Max Altman and Ben Braverman: Returning to Tradition with Saga Ventures

All right, welcome back. This is the Summit Vision Podcast. I'm Kent Lindstrom. I am your host. My guests today are Max Altman and Ben Braverman. How are you guys doing?

We're doing awesome. We're glad to give you two-thirds of the partnership of our new fund that launched just a few months ago.

Oh, that's right. We'll talk about that. You guys, Silicon Valley is sort of this— is a pretty insular thing. I mean, if you really think about the number of people on the planet and like kind of how many people actually work in Silicon Valley and how much capital they control and how much of the future they're building, it's not that big a place. And within Silicon Valley, it's kind of like a high school, right? There's kind of like a hierarchy. And so the way I thought I would come into your backgrounds is you guys, before you started The Firm Saga, which is what you guys are doing now, Max, before investing, came up on the product side, but working at Zenefits for Parker Conrad, who is kind of one of the most famous entrepreneurs in Silicon Valley. And Ben is the chief revenue officer at Flexport, working for Ryan Peterson, who's kind of one of the most successful people in Silicon Valley, both of whom have been on this podcast, which is probably what you would attribute their success to, I assume.

Of course. Yeah, they both mentioned it, actually.

What else is correlated? I don't know. But so So you guys both, before even doing this, got pretty close to what I would call the tippy top of Silicon Valley. Maybe there's a level above or something, but how did— I guess, Ben, starting with you, what was your path to getting to that point where you're doing one of the most important jobs for arguably one of the most important people, entrepreneurs in Silicon Valley?

It's so funny. It's funny this is your first question, and I swear for anybody listening, we didn't coordinate this. This was a big part of our pitch to the folks who ended up backing this fund, was that it's, you know, we were both just the beneficiaries of some good fortune of like getting to work for these people who, to your point, are the masters of the craft. Like Parker, Ryan. I also worked for Ahmad at Mercury. You know, Max has spent a bunch of time with, with a lot of the folks who's like, you know, Max interviewed at early Stripe and actually declined to join Stripe and stayed in college. You know, it's, it's just funny. Like, we've been around these people who are special and for whatever reason have this ability to sort of morph the world to their whims. And once you see it, it's intoxicating and captivating. And in both of our cases, we built our lives around trying to find more people that give you that feeling. But you realize like, oh, the majority of folks who are pitching, although they are nice people and smart people and they're working on interesting problems, They're not Perg Conrad, they're not Ryan Peterson.

Right.

And I think our job is to try to, as best we can, just find that one in a million person that we were lucky enough to get to meet early in our careers.

Yeah. And Max, same for you. You came up somehow, you ended up at, you know, and I know you've invested since then, but, you know, working for one of the greats as well.

Yeah, it's the same thing where, as Ben kind of said, it's really just fortune. Like, I was a quant trader in Chicago. I hated just staring at my desk all the, you know, my computer screens at a desk all the time. You know, I got to San Francisco, I asked a couple other people, including, you know, both my brothers, like, who are the top companies I should be talking to, you know, to join as sort of the first product person, get to work closely with the CEO, you know, report directly to him. And I looked at tons of different companies, some of which were way hotter than Zenefits at the time because this is 2013. It was 8 employees, right? It was not— it was not known as a hot company. And got a couple offers and Parker just sat there and was like, no, this is why we're the next unicorn. Because back then $1 billion was a massive outcome. It didn't have to be $10 billion.

Yeah.

And just convinced me to join him versus anyone else. And he easily could have just gone and picked one of these companies that ended up getting bought for, you know, scraps later on.

Yeah, it's got to be. So how did you like the— I went to school at Northwestern, so when I like kind of got out of school, the— I had friends who were like trading, like doing that stuff on the exchange. Like, how did you like the that life?

I liked it in that my friends all lived in Chicago. I grew up in St. Louis. And if you're a Midwesterner, the idea of going to California or New York is like, no, the East Coast is Ohio, you know, like the West Coast is Kansas. You don't think of other spots. And my buddies all went to Chicago and I was a computer science major. So I was like, great, yeah, this is what I can do as a good job. And that's really all I thought about it right after college.

It's kind of crazy when people— this is one of the things as we invest in companies, the ability to recruit people. You don't kind of realize in a startup what a ridiculous thing it is, because you really shouldn't go join a startup. Like, you really shouldn't.

Exactly. It's the most important thing. And Ben Thompson and I talk about this all the time. It's a terrible financial decision. And people are like, well, no, it could hit really big. And I'm like, no, even if it hits really big, it's a bad financial decision. Because you can go work at Google and Facebook in Silicon Valley and get paid way too much money to work 25 hours a day and and get liquid stock. And these comp packages are getting massive, uh, 25 hours a week. Yeah, I was gonna say, yeah, yeah. But like, the comp packages are massive. So even if you knock it out of the park and 8 years later your company IPOs and you get a big windfall, yeah, unless you're a C-level executive, you're gonna make more money just going to Google. You're making a bad trade financially. So there has to be some other reason for you to do it.

