startups and especially at these like bigger more established companies. But these companies are pretty recent right they've been around for maybe like a decade or so. And you just go in them and you learn like who the great people are right so I like to network around and one of the things I asked folks when I meet them especially if I used to someone that I heard was like really great. I will ask them like who the three best people you ever worked with right it's so different like I never I think people never motivated to give like bad references you know. You know you're really looking for in this business is like especially when you're doing seed stage investing is like who are the like the stars like who are just special talents. And the best signal to find that out are people that worked with them. And so you go into a warri partner and yeah I know Dave Gababa and Neil Blumenthal the co founders but I also know a whole bunch of other people that work there. And I would just ask them like who the best people that you think you know you ever work with a war be. And I would try to go meet them right and get them to know them. And why that's important is that like you're building a network of all these like high signal nodes. And what happens is that you know that person that leaves Columbia or maybe worked at Google and now wants to start at in the New York office and wants to start something. We'll probably network their way around also and know some of these really high-calibre people that work at startups right. They say oh what is it like you know working at a startup and any advice here or let me get your take on. You know go to market and like I'm a product engineer person and I want to get your take on and they're great. And then building a relationship with them they'll want to they'll say hey you know you should talk if you think about starting a company you should talk to Ben right. And so I think that's how we think about it is less about like what makes New York great is like I think the the pool of talent that they're now works at startups and our starting companies. It's really diverse but what's great about it is that the like it's so new the community that being of a network and build relationships with folks is easier right. We're in a Bay area knowing other people that work in startups it's like everybody you know every cafe you will ever restaurant you talk with everyone works in startups. New York because it was more of a niche community. You know people wanting to meet me and connect with me was just easier right because they're just like yeah weren't that many VCs wanted to network with them. They're just in the community for the last couple years you know their neighbors aren't in it and I think that was really the path of saying let's go and find that great talent that's working there let's get to make sure we know them. And they're going to be our great network nodes to find the next great founder. What is like the main architecture so I hear you on like okay so you want to first of all start with like the startup. I guess like not the founder themselves and maybe like I see oh oh same or like someone who's like. It could be a star engineer could be a star marketer you know we think you know those high potential superstars are just like what we look for like you can be senior but you you may not be great. You might not be like person everyone says oh wow as a Cima or they like the top 1% right where they really like the stars of the company and really have in a huge impact. Your question the archetype and the profile I think the way that we view it is is again like if you if I if I kind of went through our portfolio and like talked about each of different founders. They're really different archetypes right like a leader who's the founder of slice you know we grew up in stand Island his dad and uncle on the pizza shop. He he was running a small like it business helping local businesses and then basically created slice or my pizza which is a is a great business it's you know hundreds of you over a hundred million dollars over that revenue is it's very profitable. He process over a billion dollars of pizza orders a you know a year it's pretty amazing that's one category and then I can probably point you to the former banker former Bain McKenzie person as another category. But meeting all those people the common tie was how strong is your network within your technical system of the really strong talent that people so I can almost tell you any of the founders to say. Hey I was introduced to them by someone else that was also great. Love that okay so I guess like so basically it doesn't have to be like an angel right so like so in Silicon Valley I feel like I can only name one company that's not started by an engineer which is Airbnb well it's still like three of them one of them is an engineer but like I would say like the for every other company it always seems like you have to be an engineer to be the CEO at some point. But I think like I was expect like more just like divers per fall people in New York to do different interesting things. And I would say don't think about New York is not being a company in a market where you have highly technical people that are starting companies they're they're plenty and there's a number of founders that we back with that kind of profile. Just because there is it's Stanford's out there doesn't mean that people that went to Stanford or went to some other you know great school didn't come here to go for the company. And you know Artem was a co founder of new was a Google engineer you know he went to Princeton and he majored in in comp size as well psychology and worked at Google for a number of years he was he was on a side you know doing building robots to compete compete and soccer competitions and highly technical person and then he co founded new in New York. Like you know but you think about that archetype of like that's the kind of talent it's like we do have engineering talent we have people that work to be in McKenzie we have