Benchmark Part II: The Dinner

I've spent a lot of time in Europe, and the dinners are about three hours, maybe three and a half hours long. That's an acquired episode. Yeah. That's right. 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 a dinner, as opposed to, you know, this sort of rigid structure of a typical dinner with an agenda. There's no agenda. No agenda. The agenda is to come together. Who got the truth? Is it you, is it you, is it you, who got the truth now? Is it you, is it you, is it you? Sit me down, say it straight, another story on the way, who got the truth. Welcome to season 11, episode 5, acquired. The podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures. And I'm David Rosenthal, and I'm an angel investor based in San Francisco. Where we were for this very episode. Indeed. And we are your hosts. Last episode, we told the four-hour story of benchmark, the legendary venture capital firm that stayed small while all their competitors ballooned in size. At the end of the episode, we mentioned that their partner meeting had this dinner at the end of it, where the five equal partners of benchmark sit down for an open-ended discussion, sometimes with a special guest. Well, we were talking with the benchmark partners about that last episode, and they invited us to be their guest for one of these dinners, and for the first time ever, record it, even on video. So we are so pumped to share this with all of you, we got to ask them about a lot of the open questions we had about the future of balancing those out there consumer investments with their B2B portfolio. How they think about making sure that they see that next world-changing company, the pressure of inheriting a top venture firm and trying desperately not to mess it up. And of course, there's some good war stories from the portfolio companies in there, too, David. Indeed. Indeed. But this was such a special episode on so many fronts. This by far is a record on an acquired episode for a number of guests that we have concurrently. Oh, we had seven microphones running. We had to buy like $5,000 worth of gear just for this episode. I think it was worth it 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. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. 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These 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. Trust 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/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. Well we have an update to the merch store. We got many requests about this. Gosh, why isn't there a dad hat? Well, we called up the good folks at Cotton Bureau and we did some horse trading because I wanted a really good one. You know, I wanted one that was embroidered that felt nice. So for the next couple of weeks, there will be a limited edition dad hat embroidered with ACQ right there on the front. So get them before they're gone at acquired.fm/store. All right, join the slack acquired.fm/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, Rizai, the CEO and co-founder of Mutiny. That is live just for LPs right now for another week or so and then it will hit the public feed. So you can become a LP at acquired.fm/LP or get those episodes after they're made public by searching for the LP show in your favorite podcast player. Now without further ado, on to the dinner and listeners, as always, this show is not investment advice. David and I may have investments in the company we discuss and this show is for informational and entertainment purposes only. Okay, so our first question is what are we doing here? What are we at and Peter, it feels like you would be the best person to explain in 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 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 going deep on finance and then on chemistry and then on life sciences and he took the catalyst to say why are we doing dinners? Anyway, we had this playful 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 was actually my first year and it was amazing, time stood still and we realized like just the partners or no? No, we had four outside guests, a catarena fake, Mike McEw, Gideon U and Martin Mekos from my 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 did you think of the dinner, I'm like, I want to go to bed. And 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 I came to is that firms are fullest 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 Monday is as much as they're an attempt at that you sit around in the office and you joke around, you try and dive into topics, they're limited, so the dynamic range of a dinner with, you know, an open ended, no agenda, wild explorations of the most bizarre things your partners might be curious about, and I've definitely gotten a few, you know, rattles with this group and they pulled me out. You know, it just became one of those things that honored the purpose of the firm, which is the sense of like constantly learning and activating our curiosity, but collective effort, the 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, you know, 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. And so I'd seen this table, the seven by Jean-Marie Mossoud, who's a French designer, and 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. We gave him, I gave him a hand sketch and he ran with it, and it's allowed Ole's lifestyle to meaningfully upgrade because the number of people with means that have sat at this table to decide that they need a table just like this. Well, on the people you have at this table, just for listeners who don't understand the gravity of this dinner, it tends not to just be the five partners. You have pretty esteemed guests come to these. It's the spotlight of attention, which is the biggest gift you can give to another human being on an individual. And more often than not, it's somebody that we haven't worked with or invested in. And I think you guys might have mentioned this in the podcast that we've had dinners with people like Dylan Field. And you come away, you're swept off your feet, you're like, "This is why we exist to serve people like that," Toby from Shopify, Jeff Bezos has been, "We travel to Jeff." Do you bring the table? Unfortunately, it's not portable. We've been in L.A., we've been in L.A., we've been in Seattle. And I think you can tell just from, you can see it. You 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, you 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. And I really like the table for that. I mean, I remember, I'll never forget early in my venture career, when I was a venture capitalist, I remember an older partner taking me aside and saying, like, if you want to bring something up at the partner meeting, you need to have had a side conversation with everybody else before you bring it up at the table. Which is so funny because Bruce, when we were talking to Bruce Dunleavy, he was like, our one rule was no preselling 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, you know, obviously give background on a company, all the work you've done, but it is also a little bit a presell before the company comes in to present. It's persuasion. Yeah. And so, you know, a lot of hours get consumed by the writing of it and the reading of others and not to have like a founder come in, then, and there's none of that. It's a blank sheet and you just get to have the experience of the founder. It's a, it's a, it's a nice, so it's just this 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, 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 how, what things do you do in your partnership to gain clarity of thought? I would say the memo is a crutch often, because yes, it can force you into clarity of thought, but it also allows you to fill in blanks that the entrepreneur themselves are not saying. And it pushes a sort of bias and perspective that maybe the firm has or maybe 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 relaying the calls you have, relaying the notes you took on those calls, you're actually telling exactly what you've discovered without the overarching bias, without your ego pushing into it. You're not pushing anything into the firm. You're just saying, this is what I've discovered. We all just heard from the entrepreneur. It either confirms their views and how they want to roll through this market or we found some challenges. And so it's that sort of like, and I think you all mentioned it on your podcast, which is that when you talk to benchmark partners, it feels like we don't have some hard stop. We can just keep going. And that is the beauty of that Monday meeting, which is that we don't have a next topic to jump to. It's not like we're working through a list. And so we allow ourselves to have that open discussion. There's your agenda. You got to go through the CRM, update the CRM. And if you haven't updated your CRM, you're going to get negative points. Negative points. Yeah. Like, I don't see all these calls logged into the CRM. I also like to like the artifacts, like they live in the memories and the live stories of the partners. And so like, sort of if there's a curiosity in that direction, call up Mac, call up each other, call up Mac, call up Bill. And so there's learnings, there's stories that wisdom sort of still walks and success. And one of my first experiences of this unbounded agenda on a Monday was I brought up a so uncomfortable new partner. No, actually, just before it, like you, you know that that's going to be what Monday is like coming when your first Monday is one of the five of you were TPs of other firms. Yes. Yeah. Yeah. So we've all ready, boys. And like you talked to Bruce or whoever, and it's like, just Monday has no agenda. I get that. But you can intellectually get that. Yeah, you get it. And then I remember my first Monday, and say I interrupt on your first Monday, but you sit there and you keep on waiting for like, well, when are we going to talk about pipeline? Or when are we going to talk about, you know, the people who updates, you know, and it doesn't happen. And instead it's like these random roving conversations, but then the, you know, the topic of substance will come out here 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 get, 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, so, so, so, for a deal or four, you know, for a deal. Yeah. Expensive. There may be one, yes, but it is, it is, it is critical to then what happens on the Mondays and everything in between. You see Sarah, you and Tatham both mentioned lack of structure, lack of memo is not a replacement for doing the work that I assume happens during the week. I'm curious. What does the work mean? They've