Yeah, well, it's crazy because there's like the one guy, right? Like, oh, I know that, and I do know this, like a guy who was like the 6th guy at Uber. And he's worth like, you know, $150 million. But nobody ever goes to the bar and says like, yeah, I've done 6 startups in 7 years. And, uh, or, you know, I've done 6 2-year stints. I've done 12 years. I haven't made any money. None of them worked. Like, that guy's not, that guy's not posted on Twitter, right?

Or even if it works, and frankly, you make a million dollars after 6 years, you should, you know, if your goal is optimize for money, you should just go to Google.

Yeah. Which, which brings you to the point of like what an incredible skill it is, and an important skill when you're investing in companies, that some guy can just conjure out of the air— no, of all the companies, a guy, I mean, whoever can conjure out of the air, yeah, this thing, this thing is exciting enough and it's worth all that time and effort to make something happen. What, um, so you guys, speaking of decisions, so you guys decide to start a venture firm. People all over the world listen to this and they don't know all the terminology exactly, but, but when you start a venture firm with somebody, it's a very different thing. You're, you're You're saying to 1 or 2 people, we're gonna form a partnership. It's gonna be a pretty close partnership. Like, you're not just my CTO, like, 1 of 8 people who report to me. And the plan as we get started is that that close partnership will last 15 to 20 years, something like that. So you guys make this decision. Like, how do you guys come— and I know you have a third partner who's not here, but how do you guys come to make this arguably pretty big decision?

So you're—

it's—

this is the right question, right? It's like, how do you— how do you decide to spend your life with someone in marriage? How do you decide to spend 20 years of your life with someone building a fund? I mean, in the case of the great funds, some of these folks spend longer than 20 years together. Like, if things are really going well, you might be doing this well into your 50s and 60s. And that's one of the remarkable things about this business is some of the best brands in venture have been incredibly durable. And if you keep investing in the future of your brand, like, you know, Kleiner had to reboot. But if you look at Sequoia, if you look at Founders Fund, they've just brought in such incredible talent that their brands are stronger than ever. And in the case of like Trey and Peter, they're coming up on 20 years working together. So yes, this is very much the goal. I think this is what success looks like for our investors and for us. And there's kind of no way to know. Like Max and I were friends before we got into this. Max and Thompson were friends. Thompson and I kind of knew each other tangentially because actually his first company that he sold to Square and Flexport were in YC together. Back to your original point of how this podcast started, this is a tiny community of people, right? So like, even though I didn't know Thompson, you know, via friends, I had people vouching for him saying, yes, this guy is wildly smart and he's incredibly good, dude. In the case of Max, I've known him for a long time. Funny enough, like some of the best investments I made at Flexport fund were in things that had nothing to do with transportation that Max brought me into, one of them being Owner.com. I knew Max. You know, I feel like Silicon Valley also is a little bit about secrets. One of the secrets of the last 8 years was that Max and Sam and Max and Jack had these funds. They're performing really, really well.

Yeah.

And I was friends with Max, and Max is a pretty humble guy. I didn't actually know how well they were performing until we started talking about working together. But then I, like, that was part of the appeal of working with Max was like, this guy wasn't bragging about what was frankly like kind of outlier performance. And it was like, it was really, if you were trying to build trust with someone and inspire yourself to spend the next 15 or 20 years with someone, the idea that you come to find out that one of your friends is actually even higher performing than they had let on and that they wanted to work with you, it wasn't a super hard decision to at least start the process. And then we got to do the fundraise together. So like we spent 6 months basically on the road together, meeting with, you know, universities, pension, you know, giant institutions, refining our story, getting, you know, you really get to know someone when you eat 3 meals a day together and you fly together, right? You know, you're sitting in row 28A of a Delta flight together. So yeah, by the end of it, it was really obvious we'd made a good choice. But the beginning was sort of a leap of faith.

Yeah. Yeah. I mean, get out of the way. Like Max is— your brothers are Jack and Sam Altman and, you know, we've heard enough from that guy, right? Like enough.

I think so.

He, he, he, he does like his PR, but yeah, he has a lot of cool things going on in his life.

Yeah, I'm sure he'll be fine. And so I, here's what I, I, I think is interesting about your firm and I just to spool it out, I'll just kind of lay out what happened in Silicon Valley over the past few years. There's a profusion of funds emerge in the last 5 years. And all of a sudden it seems like everybody has a venture fund. They're running a company and they have a fund on the side. They went to college, they've worked for 3 years, they've got a fund. And somewhere along the line, the sort of chattering class of fund people who invest in funds start saying, oh, you need to differentiate yourself becomes like a thing. And then so everybody's fund all of a sudden has a gimmick. right? Like I'm the future of work or space defense or some gimmick. And I, I run the Northern California Space Club or something like, just all these things. And yet when I, I look at what you guys are doing and I, I can't remember what it says on your website, shows you how well researched this podcast is. Um, but you guys basically say, no, we're invest like, No, we don't have a gimmick actually. We're just doing venture capital or something like that.

Yeah.