people that used to be lawyers we have people that are starting companies that used to be that were product managers as a successful startup so it just covers the gamut. But that's a great thing about New York New York's just always been this great magnet for like great talent right like young people that are ambitious like it's just been the heart of what New York's been about. And so that's why I don't categorize it as like the only people that fit that archetype or engineers that graduate Stanford I think what the success of New York has been driven by just smart talented ambitious people. So I wonder I think that the pro not the problem of New York but it's like I think if I were like starting a fun in New York I think the biggest challenge is like how do I eliminate destruction just because you know on your team you guys have like six punters who rights tracks right so like they are you know Emily was like Fintag she's on the show and Sam is like how's care on the show so how do you eliminate the stuff that you don't want to look at and how do you kind of like I guess like manage the coverage because like as a seed phone I feel like you will get like thousands of pitch tag every single day there's like I'm sure like let's say call it 5% will look really great but that's like 50 companies sometimes so how do you quickly eliminate the stuff that doesn't matter. Also from a portfolio construction perspective like you mentioned about this on like a different talk has about like waiting for the right company are waiting for the great company is that just like spam prey vibe how do you think my portfolio construction in this sense among the six different category people yeah so if you take a step back and think about seed. So it's a great question on coverage right so there are last year there were about over 5,000 seed deals done in the US alone so just in the US over 5,000 about 15 billion dollars was invested in seed last year. Let me give you a sense of that what that's been like how that was 10 years ago that's gone up by 5x right so 10 years ago about 3 billion dollars was deployed 10 years ago it's up to 15 billion right now across thousands of deals right that's a lot of the cover right and especially hard at seed because you know to to to see those 5,000 seed deals that got done. You might have had to like imagine looking at 20,000 things because a lot of them will not even raise a seed route I tell people sourcing at seed is so much harder than like series a or series B because if you're sourcing series a deals you just have to find the companies that raise a seed round right go to pitch book or crunch base look at all the companies that raise a seed round and go talk to them. We're trying to read you know invest in series B go go to the pitch book look at all the series a deals go talk to them see there's really no such less right there's some crazy deals done but most deals that are getting done push straight to see. And so if that occurs like you're just dealing with a really noisy market right so you have 5,000 seed deals that have over 5,000 happen a year how do you figure out what to focus on how do you then source or cover. One thing that we think about is well there's 5,000 seed deals but if you look at the historical seed to unicorn success rate. It's been about 3% and this is 3% I'd say nationally. So only 3% of companies that raise a seed round get to unicorn status right as a seed sage investor or any venture investor you're trying to find the outliers you're trying to find the big break out companies the big exits so if it's only a 3% success rate. 5,000 deals that seed deals that happen last year I would say only 150 really really matter right so think about that 5,000 seed deals only 150 that matter. All right so those 150 that matter there are now thousands of firms trying to find those 150 right you have great firms like pair you have angels you have single small solar GPs you have all these multi stage funds are now doing seed so now you have thousands of firms thousands competing for that right. So when you take the step back and say oh wow like the market's big it's a lot more efficient and competitive how do you how do you win how do you find those great deals how do you make sure you're covered. You know because like you can go and link in and if you have a really interesting you know operator founder background and you changed your title to something working on something new or stealth you're going to get 10 messages tomorrow like everyone's using software to try to sort. This is what we're doing you know thousands of firms competing right for these 150 that really kind of matter so how do we think about it we think about. Scale as kind of our advantage as a firm so we're currently investing at about 280 million dollar seed fund right and people like oh that sounds too big for a seed fund I'm like there was 15 billion dollars invested last year right 280 million dollar seed fund maybe we're writing somewhere in the neighborhood of like 60 million dollars and see checks a year. That's not even 1% of the seed market the point of seed is just really damn big so how we think about it is how we think about scale is that we have these as you said six partner check writers they spoke specific sector because out of these 5000 seed deals and these 150 big outcomes we think it's going to happen out of sectors like health care digital health care. That's software infrastructure Fintech I mean all these different sectors so we have partners at the firm that really focus on specific sectors and they go try to source and cover as much of those kind of seed deal activity in New York and beyond and they try to then by being sector focused they feel like they can kind of optimize their time on hopefully looking at better. Better companies and figure out what the diligence and then more importantly what we then deliver on as a firm is a kind of a platform or resources beyond those great investors where we have over 50 people that work at primary only a third of the firm are