been in the meeting itself. Oh, there's no reason why we can't call somebody that we want to talk to one more together. Yeah. Do you put them on speaker phone? Yeah. It's like, hey, we grew on speaker with all of us. We have a couple questions for you. What is the, how do entrepreneurs react when they get a call from the partnership? Hey, it's benchmark. Yes, no, I think it's, it's surprising to everybody whether it's entrepreneurs or whether it's like people that we call in the industry 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 bench 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 are natural in the industry naturally tend to be one person. Like, 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. So one of the things we spent a bunch of time talking about on the first episode was what the psychology must be like, Ben and I speculating of being a around this table here as a partner with you guys. And our thesis was that for an 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 spent all this time together. But obviously we each need to like really bring it. So right before Sarah was joining, do you remember this? Yeah, of course. This is what, five and a half, six years ago. Yeah. Something like that. So she texts me on a Saturday. She's like, so it hadn't been announced. We hadn't decided anything like it was like we were, but we were close. She's like, do you have time tomorrow? Okay. And so anyways, we got brunch at the pub and she's like, Eric, okay. What's our job at benchmark? Like this is V3 or whatever, benchmark. Like what is it? And I was like Sarah. Top number one, don't fuck it up. No pressure. Yeah. 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 announcement is. 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 evening. The next evening. Yeah. The next great entrepreneur, and believe me, I wake up every fucking morning. Like, hungry, that I don't want to be the beginning of the end. You want to contribute, and where does that come from for you personally? Why are you, because you don't have to, because I'm a failed entrepreneur. I think that really is it for me, which is I know what, I know how hard it is, because I did it and failed to not live up to expectations. It did not live up to expectations, and I started a company, and it was really hard, and it didn't work. I think you just realized how difficult it is, there's a lot. The privilege of the job is there are people out there who are super smart, who have an idea that's often against the grain that want to change the world. In some way, and it's doing what you can to help, and so I think about that all the time. I think that's a chip on your shoulder, whatever to go, prove. They're different motivational systems. Yeah, fair enough. Fair enough. I think some part of them, all of us, some of those motivational systems, are fear-based. Don't fuck it up. Some are joy-pists. I remember saying to Bruce, we had a long conversation about, well, you guys are moving on. I really don't want to leave the firm in a better place than I'd join it, 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 have been towards excellence? I think we had this sort of insight that the joy you feel, the total complete joy of working with a great entrepreneur is contagious, it's energizing, it's the lifeblood, it's the currency of our firm. If we look up towards that, we can all recognize that benchmark probably isn't going to be around in 30 years. Bruce said to me, "You don't need to keep me like benchmarks." We didn't try and start this, so it would outlive us, it was sort of an accident. They didn't name the firm benchmark though. They didn't attach your ego to its name, which I thought was telling. But the idea that this is ephemeral, and you said, "Everything's ephemeral." This structure, we don't have any institution, franchise, all those words make us nauseous, because it's really the nature of the business ran, is that we want to destroy the incumbents, and I think we're collectively aligned around being anti-authoritarian, destroy the incumbents. The last thing you want to be talking about-- Absolutely, it was the DNA of the founding of benchmark, as we talked about in great detail. 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. If you stayed true to that, and ruthlessly true to it, then you fire yourself. Because there's a day when 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. 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, so 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 Phil, both talk about is with Saribris. We 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. They're LPs with us, like other LPs. I think the feeling relationship is there you call, and they want to see you succeed for all the reasons Peter's talking about. They pick up the call and help and put their network at work to help you, and they have a lot of insights, and it's seen a lot of stuff. I would say one shorthand, it feels more like uncles and aunts than they do like parents are great. And for listeners who don't know, because I didn't know until Chatham just showed us, the benchmark partner is none of you have offices. You all sit at this crazy round table, it looks like you're going to war, and you're trying to put the strategy up on the board. You guys need a hollow deck in the middle of it. We had a poop emoji so far. But you have like, there are aunts and uncles with computers over there. 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. So yeah, you're saying that's, I shouldn't read into that, like they're here still. For aunts and uncles, it's fine if they visit. But not stay too long. They can watch the kids every now and then, but they, but as soon as there's a real problem, it's funny because aunts and uncles say, here's your baby, and let's call that to happen. This is going to be hard work. Oh, no, no, no, no, no, no, you're the parents, I got to go home. It's great being an aunt or an uncle, you know, I have five children, and I can tell you, I should have learned that lesson. I love my children, really good. My brother's in a good position. What, okay, so picking up on that theme, one of the things that I always have appreciated about you all, having done some co-investments in past lives, and just your reputation in the industry, the hard work. What are examples of the hard work, like real examples, that like- We're going to dish this to Chathen, because I know- Yeah, I know you have a story here, a very recent one, but the aunts and uncles are not going to do any more. For the street. What are the ways in which you get put to work by your portfolio companies, Chathen? Well, Chathen, in part of the reason he's discombobulated and has a cold brew in front of him. For those of you who are watching the video at 5 p.m., is he got an international flight three hours ago, four hours ago. But what was with it? On Monday. Which was with us. I decided to go on Monday, and today's Wednesday. So here we are, 48 hours a day. So what are the circumstances that lead to you suddenly, deciding that you need to be in? I think this is a great story of how the firm and we as a group operate, which is, there was a portfolio company that was going through an important decision, and there was a decision that was made Friday morning, it felt like there was a finality to that decision. It was like, okay, this is what we're going to do. And then people go to the weekend, emotions rise up, they have conversations with their friends, and stuff starts to get off track. And I get a call Sunday night, that's just like, things are getting off track. What do we do? And 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 p.m. And we talk for 30, 40 minutes, where we're just walking through everything. And what was so incredible about that moment is when you're in it, it's really hard not to get wrapped up in the emotion and sort of stop thinking logically. And what was great about that conversation is Eric was able to zoom out and say, look, we're in the service of entrepreneurs. We only recommend and guide entrepreneurs. It's ultimately their company. It's their decision. And so what Eric said on the call is, what I would do is, and what I know you would do, is I know you take them when you do this, right? Which is, you know, if you weren't in the moment, you would make the phone call and say, hey, this is your decision. I'm here in 100% supportive no matter what. So we got off the phone. I made that phone call. But also here's what I think. Yeah, well no, I think because you've gone through all that part had already. Yeah, it already been done Which is there is no more thinking it's your call all the 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 Meeting this is like midnight. I made the call so you're all in the circle on that day and so we come in Monday morning We're talking And then at some point you're in the conversation Peter said this is not a conversation that should happen on the phone or on the on Zoom it needs to happen in person It's like okay, let's do it. Okay. Yeah, and It's like okay, I should get on a plane right now And so here we go like time to go to San Francisco Airport and then as I was leaving air goes are you going to come back for the I was like oh, yeah, okay, don't worry. I'll find a way to get back. I'm getting on a last minute flight to your up Yeah, and you have to come back by a certain hour on Wednesday And what transpired was as I was getting on the plane that meant so much and set such a positive signal That by the time I landed everything had just Like gotten in place like I didn't say anything. I didn't do anything just showing that level of support and commitment 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 That was it changed the tenor of the conversation completely I would say it's like also Broadly a manifestation of like the orientation to investing right there's a lot of people who would say I'm investing Oh, like we made this bet like you might hear that word a bunch of times. Oh 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. Yeah, I don't know that asset You know, it's it's a meta-miss play but it's sort of like pervades a very passive view of almost like trying to super forecast A set of odds and you did the diligence to super forecast those odds and like we'll never we never talk in in that way It's like when we think about partner with the founders not all we want to make a good bet It's like we want to make a commitment and that commitment Manifest like as a group to be vulnerable and honest here and and collectively get that feedback and then with the Founders to be on the field denting those odds right each year Big years and and even a couple