And I, again, I'm on the side of, I think gimmicks don't work except for maybe two reasons. The one that's like bad, but kind of good is LPs want a gimmick. They are consensus driven. They are not for many of them. The family offices are different, but the endowments are consensus driven. And understandably, like, they need to say, hey, this is what they do. They put you in the box where the x-axis is stage, the y-axis is sector, maybe there's a z-axis, which is like, here's how they differentiate. That's just what they've been taught to do. And nothing against them. You know, it's clearly they've been very successful in that, but it's just easier to package yourself that way. So you have to sell that to the LPs. And then frankly, there's so much noise and it's getting even noisier. There's so many podcasts, there's so much tweeting, there's infinity events in the Bay Area or wherever you are. So if you just say, hey, I'm doing venture capital, we're going to try to invest in the best founders, LPs are like, I don't love that. And then, and then founders are like, you kind of have to have a memetic thing that they can remember how to bucket you. And you need to have your elevator pitch. And people that have spent time in the Bay Area have been trained almost robotically to have their, you know, 15-second elevator pitch from the moment they meet you for anything. And you kind of have to step away and say, hey, It's going to take us longer to get there. But, you know, look what Thrive has done or certain other brands or, or USV or any of the people like that, first round capital. Yeah, you have to be patient for, you know, maybe a few more years, but long term it has to be way better than to give yourself a gimmick or pigeonhole yourself.

Yeah, I mean, it backtests not at all. Like, not at all was like, oh yeah, Uber, it was that mobility fund. Invested in Uber, or, oh no, it was that whatever mesh companies or sharing economy that invested in whatever Airbnb. It was just great. It was first round and Benchmark and great firms.

Yeah. I think if you look at a lot of emerging managers, I think have been shunted into being vertical funds or having categories because to Max's point, that's the product that some investors wanted to buy. If you look— if you do look back, though, on the emerging managers that kind of broke the system and delivered complete outlier bonkers returns, you know, it's Gary and Alexis with Initialized One, which was like Coinbase and Instacart. Like, you could not have two businesses that are more different. If you were a thesis-driven fund, you could not invest in both of those two companies in the same tiny little vehicle. So I don't think anyone is necessarily that well served Outside of a few sectors, like I do think like hard tech in particular, like, you know, there's definitely domain expertise that's necessary. But even hard tech like Reflect Orbital is a great example of every hard tech investor on earth passed on Reflect and said it was silly and never going to work. And then Sequoia, like the ultimate generalist and like Sean McGuire, who like has said to me directly, hard tech you can't invest in until you're 6 because there's too much to prove and the valuations don't work. He, you know, he broke every rule, all the dogma. He was the only one who would do the deal. And now Reflect is like the hottest company on earth and people are trying to preempt their A. So I even think like even if you are a discipline specialist, you get it wrong. So I don't know. I do that. My hunch is over, over the course of the next 15 years, generalist VC is going to trend back in vogue.

And we'll see.

Well, and part of it, I think, in this business is you have to be optimistic and have an open mind. And nobody knew there was an Uber before there was an Uber. Like, that was a ridiculous idea. Nobody knew there was a Facebook before there was a Facebook. So, you know, I had Eric Paley on this podcast, and he pointed out that by the time the sharing economy became a thing and you could invest in it, Airbnb was like 10 years old. So, you know, you have to invest before the things basically, right? Before the, you know, before the things are things.

Yeah. And, and looking back at my portfolio over the last 8 years, And not just to do the whole, I have to publicize this a little bit more. It's been all over the place where our winners are, whether it was, you know, did Rippling, which is SaaS, or Reddit, which is consumer, or Opendoor, which is, Opendoor, which is fintech, and kind of in my opinion, or Palantir, which is defense. Like, we've not— I've not had success in any one category, and my funds would have performed significantly worse if I pigeonholed myself.

Right. Well, and I think there's some correlation with like, how does, how does Elad Gil differentiate himself?

I think that comes down to the answer that like many VCs don't want to hear because it's kind of a massive ego hit and kind of like to your core might shake some people's identity, which is like you'd be surprised, but I think founders pick VCs for a few reasons. The first and foremost is they want to be with winners, you know, how do you continue to do more good deals? The answer is to have done good deals in the past. You're like, hey, I've invested in these 7 unicorns, I'm good, take money from me. It's a pretty good sell. I've done that in the past and it works pretty well.

Yeah.

Two is just don't underestimate how people want to do business with someone just because they like them. You know, if they— if you've hung out, you've been friendly for years, you haven't screwed them over, you're just a cool person. Yeah, that can be a reason. Or just like people kind of want to be in the maybe in social club, and that in the in social club might mean something different in New York to the Bay Area to Austin to Miami, and it means something to everyone else, to, to, you know, mean something different to everyone else. But like, don't underestimate that. And then you make a few good intros for them, that might be the only reason people choose to work with you.

Yeah, which— yeah, I mean, it's funny, we're always surprised where, you know, now the, now the cool thing you're supposed to say if you're an LP is like, oh, everyone says they have a big network and invest in a certain kind of founder. And you're like, well, why don't you go evaluate who really does? As opposed to going, well, that can't possibly matter. Well, of course it matters.