investors most of the firm are actually operators to help with our companies on things like you know go to market recruiting strategic finance. And so we bring these operating resources to the table to take these great investors and say hey I can even now deliver you know three times more value to the founders because I can give all this operating support. So we really think about scale and the the platform of what we're doing to support these specialist investors to basically go out and see a lot of deals and then we know when the deals that they want to win. I wonder so how do you so like since I know that you guys have a you know as you just measure like 275 million C phone and then there's like 150 million select opportunity phone assuming that's like the following phone so the C phone investing like the first track and then the full 150 is like you selectively pick a few companies to invest for long tracks. Yeah, the way that we view it is we we have these two separate funds because the core fund is really we think of it as our kind of our high beta product. And what I mean by that is you know you can't think of you can't think of venture as one beta right meaning like risk reward profile. Someone doing a pre IPO deal versus a pre-seater seed deal it's a very different risk reward profile. And ventures just such a large asset class where you know again three the four hundred billion dollars was invested last year. In venture with only about you know 15 billion in seed right so we're talking this like giant asset class and for you to say oh it's the same kind of profile. We think that's not the right way to look at it. We want to take our core seed product and say hey LPs when we deploy money we're telling you what you're getting you're getting what we believe our high conviction we think you know like cherry picking the best seed deals in the market type opportunities. Now out of those opportunities a whole bunch will fail because it's a seed as a high risk game. But then the ones that break out if some of them are true break out can be these long term compounders that we think it be you know super big. We want to then concentrate capital behind that and then we use kind of our select fund to follow on and write substantially much bigger checks. It's not going to have the same risk reward profile or the multiple basis but by concentrating a lot of more capital behind it it has a really great kind of IRR benefit. So IRR profile and so we use kind of the benefit of both to work in hand and hand. But it's all in line with our same strategy which is you know we are investing in the early parts of the round. We are a true partner so we usually take a board seat we have operating teams are helping with the company not just in the early parts but through the journey of the company. And because of that we have to we have the right then to follow on invest as well as the deep insights to allow us to figure out what are the best companies that we should follow on with. And that's how we look at and say the if we start with that North star of how do we become the most helpful guys in the capital to hey how does that translate to better investment decisions. We think it's not just in the early parts of when we invest but it's in the later rounds as well. I have a question by you don't have to answer maybe this says it okay so when you're like racing the two funds like constantly see people raise like opportunities found but I wonder like do people raise it at the same time like just on the same Alpe be like hey yo can we like do 70% this and then 30% that on your check. Yeah it all depends I think some firms do it kind of again opportunistically when they have enough companies in the pipeline to say oh I think we can deploy a fund in this smart way it's also had you define opportunity funds some say hey we will invest in deals that aren't in the existing portfolio. Our fund our basic opportunity fund or select fund we call it does not do that does no net news it's only existing portfolio companies. And the reason why we do that is that we don't want to create a fund just for the sake of creating a fund we want to say is there a way to produce alpha is there a right to win. Right so you need to like I don't want to be hey I'm just going to create average returns you want to say what gives you an edge. And for us our edge is on the least an opportunity fund is access and insights right access because we're investing these companies we are valuable for our rights we're on the board of these companies we're deeply involved these companies have really the founders that gets access to the existing portfolio companies to make sure we get our kind of meaningful kind of you know. Corrata rights are more but then the second part of the inside side and the inside is by being actively involved you know so much more about the business from the inside then from a investor trying to underwrite it from the outside. And that to us is the bigger kind of unlock on how to find alpha right where you're looking for alpha is this asymmetric you know information on risk reward right. Where the market doesn't see the true risk reward profile they're like hopefully underestimating underestimating it we want to find those profiles will like the market's price pricing on this risk reward when the word you know when the reward over the wrist side is actually so much better so let's actually you know press our bets more aggressively. And that's the stuff that we're kind of looking for and you only can get that asymmetric information in our belief to truly be an advantage if you get that information from the inside. I wonder so for like when you're like building a fund with your co founder like how do you just like split the work does 1% primarily on deal hunting and then 1% primarily on like raising or like how do you I guess like actually run it's kind of like you and your co founder are like a startup founder right and then like you have to like hire a bunch of people who are investing and then there's like the you know operational