times and every as a there's important moments where you can 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 bats They're and there there's a level of Relationship that then happens with the founders because there's only one or two a year and it's 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 you know a lot of companies with which you work It's you know a founder that you really work closely with that you know So much about and then you know that level of support doesn't feel like something unusual for us to do it's 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 thank our long-time 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. Yeah, the hard part is knowing what permissions they have what employees are using them for or what decisions AI is making AI security for an enterprise at scale is not a small concern like the risks are real Exactly and the challenge with AI is governing it securing it measuring it and making sure that it actually delivers value that Is why service now built the AI control tower? Yep, AI control tower gives enterprises a single place to see manage govern and optimize AI across the entire business and it works with Any AI not just theirs every device on your network every permission across every system every AI agent visible and secure in one place and Service now can do this because they've spent more than 20 years building the operational backbone of the enterprise the workflows governance Approval security controls and institutional knowledge that power how work actually gets done across IT HR customer service finance and security service Now already runs more than a hundred billion workflows annually and Trillions of transactions for more than 85% of the fortune 500 so when companies need a place to govern AI at enterprise scale They're building on a platform at the center of how their business already operates and in a future that isn't going to be one AI It's going to be thousands of AI agents working across every function of the company But the question is who's managing them all so if you're trying to turn AI ambition into real business outcomes and make it work safely securely at scale go check out service now comm slash acquired and tell them that Ben and David sent you Can I ask and this may be you know drifting into an area that's that's harder to talk about and so We can abstract it a little bit away. We talked about Uber on our episode, but I want to abstract it to you know How 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 companies 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 when do you have to Juggle those things? Yeah, I mean it's um People go to therapy often. They only talk about the shit that's going wrong And I think it's useful to think about what's going right and if there's not a DSM for flourishing There's there's a DSM for this functions We could open that book up and we can have 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 and then you look at degradations from that? I think one of the words that's sort of vital to any durable founder benchmark partner relationship is vulnerability and If if there's ever caution or pause that I can't share this information with my then we've Degradated 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 So what's the collective purpose and I think that we could talk about Uber we could I have every reason to believe Travis's purpose was The biggest most extraordinary Uber imaginable and you know We had a collective gaze on that together and and 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 other and it's not about us and this joint purpose But it's you and me it's my agenda and my lp's agenda and all that and I sadly see that with a lot of the other firms in the industry because It's not necessarily the partner in the room that's got the issue It's their partners that have told them that they need to do this or they need that and I see it I'm like, oh man. I adore you but Your partners I have different feelings about and you're here trying to radical because they've said Why aren't we meeting our plan and so the entrepreneur immediately vulnerability snaps like that and it closes and then you have no trust and now They come to us typically and they say we got a problem with one of our directors. I'm like, okay So we'll you know up and 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 know, you look at its 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 Governance and practices and that company is called Docker and I was just in Miami yesterday at their all-hands meeting And I remember the last time you invested it was called that cloud right that cloud so last time it in all-hands meeting at Docker was three years ago And there were 60 employees that that we'd spun out of the the prior company and the valuation was zero so we 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 bail and I think this is okay What was different with benchmark? Insights another story Very fun Quote that we don't often talk about on the satellite we ever talked about this on the show but a very prominent firm has a one of their mantra quotes is focus on your winners and I think that's what you're talking about here. Yeah and and well this part it was a it was a it was a pretty big loser and um but the vulnerability that I was able to have with the team that remained to say we made mistakes we're accountable to it here's how we work through this because you know what if you look up in the purpose of Docker we're literally at this is cliche it's the beginning you know we have 30 million developers that use this product every day um 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 the value destruction hundreds and millions of dollars of value destruction my two partners I came in and I said I maybe drink you my own bath water I like 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 um 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 lose joke you know employees can quit founders can't unfound a company yeah 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 um not every but like a hyper majority of executives and so this case of flourishing and then that was a case of um you know trust all these things that come to stress the LPs agenda the founders agenda that come it's not that hard you just look up and say what's the purpose of the company let's resolve around that and that'll sort the rest of the stuff out it's the you know base of saying the long term there really is no conflict but you've been creating you know a delighting in a wow and certainly yeah I'm pressing the customer and creating Cheryl value our customer isn't it's not the founder as we say it is but it's really the purpose of the founder yeah and it turns out that purpose it that's the customer yeah one of us may be deviating from that and we can keep each other accountable and that happens internally like my partner said no the purpose of Docker is just the beginning my god it's they're going to get developers to program the global computer okay so they need to you could dust off three hundred million dollars in one so I want to do um a big topic we really wanted to cover with you guys in this session is staying focused on early stage not having a growth fund especially when your entire peer set has become lifecycle capital providers and I actually think this is a good entry into it so Peter the story you just told of like when things are not going right the benchmark approach I'm actually really curious when things are going right your competitive set has said when things are going right we should go long we are going to interpret that I think in large part as a competitive response to you guys during the fast fab four era we are going to become lifecycle capital providers we're gonna put a ton of money round after round after round into our best wasn't in response to benchmark that was in response to there's a crap ton of fees to make on yeah and the founders were taking our money and we have the brand yes that was like a benchmark stayed so true to their thing okay I think there are three classes of firms there's a class firm that fit that yeah there's benchmark and then there's a class of firm that actually we're making a strategic decision we care about carry we're playing for carry we think we can 100% yeah and those were valid decisions on that third class but you guys have not done that despite I assume every opportunity in the world to do so why can we ask miles you were the newest to to join he's gonna try and change that well actually this is a great point to announce that's more rough we've got an even bigger thing pretty much there how far can we stretch this trade I look I think there is there is certainly say all of those all of those opportunities to do that I think Sarah says it nicely in part like our job we'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 adopted by this question of the us making another commitment decisions like we're we're in and we're not evaluating anymore we're not deciding what a fair price is anymore we're not trying to decide how to maybe make a make a strategic core of the company that optimizes for a moment for us to get more capital and like this should be want to remove any chance of doubts or alternative incentives or questions in in that relationship right so it can be fully fully vulnerable and if we do that well and we've partnered with ideas with great purpose and and and a long endless runway to work on we'll scale our success we'll scale through that success and we don't need to scale ourselves you know in independently of those company scaling and so I think we'll all the beauty of being small it's like we'll all do perfectly well but they'll literally like a million dollar bills on the ground for you to pick up if you were to just put more money in your own company I totally agree with Maelson I would just add one thing is like it doesn't feel like work if you love doing it what do you love doing and 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 like it's just like that's like you want to spend your time with those founders and I think that's that's the what do you love doing and 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 um extraordinarily well and there was millions of dollars to be picked up doing that um but but I think the question of like what do you love doing really resonates and one thing that's super nice is you know the cycle's turn and strategy persists through cycles and so I also don't worry about a hundred million dollar holes right and we were joking before we started like I would have met him over here eating dinner you you guys must be licking your chops right now like this is your