I think it's the only thing that matters. And then having a decade of not screwing it over and just being a generally great person to hang out with and do business with.

Right. If you look back at our last 4 investments, only one of them came out of network, like, and several of them were like decade-plus relationships that yield the investment. Like in one case, like we co-invested with Zach from Mischief, who Max has known for since they went to Duke. Like these are, these are relationships that aren't like, oh, we hung out once. This is we've known each other for a decade plus. We trust each other to be the only investors on a significant deal. But, you know, the wire that like just went out as this podcast started was into a guy that I hired out of college. Like, I don't know. I do think particularly at our size, most of the returns are going to come from people that we've known for a long time.

Yeah, yeah, yeah.

And then not that this is how we sort of live our lives on purpose, but, you know, I've had people like, hey, I just got coffee with this founder. I'm trying to get in and, and, you know, he's considered taking my money, but He's also, you know, he's also taking money from someone who's like, you know, who's his pickleball partner or like plays poker with every Tuesday or whatever it is. And I'm like, he's like, how am I going to beat that other VC? I'm like, you're not. Because I'm always, you know, trying to do business with people that I've had that sort of relationship with. And yeah, hopefully I'm not doing that on purpose, just living my life around cool people. But no, if like you're like pounding the pavement, getting a coffee with someone every 3 years, you're never going to be able to, I think, win those kind of deals.

Yeah, it's kind of funny. I mean, to wrap, we kind of make fun of, well, there's two things. When you kind of come up with your gimmick, the one rule that we, you know, rule, but idea we have is like, if the opposite makes no sense, then it's not a thesis, right? So if you say you invest in unbreakable founders, nobody's investing in like the breakable founders, right? If the opposite makes no sense, right? We invest in world-class, you know, we kind of invest in the B-class. Now you can say I invest in hardware. Not because the opposite does make sense. There's people who don't invest in it. And then the thing where you just restrict yourself, we go, I'm focused on Stanford. And you're like, well, we can invest in people who went to Stanford, like, right? Like everyone can invest in people who went to Stanford. So it's just been an interesting trend that you've walked into and built your fund into.

Yeah. And there's, there's a couple of funds that, you know, they really do have a good mousetrap for attracting the exact kinds of founders that they know how to underwrite, which is pretty useful. But no, yeah, we like having the world, the world sort of being open to us and we like weird stuff. Like one of our favorite deals in the fund, I asked a friend of mine who's a partner at Accel who I knew was looking at the deal and she just was like, look, this can't be my one deal of the year at Accel. Like, this thing's just too weird. I love the guys, are amazing. It's like, I think the business is going to work, but it's just too weird. I need something that's just a little more down the middle because I can do one deal a year here. Yeah. And for you, like, you know, you're our funds that we do a deal a month, obviously, and we're, you know, the way we're structured, by the way, is really all three of us do all the deals together. We don't really do attribution. Most of the deals, it ends up being that both of all— both or all three of us have some connection to the founder anyway. But we love that. We love that. Like, okay, some tier one fund and like my friend there, she's really brilliant. I love that she was honest. She's just like, look, it's just, it's just a little too weird for us.

Yeah, you can play that.

And I think it's very rational of her or whoever the investor is. I think the one advantage we gave ourselves and ourselves up as a, as a 3GP firm is we all can make a lot of money if things go well and we're not incentivized to get a deal done that looks good, gets a quick markup, and then, you know, kind of falls apart. Which, you know, frankly, if you're trying to get promoted up the chain like you are and you should be doing that because that's exactly how you're compensated, it's like, great. That doesn't help us at all. We're only going to make our money from carry with our fund structure. So like, we got to hope it's a big outcome or it doesn't help us whatsoever. And I think we also set up our fund just kind of how we all agree. Talk about who you want to do business with. This is, I think, what we're kind of calling like a high convexity fund, we're selling a product. What we want to do is you're, you're, you're 6x or you're like a 1x, you're going for these big swings that are $10 billion or, you know, or fail. And I think seed funds always were supposed to do. And that's frankly like a more fun way to live your life if you can do that. And it's kind of what the LPs all, I think, truly want.

Yeah. I mean, a little— this is interesting for some people to kind of contrast this between a partnership like yours where you can do what you want and a big firm So at a big firm, people are trying— you guys are just trying to return capital to your LPs like in massive quantities. And there's just 3 of you. But in a big firm, you're trying to get promoted and you're trying to get a bigger piece of the pie and you're trying to do a series of things. And so as an investor, you'll go out and you'll, you'll do things like that. Like you won't make the crazy decision because you don't want it to be your one loss. You'll try to get a board seat even like we don't take board seats. Like we don't think it matters at the seed stage, right? But you'll try to get a board seat because you're like, well, that's the metric at my firm. And so you end up doing a whole bunch of things that may or may not make sense. May or may not make sense for an entrepreneur where we get to just kind of— I mean, we're very decisive and just play jazz and go, I— yeah, this person, you know, it's a big market, they might move around 8 times, but we need to do this person. And we've done it a few times, by the way. We invest and just sit there for about 5 or 6 months realizing, like, I don't know if anyone else is going to agree with us, but, you know, we're in the finance industry first and foremost, and you have to set up incentives correctly.