people. And also you guys also in cubic companies or I guess like as a CEO of the fund like how do you think about like what to do every day. Yeah I think that's evolved I mean when we first started we were a six person firm and how we divided the work was a bit different from now now we're you know 50 plus people. My co founder I brought really I think we just find hey what are we really great at and where did we get energy around. And so I think we were we were kind of a hat down that we have a number of partner check writers where we kind of play kind of co CEO at one point at one part of our job and so what does co CEO mean like we want our partners to have agency their sourcing their deals they really have a checkbook. Even our kind of IC process is less about like is more about like us potentially vetoing a deal and we've never vetoed a deal. You know basically we'd only veto a deal if we thought it was it was causing like an everdick as a matter of risk for the firm and the fund which you know if you got a checkbook from us it's most likely not going to do that. So our role as co CEO is just helping the partners and check writers be really kind of thought partners on how they can be great investors. And so that's the kind of work we do with each of the partners as kind of a CEO role is helping them think through their strategy helping through think through their tactics or initiatives so they can be successful. All of those things that we can take our learnings as an investor to help them. And so we put that kind of co CEO bucket as one and two there's with that much scale of 50 plus people there's just operational things right there's budgeting there's administrative issues there's people development across the firm. There's that bucket of like you got you got to kind of run the day to day and make sure that's like what well really Brad and another general part of the firm Cassie young who's amazing and especially Cassie takes on a lot of that work. It's just a lot more operational complexity when you're you know a 50 plus person organization trying to like work in a very kind of high fast pace high powered way. And that's another kind of bucket of work another bucket of work as you brought up incubation and things like that. I think we're constantly we think of ourselves as a startup we're constantly evolving and reading and with that there's kind of like R&D right there's things that we're going to test and some of it's going to fail and we're going to kill it and some things are going to work and we're to say hey how do we continue to scale this. So incubation was something that was done on the side of my desk at the first fund and now we have a you know a dozen person operation supporting of our founder or check writers on incubating companies. But that starts off an experiment smaller scale and you figure how to scale that up that's a good example as like probably where I play where you know if you had to say kind of Ben is ahead of like R&D as another part of my job that's a big part of it too. But we're also you know Brad and I are still the investing and incubating companies and managing a portfolio that's under us as well and you know that's you're kind of always in the game as well. Totally okay quickly saying hi to the audience will comment hi Samuel I want to reward two people who are brave enough to comment so I wonder so how do you think about. I guess like you know there's like a lot of funds so basically I'm thinking about how you structure your phone you mentioned about like you know you guys have actor and go to market or in like professional support. And I think a lot of funds have that but like you know for asin z I would say like the most I guess like from what I've heard from like other people it's like you know they have an exact network so basically the fortune 500 they just like bring to asin z and be like. Connecting them with like professional companies and so that but and then there's also you know for example signal fires like famous for like hiring people like just have like a you know. What I'm calling down store steroid to like you know find that it's like data from firm is like helping hiring that's like a core by that like how do you think about like building that and then like which is there like a specific thing that you feel like you want to be famous for or like it's more of like a well rounded you know if you need marketing we have this guy if you need like go to market we have this guy like or how do you think about like the whole. Support side of things yeah so I think about it in the kind of to criteria primarily one is what are they like the biggest pain points for a founder like what's keeping them up at night and so our three current three big buckets are hiring great people. Getting in front of customers raising your next round right those three I like when I think about a company's success right like those are just so huge. Especially when companies are at the seed stage right you don't have enough team and resource you don't be cheap people obviously don't recruiting team you don't have a CFO like how do we give you resources especially early phases of your journey that help you with solving those problems again. High and great talent getting in front of customers raising your next round so we think of that as one part of the criterion I'll talk about how you can keep that in the second the second thing that we think about as another part of the criteria what we do is. Is there like an outsource version of something like that we can support that they can get right so bookkeeping right like you can say oh you know should you help in doing bookkeeping there's a lot of third party bookkeeping services out. And they do a fine enough job right especially your only phases so we don't think that's necessary. You can say there's like recruiting from the recruiting firms are really expensive and we don't think they necessarily are really kind of they don't they work really well with super early stage startups at seed stage and they can like