time to shine here in late 2022 so well yeah um with the caveat that I think we sort of because we're at early stage what does that mean it's moved it's in terms of its definition um we have faith that every year some number above zero a company will be founded that are going to be worth more than ten billion dollars and then about every two or three years a company is going to be found out this can be worth more than a hundred billion and it seems to be independent of the cycle so yeah I think it'll crazy or one thing sort of front and they get a little depressed but the growth fund thing I'll come back to answer a little differently which is that I 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 you know if we had a 20x fund 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 late stages we're lowering our returns that's all we're doing because our commitment is fixed it's not like we're going to be more committed so we're you could say you're getting more cash from cash return yeah but we're lowering our returns and the hack of the venture business which is coupling you know capital from other people in ourselves with uh 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 you know as opposed to keeping a period 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 water mark 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 when they're on yeah but I also want to know with our limited partners say um there's nothing like a benchmark fund and when it works it sets the pace in the industry and so you know and sort of like there's uh there's the wisdom the quote Sarah and I used to the team the other day the Johnny Ive quote yeah I have like you know what's focused I was going to say it's like focus is when in some ways every bone in your body thinks an idea is a really good idea but you don't do it yeah and saying no and and it's a fine idea we would I think it's not to say we don't have opinions on later stage later stage had ideas a billion dollar opportunity fund stapled to benchmark with the same team you would for sure have good protect it would be one of the best growth funds in the industry and we like to think so but that's not if we're going to do it but I think to to be able to have that focus that you know a conversation on Monday and our time together on Monday is an hour of roving curiosity of like fertile ideas the right at the edges that seem weird because yeah early you got to be weird instead of 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 and I think it's the the focuses and we're - We have to have a CRM if we did a girl. (audience laughing) - Sorry, that it's, you know, for us, it is, and we're all here because we want to partner with founders as early as possible in that kind of relationship on the board. And anything, you know, to this Johnny Eye, you know, just the focus, like anything that distracts from that, and we have five people. Like, there's not-- - This is it. - This is it. And like the capacity to do one thing-- - We gotta ask you about the principal program, - Yeah, but the capacity to take on more things would take away from our, you know, getting in the room with that founder who is gonna build that next iconic company and supporting the ones that we have. And so we just, we're forced in a way by the constraint of how many people, you know, 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. I mean, the, just to validate it, like, there's lots of opportunities that you can always pursue and that seem like good ideas. And like, we have this struggle required. We're two people. - Oh, yeah, oh my God. - And there's a thing that we know is uniquely differentiating, which is these, like, ridiculous, deep dive podcasts that are just us, and sometimes we have guests, like, wonderful to be here. Thank you for doing this with us. But we know that the most different and changing thing that we do is this, like, unique form-- - Boy, I was on that right capital. - That just we can do. - So. - And every time we start taking on more stuff, I'm like, oh man, the Golden Goose is getting worse. I can feel the Golden Goose getting worse 'cause we're doing other stuff. - You're really good about keeping us both honest on that too. That's it. - 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 venture marketing until 2014. So 2008, and a very famous, a very famous venture capitalist said, our early stage program is our Golden Goose. (laughing) - How much are you, was that a famous venture capital? - Yeah, I'm happy about that. - That early stage-- - That's everything that we do, protects that Golden Goose. - Long time less than years, so we'll probably know exactly what you're talking about. - Okay, so Peter, I just wanna clarify something that you said, it's interesting. You define the scoreboard as fund multiple, and it's not total cash return to LPs. I think that's an interesting, like that's a clarifying mindset about the way that you guys look at this. - I think of it as an LP. And the benchmark fund, of course, again, the purpose is not, we don't show up and say, let's drive returns, it would be alienating it to everything we stand for to think of it that way. It's the outcome, right? Not the input, but I think the cash and cash multiple, both as an LP, and it's a real problem for LPs, I will say, 'cause we have large LPs who look at us and like, why do we waste our time with benchmarking? And I say, oh, yes, right. - Can you save the number of year your largest LPs, like what their dollar per fund? - They're like 25, 30 million, I could get it wrong, I'd probably piss on them off if I listened to this. (laughing) - We're just saying that, just that's for-- - In the context of a hardware-- - And you get down, but it's tiny, that's tiny. - That's barely worth their time, right? - It, it, it, it, it, it, it, it's hard to say that the LP construction has much to do with anything of our day-to-day performance. I do think this idea, though, of the principle of the firm being standards of asymmetry in our exposure to the volatile material of the startup. Asymmetry is a 20X, 50X, 100X fund. And if we degrade that, it sort of misses the point, you know? And I want this to be, and I'm already, we're many of us in this place, where we pay, crazy. As a GP, I pay carried interest. And management fee to my fellow GPs as an LP. And that's, well, that's crazy. And this, this, this is-- - Oh, you don't get like a GP allocation that doesn't-- - I get a tiny, my view, tiny-- (laughing) Now we've exposed the tension. - But for this, for the super majority of my investment in benchmark, I'm paying limited partner rates and management rates. - I would say that's where-- - It's not tax efficient. (laughing) - But just as 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. Like that is, you know, taking it to every extreme. - Yeah, yeah. - 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, the worse your economic deal gets? It's the same. - Oh, that's a horrible way to characterize it. (laughing) - As your L.P. commitment goes up and you're paying fees and carry on. - You know what? I think the counter-argument, not $1. - What would Bruce-- - The Bruce counter-argument, which I think is 100%. - Right. - Is it isn't the worst economic? It's not a worst economic arrangement because the returns will be higher. So you'd be happy to pay the fees. - This is the way for its thesis of every successive generation of technology should be bigger outcomes because you're addressing bigger markets. - I'll make it more simple. - No, you cannot get allocation to the benchmark funds. - And so getting any allocations. - Yeah, yeah, yeah. - It's gonna 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 your aggregate economic deal will get better. - Your cash on cash, even the amount of it goes down. - Your cash on cash. - It has the difference. - We do. (laughing) - Well, we did spend a lot of time. - We all learned from them. (laughing) - Wow. - Okay, one more thing I wanna say 'cause I think, I kinda think only we can say this, you can't really say this on 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 talk to entrepreneurs in the current benchmark portfolio who believe that aggregate in the long run they took less dilution by having benchmark invest and you guys not having your growth fund and having to put more money into them. Then they would have had you or whatever early stage firm they had taken money from been wanting to put more money in in subsequent rounds because just to connect the dots, if that had been the case, then you would be have a conflict as that investor when things are going well to put more money in at a better advantage valuation for yourself and you don't have that conflict. - Versus, and what you actually have is quite the opposite. It's not even 'cause this happens all the time where someone is an investor and they're like, "Ooh, this company's doing well. I'm gonna preamp their round and I'm gonna see if I can get a slightly lower basis than if they went to market." And so that's firm A, firm B is a not benchmark firm who also doesn't have a growth fund. They go out and they raise at market rates, but then there is a benchmark brand. So like option C is take benchmarks money and I think, and you guys probably are sure of this, your companies tend to go raise better series Bs at higher valuations with more certainty than your average series A fund did start up. 