Otherwise, it's not going to work out long term for everybody.

I also think people don't realize, and tell me your experience, but you do at the seed stage, it's more about the picking really. Like you meet somebody, you know somebody, they don't go and talk to— oftentimes they don't go and talk to like 10 firms, bake them off against each other and pick one. Um, you just know the person. They say, hey, I'm thinking about starting a company. You say, you know, you should start that company. Here's some money. And you're in, as opposed to the Series A game, which is like everybody kind of knows what the winner is and it's just a dogfight to, to get in. They're actually two very different, I think two very different games. And actually you've seen people try to move from one game to the other over the past 5 years with, you know, with different results. Yeah.

I mean, I think that's exactly it. You know, Ben and Thompson and I talk a ton. I think, Ben, you're like leaning into this like even more, which is just like, hey, our job is to get 30 good shots on goal. And like, no offense to any founders, this is a really hard, like, like really sort of random world where we don't know where the winner is going to come from. And like, we want them all to be winners, but statistically that's not what happens. You get 30 good shots on goal and you'll be surprised. And then, you know, hopefully 3 or 4 of them are. And that's all we can really do here.

One of the best VCs in the world whose name you have mentioned on this podcast already, they see probably 80% of the market seed, they told me. And their biggest issue is they still, after 25 years, miss, miss great things.

Like the—

it just, it feels like almost a random walk at the very beginning of these companies. And, you know, you really— all you can underwrite, we think, is, is the founder. Sometimes you don't have sufficient information to do it. And so I think really all of this trends towards like price discipline really mattering. And there's a lot of smart people who have sold a narrative that the best companies you should invest in at any price. And, you know, Peter Thiel famously talks about how the best investment of his life and his biggest, his biggest miss was thinking that Facebook was getting marked up too quickly. And now he sees that as a sign of success. I think people have used this line of thinking to convince themselves of sort of a lack of price sensitivity that's going to haunt them because If we're honest with ourselves, there's no difference between a lot of the companies. When we see a company that's raising it, you know, there's a company we just invested in that, you know, raised at a very reasonable valuation with a very premier lead. And from the outside, like, you know, they're raising it 70% less than a typical YC company with, you know, a founder who's got a big exit and all sorts of things that would make you think they're raising at a higher price. And people are kind of going, no, like the best investors in the world are going to invest in pre-seed or seed stage companies at a certain price range. And the best founders in the world know you get it back anyway. If your company works, then the A, B, and C round that follow a tier 1 leading your seed or leading your A, all the subsequent rounds, your dilution's lower, prices paid are higher. I mean, the level of scrutiny is lower. You can raise faster. Like everything gets easier once you have the titan sort of on your side. And so what we're seeing is it's kind of a random walk in terms of the quality of a company versus the valuation. And in some cases, the higher valuations are actually a counter indicator where it means that one of the tier 1 funds wouldn't do the deal. Someone with less price sensitivity was willing to set a price and lead it. And there's no difference in most cases between the company that's pitching us at a $10 million valuation, a $15 million valuation, or a $30 million valuation. For the most part, like if you were blindfolded and asked to pick which one of them was which based on their attributes, I think you'd have a really hard time doing it. Yeah.

Well, I'll give you an ungenerous interpretation of that $30 million thing, which is that you've had a bunch of, quote, seed funds become very big, $300, $400 million. And so what they need to do, they need to say they're investing at seed 'cause that's their product, but they need to put $7 million into a deal or $10 million or $7, call it $7. And so the smart entrepreneur just gives them the product they want. They're like, oh, it's, I'm definitely gonna have to hire 52 people for 5 years to figure this out when actually what you really need for most companies, put aside the weird AI stuff, you need 3 or 4 good people for 2 to 3 years to see if you can figure something out. And that costs about $2 to $3 million and that gets you to a $12 million valuation.

Yeah. And then the, those VCs win, they're still taking, you know, 2 and 20 and they have a, they have a big pot and they move money and they get, and, and then Frankly, it took all the way up to, you know, incentive chains. The LPs, a lot of people that are backing them are pensions and they, they have to move $40 or $50 million. They can't. So they're like, guys, we can't do your fund if it's $150 million. So they're winning too because they've moved. They have to allocate to VC and everyone's sort of maybe being rational. Yeah, they could be more rational, in my opinion. They could ever make even more money if, if more people thought more about outcomes. But everyone's doing great in that scenario.

Yeah. Oh yeah. I'm the— don't, don't— yeah, don't shed a tear for any of these guys. Yeah, sure. So you guys take out— I mean, it seems like, it seems like you're pretty sincere, like you really are trying to invest in the next unicorn. You take this on the road, you go to a bunch of, you know, investors, LPs, in this market where liquidity has been kind of shut down for a while. There's a profusion of funds, but you raised your fund. Like, how'd it go? Like, what did you, what did you say to these guys, you know, without, without a gimmick, without a thing, to get, you know, $150 million fund working here?