truly vet talent the way and we feel like. You got to be really aligned like recruiting firms are just like let me place you know a button to see and get paid versus like we're like look we're we're we're giving you money and playing for carry we want to make sure you have an amazing but that seat so so we want to be much more aligned there so we think about alignment we think about hey are they really they really servicing you start ups in a great way and so if there is no good great option there then that's the other part of the criteria can we be that great option. So those two things allowed us to figure out like oh how do we then make that happen and so out of our 50 plus firm over 30 people are in our impact team. We start with see sweet level operators that then have teams of people under them that help with those three pillars so Cassie is a general partner. She's she oversees all of impact altogether but Cassie was you know the chief commercial officers year of a 200 plus million dollar SaaS business. She worked at startups from the zero one stage but also to the scales stage and she's just like a best in class like chief commercial officer. She's revenue officer that we get to bring on and then she has teams of people under her you know Jason Gilman was you know head of rev ops a companies like compass. And then there's teams of people on the market Devside that is similar to an 8 a 16 Z that's building out a network of potential customers. And so we have that real kind of both strategic operating support that can help a founder think through strategic and operational high level issues but then also a team of you know more junior level folks that are going at it actually doing the hands on work of getting you in front of customers getting you meetings building a pipeline. That's an example on our talent side Rebecca price who's also a partner who Lindsay leads these are people in that works team. You know she was chief people officer at capsule and nigma sail through all these great startups. And then on the nether she's she has a team of people that are on the talent recruiting community building side as well that go out and service our companies in a much more bespoke and hands on way. And then on tragic fantasy. Our team there comes from operating at P&A background this is not funding fund admin we have a separate back office for that support. These are folks that go in and help you because of the early phases you don't have a CFO you'll have a head of that P&A. Let us help you with your model. Let's help we prep for your data room. So when you raise your next ground is all buttoned up let's make sure you understand your next kind of your business. These are the things that we really kind of make sure we're delivering on in order to make sure those companies are ready for raising their next round. So that's how we think about it and we do it at a such both a level of scale as well as a focus on the early stage which is really differentiated like as you mentioned. This major reason has a lot of this kind of similar kind of platform team as they so called it but most of their money thing that being deployed at later stage deals not seed. And so if you're running an $8 billion fund or you're going to really tell your recruiting people to focus on the company that you just invested $3 million in a seed ground. Or you're going to tell them to focus on the company you just invested $115 million in. And so what we kind of tell our founders is how we differentiate is our core businesses to seed and our resources to help you are focused on that early parts of the journey. That's a deep point of differentiation. For as for like portfolio construction like do you think of like since you guys invested like let's say the sixth investment partner each of them have their own sector. Like do you budget more for the SaaS people or the fintech people or the healthcare people versus consumer people or like how do you kind of like. Think about all the evaluations like so different in these days like you know you could have a AI startup that's value at like 100 million. Yeah, we don't we don't set targets or we don't set like we don't set minimum kind of targets that you have to hit someone does three deals versus 10 deals all we care about you do great deals. And so when we think about portfolio construction the key insight to me right whether you do 10 deals or 100 deals. If you think about it it's what percent of them become these unicorn companies that's what drives outside returns. So if you do are if you really kind of model it out you need you need like 10 especially at these valuations you need about 10% of your seed bets to be unicorns in order to have a you know a 3x plus net fund. So let me you know kind of walk you to that logic some people say well if you get a coupon that's worth 50 billion dollars like you really need 10% of the coupons but no. But there are I think about 1500 private unicorns right now only about 70 or 80 are decor chords right so only like 5 6% of your unicorns are actually valued at 10 billion dollars plus most of the unicorns are between 1 to 2 billion dollars right. So they ever imagine you're going to get like a decade coin every year your feature your portfolio you're full of yourself. So we look at it saying like what we're anchoring on is like how many unicorns can you get and the math is if you're going to invest it seed probably 1 out of 10 deals that you do need to be unicorns to have a good fund that we think that's how it correlates doesn't have to be exact but the correlation is we think is real. So what do you do 10 deals you need to get one if you do 100 deals you need 10 right so then the decision is well should you do 10 or 100. I remember talking to you a potential LP and they had been in venture for a long time and they had studied all these managers and said. The one of the key factors that drove outsize returns was deals per partner right they actually said those firms that did fewer deals per partner meaning like really was like 1 to 2 deals per