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. - I totally believe that's-- - This is a question we're just selling for benchmark. - That's, yeah. - No, I didn't think they would say it, but I think it's important that we literally never heard that from my clients. - I believe that the founders own more of their companies at Exit, at S1 time, whatever it is, in this case, for those reasons. And one other really important reason, which is a founder is going to raise a series B or series C or series D or IPO one time in their career, maybe two times in their career. If we're doing our jobs and the people around this table have all done this multiple times and you will help them raise better rounds from better investors, have a better process and get to a better outcome. You'd have to talk to the entrepreneurs that I've invested in. But I suspect if you were to talk to them, the value that I can provide to them, since I stopped being a professional venture capitalist as part of my firm, exponentially higher than when I was within a firm. - Totally. - Because there's no conflict. - And you can do that. You can do that. You can help them through that part. And that outcome results in the subsequent rounds are de-risked, sure. There's, I think there are a bunch of brand 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 and aligning all of your trade-offs so that they're a force multiplier rather than in conflict with each other. And if I had to sort of summarize why benchmark works, it seems like all the trade-offs are actually just thought through very clearly and tried to align them all so they sort of like, they play well, amplify each other rather than conflicting with each other. - There is one big trade-off with our model though. But I think about all the time just because I'm a paranoid person, which is at the end of the day, like 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 gonna build that next iconic company, right? And so much of what we do is about maximizing that probability that we do get to meet that founder and then end up partnering with them. And a lot of firms, I mean, all the other firms outside of us have built machines around that, you know? You have legions of people at these firms. I grew up doing this. I was, you know, an analyst at Bessemer. - Right, I've called the college 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 'cause it's all about making sure that every deal, every round that happens, they're gonna 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, when 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 hours to spend. - We're limited. And so that is, that is the big constraint that I know keeps, keeps I think all of us up. You know, it's just making sure how do we, the founder that is gonna raise that round. You know, many are intentional about like, how do I make sure that I'm gonna find the right partner for me for the arc of this, you know, the journey that we're all gonna be on together, but we're still not there on time. - You know, you guys at this point have such a, for 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 gonna call them, I've got these other firms calling me, that's great, I'm gonna go with, but like, am I gonna call Benchmark? Like, that seems to be like, wow, that's a lot of pressure. - And that's, that's, that's a potentially lethal risk for us, right? - Yeah, if you think about us 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 in the sense that they could dive in, they can give their all, and it's, they're very available. And so, one of the things you think about is the shift in the last 15 years since I've been here, you know, the investments that are occurring before we get engaged have gone up by about a, I don't know, 100x, at least 30x. And so-- - I mean, seed was not an asset class. - I didn't know I was a seed investor. I guess I was a seed investor. But the third of what I've done was like, formation of a company investments, right? And so, when, so weird when people say to us, I didn't think you're at this early stage 'cause then some people say-- - You're like, no, like, was incubating-- - We thought we were too late for this. - Yeah, I was like, what, 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 it, yes, let's meet. Because I have always, well, great time, as much as it may impact week. When I don't have enough time to take that next marginal meeting, I shouldn't be practicing. And what I would love to know is that people 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 wanna use, high quality experience, they're gonna get, it's gonna 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 met. I've heard something that really helped shape the course of the company. So the point of this is that our 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 very inception of the company all the way through to the last drip of capital going in as they go off of the, whatever. From seed to IPO and beyond. - In seed. - Yeah, in seed to grade. - Yeah. And one of the strategic vulnerabilities we have, is that people tell stories that were this way or that way. No, we're just like everybody else, but we're highly available to meet and we're quite responsive. And the last two or three investments I've made were an example of the following, which is that there's an angel in the ecosystem who saw a deal going down. And they said, you know, you probably should talk to benchmarks. And when they did, we committed 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. And then you would have taken a week if you had one. - But this is illustrative because the system we built is to do just that. And so our biggest risk is that people tell stories. And I think sometimes the stories are propagating their agendas. We're widely available and open. We're in most times an emphatic yes for someone who would introduce something to us. And 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 and fully present. Okay, we take that seriously. But that's the vulnerability of the model, which is that capital always carries its agenda. Oh, let me tell you about the way. We're this, we're that. And it's always threatening and attacking other layers. And we're hoping that we play a different game, which is serving the founders purpose and show up and be decisive less than a day. That's pretty common. - All right, listeners. Now is a great time to talk about one of our favorite companies, LaGora, the Agentic Operating System for Legal Work. - Yes, most of you have dropped a contract into a chatbot by now. But as a lawyer, how far can that really take you? It's never seen your firm's precedence. It doesn't respect confidentiality and you can't check where its answer came from. - So LaGora's founders approached this the way that great founders do. Early on, the team moved into the office of a big law firm in Stockholm and learned four months. How the work actually gets done. A couple of thousands of enterprise customers and a 100,000 users later, they still work that way. They employ 100 legal engineers on staff. These are lawyers sitting inside of firms and legal departments to deploy LaGora onto live situations like the deal closing this week or the policy review due Friday. - The product has gotten very powerful in a short period of time. A year ago, the goal was a good answer from a chatbot. With the LaGora agent, you hand it the work and it comes back with a plan. Tasks like running diligence on a data room or reviewing a new vendor contract get completed inside the tool you use every day like Microsoft Word and against your own precedence and playbooks. Every finding is sourced, the lawyer directs the work and signs off before the system executes any steps. Every legal team can get access to the same AI models. So the models themselves do not give you an edge. What you can do with your own data, people, playbooks, that's the whole game. - Today, over a 100,000 legal professionals at more than 1,800 law firms and in-house legal teams in over 50 markets use LaGora. And when LaGora goes head-to-head with its top competitor in a pilot, it wins 70% of the time. - A demo is one thing, but what matters most is an associate who reaches for it at two in the morning during a closing or whether a general counsel trusts what it says before the board meeting. So if your legal team wants to check it out, whether you're at a firm or in-house, go to laGora.com/acquired and be sure to tell 'em that Ben and David sent you. - What do you do besides the five of your 24/7 being on, what things do you do to keep your radar operating to try and address? - How do you solve them problem? - We all have different ways. I mean, there is no single way for us, I would say. I mean, I always talk about having an air game and a ground game, you know? And for me, it helps me learn to write. And then you write about areas that you're interested in and that tends to be its kind of virtuous loop also of then the founders who are thinking about building a marketplace or a next social product, the social network will see something that I wrote or Bill wrote or whoever wrote and then kind of come into the fold that way. And then there's, I mean, I think you have the consumer lens that you have, you have a little bit of a wider funnel that you have to kind of keep. You never know where these things are gonna come from. There's so many different domains where the next consumer company might come. I think like the B2B stuff, the developer-oriented companies are closer to the ground. - Yeah, I think we all have our own strategies. And I would say the one thing that's always interesting is to compare sort of our different strategies of sourcing and how we source investments. I was sharing this note internally, which was that I found that 100% of the investments that I've made as a benchmark partner We're all sent to us by an entrepreneur. and not necessarily an entrepreneur that we hit back. 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, is they went to the next entrepreneur and said, "You should go to the process." Like, just talk to them. - That's the most meaningful introduction we can get. - Yeah, and that carries so much weight. You have them to one of these dinners. - Yeah, I think it's in pop because there isn't really a process. If there's diligence, people are oftentimes found as well as go, "What's your process?" - That's the funniest question. - I don't know, we're just going to explore this together and we'll do a chat together. - And I think to what Sarah said. - So what you're saying, it's like the Elon Musk's tweet. - Yes, it's exactly like that. Let's just text back and forth a bit. What did you do today? But to frame it more precisely, 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 pop 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 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 full starts or local maximas be, and how could we realize the full purpose?" And that comes with dynamic sharing of stories and history and 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 pop because it was sort of this reverberation of discussion around the potential that they had and how to navigate that correctly. They got an interesting view on their own business together. And that's. 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 lumenert. Like, connections to people who've been there before you, we just went through this process on a recent investment, and we introduced the founder to other CEOs who were further along. And she extracted knowledge, basically from them and 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 may 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 getting conviction on each other. And that should be the greatest part of it, is like, this is, you know, one of the things that makes me sad about some of the conversation in the industry is 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 try to have that level of commitment that ends up manifesting in all different ways for the company, whether it's helping close like an IC engineer or, you know, whatever, you know, having those, like, late night conversations or whatever it is, like, that is, in the best form, can be a really meaningful relationship for the founder and from the company, from the very beginning. And a founder should realize that that is, like, you know, of course, you get into the anxiety 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 founder's first call. And it's like, I've never really liked it in so far 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. I think it's a low bond. 