We did $125 million with the first fund, and I think that was something where we were able, you know, in a fortunate position to, you know, cut back the majority of LPs. We wanted to make sure we knocked it out of the park in that if you can do a good job on fund one and be patient and get some good logos in there and have everything look good, like it makes your fundraising for the rest of your life a lot easier. Frankly, it's kind of the same as what we think of as founders, you know, don't try to optimize the highest valuation possible. Their life gets easier.

Yeah. So what's your assessment? You know, I see a couple more things here. What's your assessment of kind of what's going on in venture sort of writ large? You know, a couple factors we've talked about recently. There've been a number of firms that have split up, you know, a number of VC firms that kind of started like you guys, you know, 7 years ago and they've gone their own ways. You know, August Capital, Defy, Sousa. What do you just make of the market in general?

So this is maybe the most controversial thing, or maybe it's not controversial. I know you can tell me that we believe, which is actually the LPs have been very rational. I think when you look at the performance of some of the top funds, they've earned the right to have lots of capital. And like, it's, it's— I know it's fun to beat on some of the biggest ones, but frankly, like, they've hired very smart people. They have incredible marketing. They have people that are working investment banking hours. Like, if you go into a Sequoia office or an Andreessen office, on a Friday night or Thrive. Oh my God, you go to Thrive at 10:00 on a Friday, there will be people there grinding. I think it's sort of become— it's easy to say that these guys aren't going to be able to deliver because they're too big. But frankly, some of the best ones are going to keep delivering. And like, you know, if you look at Founders Fund, who was even so rational or so self-aware, they even returned some cash to LPs and said, hey, we don't want to have a fund quite as big as we thought we did. I think these guys are going to continue to outperform. And I also think, by the way, that LPs are being hyper-rational in not funding new managers. I think the market looks so different than it looked 2010 to 2018, 2016, like where you had Gary and Initialized, you had, you know, Roger Ehrenberg and IA. You had a world where the funds that these, that these sort of guerrilla upstart VCs were competing against were much smaller. The environment was even more intimate, whereas if you were connected to the right set of founders during that era, there really was a scarcity of capital. There was enough time to really get real chips behind the winners before the bigger funds lined up. Frankly, it was a better time in a lot of ways to be an emerging manager. There was a lot fewer of them. The incumbent VCs were a lot smaller. And I think LPs have correctly identified Frankly, way too many people were raising venture funds, like people who had been a PM at Facebook and had a 2-year stint as a founder that didn't go anywhere were all of a sudden managing $100 million. I think the pullback from emerging managers is just like— is totally rational. And I think the bar in a world where you're competing against a Sequoia with unlimited money and an army of people working 80 hours a week, the bar for emerging managers should be super duper high.

Yeah.

And like, you know, you asked how we raised this. Effectively, Max, you know, had the track record with the first with Sam and then with Jack, where across 3 funds they really delivered vintage by vintage unbelievable performance. This started resonating with LPs when the story was, hey, this is a spinout from Altman Inc. Max has been behind the scenes managing these vehicles while his brothers do other things full time. And he and he and Max was sort of aware enough of what a founder wanted that he brought in like sort of the archetypal technical founder in Thompson. The archetypal sales leader in me. And that's effectively the package the founders wanted. So that was the pitch that ultimately LPs were sort of like, yes, we will write a check into that. No problem.

Yeah.

And don't the later stage VCs, though, in defense of the emerging managers, need an emerging manager, need your product? Basically, I'm using product as the company to do what they do. Like they need somebody to take the company to the point where they can put $20 million or $50 million into it. They want you to succeed because your success makes their success possible in some sense, doesn't it?

Our job is sort of like, you know, kindergarten teachers or whatever, where it's like you find this company. If you can check your ego at the door again too, you get them to a point where you say, hey, whether it's Sequoia or Founders Fund or Thrive or Khosla or Accel, whoever it is to say, hey, We think this is a great company. You should go lead the Series A. We have moved back. You guys can join the board. You're first chair. We're far second chair, and everyone wins. And the really good firms, I think, have rightfully understood that. It's like, hey, don't, you know, we're sort of the big dog, as Ben would call, you know, as we call them, but also like, don't bite the hand that feeds you. It's like, will, you know, have ball control over the companies that we've backed. And we, we can definitely, we definitely want to partner with them. Everyone wins if a true tier 1 firm leads a Series A and we get slightly less ownership than we would have with a different person. We win, they win, the founders win. And if we can just keep that going and all be sort of mature about it, like everyone wins. When people start saying to us like, hey, we need to have our 20% of the Series A, even if you bring it to us like you can't even get, you know, another million or $2 million in here, it's like, well, great, I understand. Good luck. This is not going to be a partnership. And there's a lot of other really great people we can play ball with. And I think that's sort of how we're going to build our firm out, our careers, you know.