year. I'll perform funds that were the partners are doing like 4 or 5 deals a year right make sense right if I said you grace like hey you saw like 100 opportunities and you're waiting for that one versus hey you're going to look at 100 and you're going to do 10 you're just going to be pickier right you're going to like wait for great you're going to wait for that really kind of special one and that gives you a better hit percentage right like I kind of think about baseball like you want to wait for your pitch right. I kind of say wait for great that's like that's a that's a motto that we have at the firm like don't settle for oh this is good like wait for great and yeah sorry wait. And if you wait for great you know we you'll have a higher hit percentage and that will do to higher CD or hit rate which leads to better fun. And so we really kind of anchor off of that so reality each partner is maybe doing about to maybe 3 deals a year and as a seed fund that's pretty low volume right and they're looking at tons of stuff that gets done they say no. You know last year we looked at over 900 seed deals that actually got done in the market. We only issue a term sheets for nine of them 1% and these are actually deals that got done not opportunities not like hey someone sent me a deck and they never raise we're talking about we looked at over 900 seed deals that actually had gotten done. We we were part of that process of looking at it and we passed on over 99% of them and we only wanted to do 1% and every deal we do is competitive. So so that's how we kind of think about it is we have a our construction our portfolio construction is fewer deals per partner wait for great. Each partner is doing roughly maybe 2 at the most 3 deals a year they can do more if they want but they got a they got away for great right they got to like figure out like every deal you do is great. And I think that's allowed us to have really great funds. That's really interesting so like as a phone collectively I feel like yeah because of your I guess a font size is big so like even if you invested like 50 company and the past like I don't know 3 years that's still you know very high generally highly concentrated. Yeah so think about it this way like when even someone says a $280 million seed fund I'm like remember we have 6 partner check writers so I broke that down and said if you talk to a solo GP that was running a $50 million fund had a team of almost 10 people behind them. What would you and that was doing what's called eight deals in a fund would you ever say oh how does that fun how's that fun ever going to be a good fun. I'm like well we're basically doing that time six. That's a platform that we we think about it that way so you know when people say oh a $280 million seed fund you're not going to have as good as returns I'm like no no no no like what we're doing is we we have a great investor and we have a platform that hopefully making three times more. Successful right and that way when they're deploying at 50 million dollar fund it's like it's better than being a solo GP where you don't have a brand or resources or impact team you know you have to go out and raise money we have our support like all of that is. Right on your platform yeah and that gives you the advantage I wonder so like I really like the way of you think of how you think about it so like I guess like the other questions like since like right now I feel like the crazy seeded stage is like where the venture entrepreneurs are like kind of like all waving like all like jumping into these days like because of like with solo GPs they come because like how big of a fun a person can raise typically can only allow them to invest in a pretty seed and see and like how do you think about growing your own fund do you envision yourself you know entering into later stage as well or like do you envision you staying in the same size of seed because like I was trying with some emerging managers they just want to say that big because they don't want to manage like a mega fun and they want to say highly concentrated and but on the other hand like I guess like I'm sure you are I think you are out piece of like other funds as well so how do you think of like these like emerging funds in general do you feel like in the end of the day everyone is going to merge into a platform like a primary so basically you just take you know 50 emerging and then migrate them into primary call it like you know become I guess essence but or like how do you think about like so like they just like keep doing their thing maybe you collaborate them or like maybe emerging manager they're just going to die as a category sure sure so the way I think about it in terms of for us because people ask like oh you stay focused even though you got bigger as a seed fund like one should become you know multi stage fund or get into growth and again it gets back to this like right to win plus my view on venture is the best part like there's a lot of firms that say we want to be the best venture firm in the world but I'm like how do you define that by as they gathering or by actual like returns and I want to be measured by returns I want to say we have the best venture funds in the world right that's how you should be measured so what does that mean then like returns on a multiple spaces I think about that multiple is an IR not a dollar volume right if you invest a billion and just return a billion and a half like sure that's a lot of money return but I want to see how to produce five X funds seven X funds 10 X funds and I think that opportunity really lies within seed right the big opportunity and getting great performing funds is if you can figure out a new seed really really well and so I think that for us if we can create a right to win in seed and find alpha there then I feel like we can have the best venture funds in the world so that's why we're focused on seed as well as incubation about 30% of the deals that we do in the fund currently are incubations and the benefit there is you know cost basis