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 close to the initial investment right after it happened, Peter, you could imagine, it was a decently high price in some ways, like, I'm 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, right? Like, why constrain this and squeeze juice from what we have, let's unfurl this even further. It's a database at the end of the day. Why would you constrain people putting stuff in a database? There's so much that happens on top of that. As you're evaluating mutual fit on an investment between the entrepreneur and benchmark, you know, when eBoys, there's some famous line about venture capital is more a ball's business than a brain's business. And like, let's stop using that phrase immediately. But it's the most eBoys 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 brain's business? No, I think it's very like 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 like fulfillment here. And if everything works and we serve that great purpose that we're all aiming for, then the financial returns are going to be excellent. But there's no sort of like outcome scenario analysis here that says like, here's the 10% upside, bull case, bear case. These are all things that, you know, those of us that came from other places had all done. And one of the interesting things is, you know, watching the firm externally and seeing how this works inside of boredom, like Miles just talked about an example, you know, I was on a board with Peter for a long time before I joined here. And one of the elastic, yeah, that's 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, it was just so far and about like 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, et cetera, et cetera, but it's not analytical. I think most of the investments we make, it differs consumer enterprise, marketplace, all of them are different in different ways. There's just very little data to analyze period. But when you're looking at something that's like a consumer social app that seems to be catching fire, there are things you can know, like viral coefficient or like, you know, we go through a lot of this thing to lead you the wrong way. So the truth is, in this market, oftentimes you're making a commitment before there's enough enduring data to really know what it is. But the way I-- 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 it. 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 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. 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 you guys deal right yes yes with all the ICOs were going crazy everybody was thinking about tokens and two people I remember calling the after we announced it was like you invested in a like a SaaS company like shouldn't you be putting the money in tokens or like they're going to be like yeah and you know not wrong but also not right like it looked like you know a stupid investment in 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 that comfort that's something you know seeing something that can be contrarian or misunderstood from the outside and you have to nurture that one one benchmark no pun intended I guess so one measure of quality for the firm will be how good our failures are web van was a really good failure web van was awesome and I used to make that bet a thousand times shame that most venture capital has felt towards maybe contempt towards the venture firm because before I was here and and it's laughable it's stupid and if we start to look like we're what should we get worried about the long-term degradation of eventually we go away so it all doesn't matter but I would love for us to be universal I think we pulled it off in the last funder to like real stinkers that honor the fact that we are still just as gullible just as naive and fallible as the bar of generations um not yet more so but we're working at it I think some of those are really like that's a good weapon is a good venture investment yeah 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 an entrepreneur pursuing that should get funded and they should get funded by the best and they should have we should do everything we can to give them the best odds of success and have another partner be on the board and I think that if you just look at you know the last yeah I joined right before our ninth fund and so I've been here through fun nine and we're now deploying fun ten um there's a lot in there that that wasn't I mean most of it is not analytical and I would say like if you just look into it you know they're gonna be some bad investments that come out of it but 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 it's that was worth the shot it was like that was worth the effort well and the pivots validate why you can't be a super analytical it's like did you think that the game was getting you guys are best pivot like multi-billionaire you know discord next door talk talkers like business it's like Uber I mean like learning from lifts discovery of the UberX model like that's the business okay so it's like you have some stalling theories and you get you get in the mud yeah and always always funny reading my old investment memos and I've only been doing this for five years but like 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 that's why we don't write memos yeah right there's no no artifacts we don't we don't we don't do portfolio reviews at least they they find you portfolio reviews and I and I don't show up so I do remember one attempt at a portfolio of you a while back and there was like the apex of failure at benchmark and you know I think I have one of those in my portfolio now you guys can guess and and Kevin Harvey said this one has the dual benefit of being a bad idea poorly it turns out that a bad idea well executed is a problem because then you give it more money but or a good idea poorly executed well that hurts because you think oh I mean we can think of companies like Friendster and like oh but the bad idea poorly actually I'm so too because of the kind of investments in venture like that clearly that was wrong yeah it's the middle ones that are total yeah I love I love Armored Donald's joke like he was like trying to explain the fact when you get in front of you doing a stand-up that blesses already died of course is um and nobody laughs and 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 laughs and then we have a few of those if we're not doing that that was the early days of equation yeah can I ask I had a really dumb question prepared that we sent over and I want to try and ask a smarter question the dumb question was well to maximize your chances of getting that 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 and 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 well 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 capital and and they're pension funds they're very decent people and they're noble causes we do work for noble causes why are they on my cap table it's like because you get to work with me like but I didn't choose them well you kind of did because I bring them along we're right and I they're unpacking their stuff right now in your basement and they're gonna have more equity in this company than your VP of sales or your VP engineering well that's the same right and so we you play with this idea and as an LPM benchmark I don't like you know there's a limit to the real take this idea GP I think as a GP so but I think this interesting construct is that what's the residual value that that is separable from the capital presoost to joke we can pay a higher price because we had more value so isn't there a benchmark just a lower price but we can afford to pay higher price and get better in terms if we have more value it's a joke but the point is the same which is that we've we've confused these two things capital which seems to have been free now it's not free okay so now that maybe you are fused again in capital and partnership and I think that you've done some deals right where you put no capital in there have been examples and where we don't there'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 we want equity and Tinder here's like shut up what do you want we want equity and Tinder and like I said I don't need cash it's like so it's not just 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 it's more bizarre than your imagination can allow so go there and then go past that and you'll get so this this question of like can we decouple is something that I kind of look at as like the residual value of the firm is are we are we generating 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 that they got a ticket versus they made a huge impact on our total success and and that's equity that was the best return of my allocation of that equity and every time you're taking on on on dilution you're asking that question of like what's the return on that 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 and that's how I think and it maybe they'll be a model where we're not going to be CIA where we take 10% know that but you know the capital light you couldn't raise less why not I bet if you raised 400 million in your next fund and you have five fewer companies your scoreboard number that multiple could go up I'm the person that the last discussion of the like we were going to do at the same size fund I'm like why don't we cut it in half and people that well then people others will say we're becoming irrelevant I'm like oh no but it's so different than they say now anyway we might one day yeah it's 425 go down to 200 yeah go to okay 40 yeah was it 40 per partner per year oh the old benchmark website that's such a good lies other firms are overfunded with over 20 million per partner of capital the way that machine is such a gift to humanity yeah oh the 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 we're the vehicle for that universally. Everybody responded. They want to know, what is the process, what's involved? How do you think about who's taking the next seats at this table? So how does that work here? I think it's like 250 hours of board meetings together. It's a 