And I'll say those big firms are big firms and successful for a reason. We were talking about this a couple of days ago. It's kind of funny, the correlation between response times and how famous people are. We, we sent something to a very famous partner at Sequoia and a couple of no-name, and not to be disrespectful, firms that you would not think.

Yes. Less known.

And the big partner Sequoia responded about 7 minutes. And I, you know, I'm interested, you know, copying, da da, let's do it. And the, the, the no-name was like 3 days later. Um, you know, no response. I like, you know, Jonathan, my partner will text Marc Andreessen. Like, I don't know who could be more famous or successful. And in about, an hour later he's like, hey, this, this is interesting. I'm going to have him come by my house on Tuesday. Like, these guys are there for a reason. A lot of these big guys, we deal with that all the time too.

I think we had, you know, maybe to call them out by name is like there was a deal that we, we sent. I texted Keith Radboy, same kind of thing where he's like, you know, as famous and respected in the industry as you can be. And he's like, hey, I'm at a wedding right now. It's the evening. I've had, I've had a glass of wine. but he responded. He's just like, hey, I will get to this right now. And then the next morning, you know, he's on top of it. And, you know, and that's how the best people are.

Yeah, it's kind of incredible. Well, let me— I want to ask you about a couple of trends in venture and finally kind of ask you about the companies and what you see as the future. But what do you make of the rise of— here we are on this podcast, but kind of the rise of the podcasting and celebrity I was just thinking about this yesterday. You've got like this thing that you never had like 10 years ago. Like Harry Stebbings is this guy who's never done anything in life but have a podcast and manages hundreds of millions of dollars. Like David Sachs has a podcast that has presidential candidates coming on it. Like, what is this? Like, I'm just trying to have a conversation with a few friends here, but You know, some of these guys like, oh my gosh, I was like, Harry's Harry.

Harry's having his buddy. I think Harry showed everybody a path.

By the way, I didn't mean that disrespectfully.

I meant, oh my God, like, the way he was like, no, no, look, Harry wouldn't dispute your characterization. Like, it is a remarkable and implausible story to be, especially in Europe, to have a fund of that size at his age, having never built and sold a tech company. He's an N of 1 as far as people who built their career that way. Yeah, but he really showed a lot of, a lot of managers that there was this vacuum, like everybody wanted content on startups, particularly on the inner workings of venture-funded companies, the inner workings of how these deals came together. And he was able to punch so far above his weight class in terms of the quality of guests. And now it's like, who knows what's more valuable, the media business or the fund? I mean, I think they're both doing okay. Yeah, but yeah, I I do think there is a unique divide, though, between like some, some VCs who sort of are totally above the fray, who you never hear from, but that are like quietly the most powerful people in the world. And there are some people you hear from every day on Twitter. And I don't know if one delivers more alpha than the other, but certainly these media businesses become inherently very valuable. I, I, you know, I know the advertisers pay an incredibly high CPM for this audience.

Yeah. What do you— good.

Well, I also think too, and I've talked about this a ton because I know these, you know, sometimes people in the VC industry get shat on a lot and frankly often like rightfully so. But a lot of this is like, if you think about the alternative, you know, if you're comparing yourself to a hedge fund or a PE guy in New York who's working 90 hours a week and barely sees their family and is stressed out of their mind, they've decided like that's kind of not exactly how they want to be living their lives, but they're willing to do that to make money. Whether it's Harry or someone else and whatever their reasons might be, it's like, great, we figured out a way that we can monetize ourselves and not have to work 100 hours a week and talk to smart people. And like, for whatever reason, like, it's sort of a rational choice by them as well too.

Yeah. Well, and you have to— I mean, LPs are listening to— like, we've had some people invested in our fund, and I've had my partner Jonathan— we've worked together a long time. Come on. He's— so he's been on the podcast and we've had LPs say to us after they invested, oh, you know, part of why we invested is we went back and listened to that and listened to how you guys thought and talked to each other. And it had never occurred to us. We'd forgot we'd done that podcast, you know, 3 years ago. But part of their due diligence, they'd went and they wouldn't listen. So I guess we got to make sure we all sound smart on these things. What, um, wrap up with a couple things. What do you, what do you make of this sort of— what do you make of like the All In phenomenon? I mean, you know, there was just presidential candidates, they just held the, you know, one of the biggest, maybe most impressive conferences I've ever seen. I mean, that's kind of a little different, different thing from Harry Stebbings.

You know, Ben, we'll go— no, go ahead.

You, you know, you know David better than I do.

Yeah, David was my boss for a little bit at Zenefits. Except for Chamath, I've met all these people in real life over the years. Well, you know, first off, they're all very successful people in their own right, doing different things. And frankly, many people in the tech industry are like bored and have too much time on their hands. Back to what we're saying, they're not working hedge fund or PE hours and they're working Google hours or VC hours, which are not 40 hours a week. And they're like, great, they want to get involved with politics or culture or whatever it is. You know, I think many people in sort of big coastal cities want to do that anyways. So they have interesting things and they're all so successful before that they don't mind saying things that are really spicy takes. So it's, you know, pretty interesting to listen to. I'm not a regular listener, but like sometimes in the car for sure. And it's entertaining.