prepared to be a full number of other things so that's how we think about where we focus our long term vision is that we want to build the best seed funds in the world the best venture funds in the world by focusing on seed on your next part of question which is all right this seed ecosystem like who wins in this right so again like when I talked about thousands of seed deals only 150 matter there's thousands of seed firms competing oh it's thousands of firms period right so angels solo GP funds platforms like us or a pair but my you know multi stage firms right they're all in the game so who wins that right and that's ultimately the question and I think that question to us is all right well founders have more choice than ever who's going to be the one that the founders say all right these guys have a brand they have a way of really differentiating that says I need to pick I want to work with these guys and that to us I think has to be part of your story if you want to compete and it's not going to be a winner take all right but it's going to be those firms are going to be successful have to have a right to win and that right to win is again founders have more choice whatever why are they choosing you and that's because the market is so big and markets are so big now they become efficient which means is both supply and demand is a lot of it and they can all find each other and they have more choice and if that happens then founders have more choice and you have to have something that's really differentiated so when I meet emerging managers and they're kind of telling me their story I'm like what you're right to win the founders going to choose you you know we show up and compete against you how are you going to beat us right and I think that needs to be part of the narrative for any emerging manager if they think about how they're going to be successful over the long term I wonder so like what is like I think because since you're like a GP who have raised like hundreds of millions of dollars right so like when you are chatting with like LPs what are some questions that you would get and then like I'm sure there's LPs that may ask like you one person may think oh your strategy is amazing another person will be like okay you should do X Y Z inside how do you kind of like do you pitch people with like a different light or different emphasize or focus or how do you deal with like when people give you two completely different feedback from the LP community yeah I think what we've done breaks a lot of norms right and I think LPs are interesting because I think traditionally like they have a certain type of framework of how they think about a successful venture firm right so in the past it's been primarily like you have to kind of stay small and boutique they think about like a benchmark and equal partnership and what that's like oh my god every once obsession with benchmark is insane because obviously I feel like they're very respectable firm but like whenever you ask any emerging manager everyone's like biggest I want to be the next generation yeah exactly yeah and I think the more first principles way of looking at it is hey over the long run like in the market where there's more choice than ever why did they choose you now benchmark has an amazing brand and and venture is one of the few businesses there's a one LP that told me that this great insight he was like Ventures the only asset class where over the long run it's not a random walk right the notion of random walk is like you know if there's alpha gets chased out because markets are efficient the reason why in ventures because founders will choose certain firms over and over and over again as a preference because of their brand because they have to raise the next round right so if you raise around from benchmark at a series A your series B may become probably a bit easier right more more firms will look at that deal because of a benchmark brand so in this business having brand and and upholding that brand actually is a competitive advantage so I don't want to poo poo benchmark I mean they have amazing people that work there but most importantly they have an amazing brand right among founders and other investors so that's as a value prop to the founder you'd say that's a right to win when we first started primary we never brand right like hey you know like what are we going to anchor on and we had to anchor on well we have to provide so much help and support that it's radically better than anybody else and over time we're going to build a brand because we're going to back great founders and do great deals and other founders and VCs are going to say well that's a primary deal yeah we want to look at it and now I think we're hitting hopefully that next step of the curve and so I think about it that way when we think about like what you're again competitive edge and you're trying to win we think about it as like yeah you need to have that kind of unique story over the long run about like why founders choose you and that's really the key to it. I love that I wonder so like is there like a fund that you personally admire that you feel like you know if I build a legacy it got to be this yeah I mean people have asked me I remember one L well you asked me also unlike the LP side of like you know what do they ask and what's been the more challenging thing I would definitely say our approach is very different you know this hands on support does it really work hey you're scaling up the firm can you actually scale up a seed fund does a math even work out you can deliver out such returns so those are all questions that we've gotten and luckily you know we've raised you know over a billion dollars of last you know a last decade since we found it to have LPs really support us which has been great and luckily we've delivered a really good return so far so I think we we kind of start there you're sorry grace your question was on oh like a firm that you I'm sorry and so I think about when I think about firms I really respect I think about like they've done it