10-year-long process. You have to serve on the board on the one of us. We have to watch you grow. And then we said, you know, that person-- I think you think Mitch was an exception. Bill and Mitch had, you know, 200 hours of board meetings together, maybe. Eric, you didn't have any-- you're the only one who didn't have any-- I was just joking. I know, but that seems to be the model of, like, serve on a board with the benchmark partner. And that's how you get to know people and build really deep relationships, is you need to go through shit together. Like, I mean, the shit can be-- the company is going really well, and we have to react to a super dynamic environment. But like, getting coffee every once in a while is not a great way to get to know, should I take someone on as my spouse, effectively? I think that's right. And I actually think it's-- 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 benchmarked before he was here was working on. You were walking out the door as they were walking in. Yeah. And so, like, that's a-- that's telling. You know, the story with Miles was there before. Like, he invested in-- Three. --bensioning before us, and super great before us, and was early on air table at the same time. And so, like, that's a really important signal, like, OK. You know, Chatham had worked with Peter on the board. Sarah-- Just-- I just slowed down. [LAUGHTER] Yeah, actually, Sarah and I, I think, both had no, like, professional up and up in that context. But who made the first phone call this year? I lost track of it. [LAUGHTER] Peter, what's that? Yeah, I saw it. I'm like, I don't think he's lost track. I don't think Peter loses track of it. OK. I think the way in is something that's common what we've heard for the people we've recruited. And maybe Eric's, an example of this. But it's that they don't want to join a venture firm. The only firm they could imagine being at would be benchmark. It's the last job you're going to take. So there's this underlying love of the craft. And it sounds, again, a little romantic, but it's intended that way. I left Stanford Business School and Barris that I went there maybe at some level. And I dreamed about getting a job with Pinchmark. And Bruce canceled his meeting with me. And then I waited, and then at another time he was late, he sent me a handwritten note saying, oh, I have bigger things to deal with, basically, is what the note said. [LAUGHTER] And then, like, you know, I think you gave me a T-shirt. And then seven years passed. And I think I sent, like, to a guy sent him a note, say, hey, I'm working at Excel just to see if I could catch his interest. And he said, good luck. Did that motivate you? Like, were you thinking to back your mind? I don't know. Do you know Peter Fett? I mean, I feel like I do. Put it down up on your wall. [LAUGHTER] He, we-- Well, oh, man. And our board, you just throw it. And then Kevin and I went on a board together at a company that was not particularly successful. And I was wondering, why has Kevin doing this investment? And you know, I said, what does it say about Pinchmark? He later confessed that he felt the same way. But then you get to work with the firm. And there's something that I would say underneath it, which is that the totality of, like, I would do the job, even if I didn't get paid, that sense of all in. This is a craft. And I so am oriented towards that. When I first met Matt in 2005, around the time he presented Facebook to us at Excel, you knew immediately that he was going to be in the entry process. It wasn't like, well, one day maybe. No, Matt was going to be a great venture capitalist, because the single most important thing we have to do in our job is to partner with-- earn the trust and respect, earn the ability to be a partner and a guide, in his case, to both read Hoffman and to Mark Zuckerberg. So you think, OK, 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 course knew about Sarah because we both tried to invest in GitHub. And that's a funny story for another. Maybe we'll work drinks later. So I think, if I remember right, another firm did that at a very high valuation in that time. For the time. The moment that seemed crazy and was actually good idea. It was like 100 on 750, I think, was the post. 100 million on 750 posts. But at the time, for a series-- that was the first institute for capital. There might have been some secondary selling. One of the things I thought was, when the secondary selling, it does tend to clarify people's interest in price. One thing you're just selling is equity on the CAD table. But when you're selling your own shares, you start to get really focused on them. But we're not running an auction. But it is the highest price we've seen. All of a sudden, that seems to be the right answer. Anyway, so the point is that we orient towards extraordinary. So to get close to benchmark, get close to extraordinary. Who are the best entrepreneurs? Build that rapport 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. Or serve on a board with us with one of those entrepreneurs. I guess there's some self-serving interest, we could say, send us your best investments. That will help. That our responsibility is to be the best introduction that you make if you're looking at a great company. And if we don't, if we fall short of that, we deserve to be told and punched in the stomach. Maybe I can ask a related question, which gets to Eric. This is what we love to do and wake up and focus on every single day. And that's, if each of you have a sort of bias on things you're obsessed with, like, Chathan, you wake up in the morning and you look at net retention rates. Like, it's just your, I don't know. What I'm trying to go with is I'm boring enterprise software things. (audience laughing) But like, what did I do to see that? Chathan just, like, eats leaps and breathes sales kickoffs. (audience laughing) This is getting better for me. This is, you're just digging, really. Chathan is so far underground right now that you. - Well, he showed up. - I'm really grateful for it. - He did, he's here. - He came all the way here for this, man. - Are you looking for, there are probably, a dozen people on a short list that you're like, gosh, we would kill the work with that person. And ultimately, a factor in that probably needs to be, there's a thing that they're obsessed with that we need on our team at this moment in the technology industry. Is that part of the calculus? 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, you 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. - That's just, all that just that you just listed - It's ridiculous, it's ridiculous. - And so you join that group and in a way, it was just like the perfect time as someone who had some enterprise exposure. - You know, you're confident. - And then the, you know, lucky enough, the first investment that walked in the door was confident and for me and so, but now if you look at the group, it's almost like, it's almost turned, right? In the sense that there's a lot more enterprise heaviness. That wasn't intentional. I don't think, I don't, like it didn't come up, but it happened over time naturally. And I think this is just a big element of benchmark overall, which is the entrepreneur's lead the way and the market's 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, when Chathen joins and does modern treasury as an example or Sarah joins and does chain analysis, like you're, 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 semiconductor expertise. Like we have no semiconductor expertise anymore. - Like as you do. - Well, I have a semiconductor investment. - Yeah, different than 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. experience in areas x, y, or z in the underlying genotype doesn't actually get our attention. So you tend to lower your selectivity when someone has some background of relevance. The issue that you're seeing at Benchmark today is sort of a question of where the equity value been created, where the $10 to $100 billion outcomes of the last seven to ten years. Well, consumer has been a little more femoral in that regard or a little harder to capture because of the incumbency effects. So what's going on in the phenotype of the firms, it may look more tilted enterprise, but I can tell you the genotype is we are total generalists. So I can say very explicitly, I think that somewhere between AI, crypto, and not ARVR, sorry for the future ARU, but I think those areas don't have the incumbency of some of the traditional network effect giant trillion-dollar market cap companies, and so our genotype is such that we will then go populate those arenas, and you'll see us become what 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 the social and 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 fine man complained about this in physics, which is like if you came 30 years after the theoretical activity, you were sort of cleaning up the mess. You missed it. Yeah, whereas the people who are there the first three years look like geniuses, even there were thorough rate physicists. We're working on first rate problems. We can be first rate, you know, whatever we're 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. This is why Eric is going to become one of the great consumer internet investors of the next decade. It doesn't know. No pressure. But, you know, John Dore, Mike Meritz, we so my former partner in Jim Gatz, those are the people who shown that you can do both because the underlying connection with the entrepreneurs, they're not so different. There's similar gestalt in Chatham's next, he'll probably be there just in terms of that. Chatham is still going to be the sales director. They're already crossed the line with SAS, so I'm like, the game's awesome. I don't think even if you look at the greatest companies, right, Amazon, Microsoft, Shopify, Adobe, Square, they're all crossover, right? And even if we took something of high disruption like AI, right, what's happening in generative media and large language, it's unbelievable. Right. I'm just going to be a consumer thing, absolutely not. Exactly. For the first version of it might be something like Jasper, right, which is actually a B2B product, but there's really interesting opportunity of what is a, 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. 