differently and they have this like structural advantage like a real structural advantage that's even beyond just brand I think historically it's been a business where you have a great brand that's your core advantage and then I find like there's some structural advantages so who's probably the the one of most respect that structural advantage I'd say it's YC right so YC because they built this accelerate a model and this accelerate model is like yeah they get all these applicants because the YC brand and what did the liver is incredibly defensible right the also a structural advantage because this is accelerated model you know they're initial check where they take six or seven percent is at such a low cost basis right so they can produce great returns because they're getting incredible deal flow from these candidates are applicants to try to YC and then they have a structural advantage as well because of the accelerate a model of like hey they're putting in three inch grand for six to seven percent and if you think about that that's a really low valuation right so that's a really low cost basis and so if you think about delivering outside returns or alpha you got to either have more hits or better hitting percentage or better cost basis and they do both and they do in a really long term defensible way right like the YC network the YC brand the YC infrastructure the YC community that's a major advantage it's going to be hard really hard to de-throw them and there's a lot of other accelerators that are trying to build the next YC that it's like it's hard to imagine who's going to be able to get to grow them in the near future so I think and they do it all focus on early stage right which is amazing right such the best part of the asset class etc so if you look at the track record they've had two thousand companies go through their core to the last decade they've had over a hundred unicorns and because they've had a hundred unicorns they actually got a lot of decker coins they got you know Airbnb and Stripe and DoorDash and Instacard and GiveLab and you know Ripling and I mean just I mean amazing you know amazing portfolio and so when I think about you know structural advantage great returns early stage great replication by founders I would say that's definitely a firm that we really admire how would you belt like the New York YC I think what we're trying to do is in the same line with and I would I would say we started with a focus on New York but now actually in the current fund the majority of the deals we've done have been actually outside of New York not intently it was just the fact that we were covering New York so well and then we started having a really a right to win outside of New York so we've done the area deal Chicago deals you know Boston deals etc. How we think about it is again highly of we're mimicking YC but we're mimicking this idea of like how do you get great deal flow how do you get credit picking how do you get a infrastructure advantage that's your incubation and I think that's all anchored around this still what we're doing here is we got to solve that one core north star go you know you got that north star to start up to hard foundations are better how do we become incredibly helpful and once you do that then your reputation the marketing the content the events the network you build all of that gets fed into that right that that's that's the vehicle of like ultimately with with a foundation of those things working is all around your your brand of reputation among founders of being really differentiated again competing against and building a structural advantage to us is the key and how you build that is through scale. I want to be mindful of the time so I want to wrap with a fire on okay what's your favorite book. I you know I love all of like Michael Lewis's books you know that he's such a great story teller and obviously topics like you know finance or baseball or whatever and having these like key insights of someone breaking kind of norms like love that love that who will you and I too that I'm party like a live or a live or dead or you know investors or founders I think I've met tons of great ones they would probably be some people I would never imagine meeting so probably like you know President Obama you know Jesus some combination of incredibly interesting people that have changed the world. Who made the biggest impact in your career? I would say I've an older brother I think he has I think just one I mean he basically kind of raised me you know my parents were working seven days a week as small business owners and my brother was really kind of tasked as the one that had to like you know make sure I studied and do ball at school and didn't go to jail so so you played that influence and then you know as I became a founder and entrepreneur he's always supported me he was on the board and invested in my first company he's always been a great supporter and for me and and he's always told me like you know what I was doing as both a founder and then co-founding a venture firm was you're just betting on yourself and and he always was kind of also betting on me so I think that kind of supportive like having your brother say yeah I want to bet on you and you're kind of betting on yourself help me always to make sure that I realize like yeah I should be willing to take risks in my life and do things like you know founding a venture firm or founding a company I love that where can we find you also work working for me outside of work I'm in New York all the time so yeah I'm still a die hard New Yorker as someone who's born or raised here so whether it's at a nice restaurant or senior show or in the park I think yeah you can find me just being around New York wow lot that I feel like the Bay Area answer will be hiking so anyway so I'll do a high Lauren thank you for joining Jeff and LinkedIn user thank you guys thank you so much Ben for you know this amazing conversation I feel like I had a master class on how to build a great C phone okay let me quickly and stream It's sad.