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 pages. Yeah, yeah, yeah. I think the technical, like we're not, it's not our, the founders and entrepreneurs know the product. They know the technology. Like that's what they bring. That is the thing they bring. That's their invention and they've discovered the insight and they've discovered the insight. Here we go. But there's a whole bunch of things that come to turn that technology into a product and that product into a company that's really valuable and like that's the part that we can partner on. How many success stories are there in venture and even through benchmark 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, 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. Nobody's all, has said, nobody's put a blog post down on it, nobody, it's an insight. And that insight is, that's the magic. I think like if you did, yes, that's obviously how it should work. And that's why I think what I would say, like to say there's a specific sort of set of experience when needed, like what 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 a check or a net dollar attention that's got to be a sort of like, well, it's like five dollars, net dollar attention, how do you guys deal with so? In my, you know, prior life is trying to do that for, you know, a living poorly. One of the hardest parts I've found about early stage of it, I totally agree with everything you're saying. You guys can vote with your feet. You only have one of those moments in the first three minutes of a pitch. Once maybe twice a year, maybe zero times a year. So the rest of the days can get kind of depressing, like, are you going to learn something in every moment? You get to 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 in. Or you can help someone who is great, maybe you don't see it entirely, but like someone who's fantastic and help them. And they, and they, they'll teach you something and you'll learn something. And you'll just ask questions and, you know, they'll tell you. And you'd like learn. There's a firm that show our main nameless. Came in and they said, "Why don't you have a clock in your wall?" I'm like, I don't know. Because then maybe we were in a meeting at all at BN and we looked at it and it's not so good. And his person said, "No, no, no, no. We move all our clocks six minutes forward." So if it's a bad meeting, we can get out. Because we'd say, "So that's the one way to deal with it." We didn't do that. Like, people suggested this. And they did that. And they said, "I would just say any time you go to enter from, check the clock on the wall and look at your, and then, you know, are they playing this game?" 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 way to put a clock in the room. But if it doesn't work, that doesn't work. It doesn't work? Oh, Lord. No, that's not working. It's two-thirty. It's time for dinner. All right. It's right twice a day. We, we got to ask before we, we can't, another thing we can, like, go, what's the purpose of the principal program? To honor the statement that force consistency is the hob goblin of little minds, is it through all this at that? Okay. You got to unpack that. God, Peter's just on another level. I mean, I feel like I'm for context for everybody who doesn't, so you all are deeply committed to the equal partnership model, clearly. We don't have principals. So we have principals. No, I think it's a, it's a way to surround ourselves with a, with a person who we want amongst us all who pushes us to challenge us as well. Yeah. Maybe I'll loosen up the response. We don't know what we're doing. I mean, like, and Blake is amazing, and you meet Blake. You want to work with Blake. Steve, find a way. Find a way. And, and I think that is it a program? No. No. No. No. You know, Miles seems to like, Miles, he's got a British accent, it's a little hierarchical, so that's it. And he should hire a associate. I don't want to work with that associate, bless his heart. But, I mean, you call him a junior partner, a baby partner? You can hire a baby partner. Maybe, maybe, maybe. But you won't become too, um, close to her. Blake is amazing. Yeah. And so you meet Blake, and you say, you find a way, and, um, it's been a pretty good launch pad that turns out for people to come in for our non-principle principal program. Uh, uh, you don't talk about that you're talking about, you 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, because, you know, now, that doesn't mean we're going to have eight partners and a growth fund, and then there's some hard lines, we just say, but this is, you know, getting closer to people who are, um, embody our values, but, uh, at a different stage in their career, that's okay with us. You got to break your rules when you, you find any set-of-ing circumstance. 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 two tightly to something is when, like, that's, like, your head, like, and so like, is this a way to, like, hold tightly to the thing that's like a core value, the firm, but not too tightly. Like, I think we should call it a fellow, but we're just, we're not together, it is, but it is. We constantly, constantly oriented to special people, and sometimes there's this special person like Blake. I'd, I'd wanted to work with Blake for quite some time, and I'm Sarah had two, and we said, Blake, do you want to come work together? Yeah. Like, let's do it. I would say that we don't have associates, but one of us may hire an associate. We don't have principles, we have a principle. We have EIRs, we have venture partners, we, it's this, you're trying to figure stuff out. Yes, we have venture partners. investing, but you guys did Dropbox like we just it's just you come to the table and you say I want to I want to do this. I want to go explore this area. I want to go work 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 none of that should violate the authenticity of what we do and how we interact with people and I think that's the biggest thing that we have to be protective of and that is what we're protective of and the relationship we all have and how we work together as a team and I think if we preserve that then anything else the fees are to be used for exactly those kinds of experiments and 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. We're here to provide value to you guys. How can we help? How can we help? Yeah and then you know I also think about how we think about EIR so you know Eric could work with Josh at Benchling and Josh was going to leave Benchling and just explore ideas and it 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 at Benchmark exploring ideas. Why don't we like share ideas that we're exploring and then they just have to start a company together. It was like if you're an airplane which is airplane which Eric is on a border and you know that wasn't sort of like this. We have a hyper like thesis. Funnily you're managing. Yeah yeah the thesis 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 him my none 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 done? 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 and I think what we had just alluded to. 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 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 working with consumer companies and he was on the board of duo which was a secure and a song and a song right and so hey I company and I think he knows what links 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 let'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 stop droneing up the only way to kill the conversation about drones if we brought in D drone and that the like the shooting down the drone that looks like okay I got the point then we didn't do that that's probably done pretty well yeah probably would know all right other stuff we missed you know you when you 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 but I read these books about us at Uber or Twitter or we work I'm like it was so much more interesting you guys did a remarkably good job of capturing the essential primitives of the firm I don't know if it's interesting to other people but it is right that this you know deep commitment to equality that Bob feels permeates to this day through everything we do and from the way we treat our people that aren't in the investment team and to the notion that you know we book most of our own meetings like 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 the era's leading venture capitals 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 a benchmark is anything it's that we're available or 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 you know to say it's about our company it's right the founding two or three employees set the culture and it doesn't change unless there's some catastrophic event where it has to get reborn but good luck with you on a Twitter you know that culture was set in motion and the 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 yeah then that's a that's an example of one form of transformation if it doesn't then you'd say okay this believe me people have been trying 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 a we have a actually there's been a lot of discussion in the choir it's like about like why have you guys not covered you a lot on Twitter and just like that no that's not what we do to TMZ yeah that's but we're not the TMZ of Silicon Valley we'll have eight years of experience there all right well we should end it on that now yeah thank you all thank you all right listeners now is a great time to talk about one of our favorite companies Statsick yes there is a reason why the best product teams rely on Statsick whether they are iterating on their core product features or shipping AI powered experiences at scale yeah in the crazy speed of today's AI world shipping fast is just table stakes now it's basically trivial to build and deploy your app constantly the real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you shipped next this is where Statsick comes in it brings experimentation feature flags and product analytics into one unified system so teams can ship safely test rigorously and directly link what they changed to how users actually behaved so if you want to make learning your competitive advantage whether you're building new AI experiences or just evolving your existing core product go to statsick.com/acquired to get started oh so fun David man what a special experience thank you to benchmark partnership to for inviting us doing this having a pretty candid conversation with us that's not what I was expecting going in oh no very great they were very gracious hosts yes well we love your feedback to please chime in at acquired.fm/slack coming out with us get your sweet t-shirts from the merch store at acquired.fm/store we also have a dad hat is limited edition in part because that is the only way we could embroider it and so I wanted them to be great hats and so you can go and 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 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