Yeah. Yeah, I've been entertained by— and boy, would I never step into this— but the big boys going after each other, like Vinod and Mark Cuban and Marc Andreessen, all poking back and forth in a way that I'm like, "Whew." What else are they supposed to do with their lives?

You've already won. They're already 55 and multi-billionaires and super— what else are they supposed to do now?

What else is Twitter for but dunking on your friends? By the way, you said something funny. This is a funny thing that's emerged recently is the you talk about people grinding at Thrive. There's become this narrative. You can just say anything in venture capital these days and people just go, oh yeah, it makes sense, but it makes no sense. This narrative that people work harder in San Francisco than New York. Have you heard people say this? And they go, well, there's nothing to do in San Francisco, which is, I mean, we got an ocean, we've got like—

I think it's possible the founders in aggregate may work hard. If you took the average hours per week worked at an SF startup versus the average New York startup, wouldn't surprise me if the hours per week was higher in SF. Um, on the investment side though, you know, people in New York are insane. Like, people— New York is the original investment banking culture. Um, that's what I mean. Friends with the guys who run, um, Henry Kravis's family office.

Yeah, yeah.

Stonecroft. These guys are working constantly. Like, you get texts from them at 11 o'clock at night. I know the idea that anybody in New York, especially on the, on the, on the buy side, is not working hard is crazy. I— so there is, there is less to do in San Francisco. So if you're like a 24-year-old founder, San Francisco is a good place to just lock in. And we, you know, we invest a lot in the Bay Area despite our office technically being in SoHo.

Yeah, that's funny because as far as I remember, New York was known for the 120-hour investment banking week and all of a sudden we were getting that in San Francisco. But so wrap up. So what do you— as you look across the landscape, you know, whatever's happened in VC and you have your fund, Every few years we get that thing, everything's been invented. Now we have AI. What are you excited about? As you look across the— you've got a shiny new partnership, you've got capital to invest. As you look to the future, what animates you?

I think the thing that's the most interesting to all of us is what are the second-order effects? Like, what are, what are the totally novel businesses that can be built because of these, these new products? Like, we invested in an insurance company that's like fully vertically integrated. It's, you know, the founders of HotelTonight, MetroMile, PolicyGenius, like, you know, guys who are doing this as like a true second-act labor of love. They saw a problem that like most of California is now uninsurable. They saw another problem that the traditional way that you underwrite homeowners insurance particularly in fire zones, is just zip code by zip code. And there's no— you know, you don't take into account the actual property, the dynamics of the region with the fuel sources. Like, if basically if a place is actually going to burn or not doesn't factor into the model because before AI it was just too complicated. Like, what are you going to do, hire, hire an engineer to build a model for every house? No, it's like, okay, now all we can do is do zip code, do the zip code-based modeling. And that means that a lot of houses that should be insurable are not insurable. So with this company, it's called Stan. What they figured out is, no, actually now with a combination of like sensors, video, drones, you know, whatever the inputs are, you can assess in real time property by property what is the risk that a fire is going to claim the property? What is the risk of minor damage? What is the risk of total loss? And obviously it's modeled based on the surrounding risk of fire. But all these things are based on the fuel path, it turns out. Yeah. So like, this is a company that could not have existed 5 years ago. Like, it just— the technology wasn't there. You couldn't build the models fast enough or cheaply enough to underwrite these houses individually. Also, like, you know, fortunately or unfortunately, all these big insurers have announced they're pulling out of California.

Yeah.

So it's sort of like this weird moment of serendipity where you're like, this is— this problem is really coming to a head right at the moment. Technology is stepping up to solve it in a novel way. That kind of company you just like can't help but get excited about. And, you know, this is why I think we have to be generalists. We know nothing about the insurance or fire insurance space, but we heard this story and we dove into it. It was super compelling, but we don't know where AI is going to strike next. And like, we're a small fund. We're not backing foundational models. We're not backing the next Nvidia competitor. We're backing things that look more like that.

Yeah. And isn't that always the case when technology comes along? Like, you start, you know, mobile comes along and people start doing check-ins on Foursquare or whatever it is. Okay, that's great. But then somebody says, you know what, you could use this to call a car and pay somebody for a car. Maybe Uber's the thing. And it was never in your imagination and it was never in Benchmark's imagination, but someone brought it to them and they said, I get it. And it sounds like that company you just talked about is one of those things where you're like, yeah, I wouldn't have thought of that, but I get it.

And we think there's going to be a bunch of these coming. And the cool thing is now Silicon Valley is not just a location, it's a culture and it's a way of building companies. And it's an overall theory for how companies can be organized and incentives can be deployed. You have this generation of founders who have now gone through a full cycle where they were in YC in the late 2000s. They've now had an exit or two. And now AI is coming out at a time where they really understand a vertical. And we think that's like such a special moment in history where you've got these people who've built companies the Silicon Valley way for 20 years. They're still at a point in their lives where they have the energy to go again. They understand a vertical. And all of a sudden, this technology, like from, from, you know, from Sam Altman, from Google, from, from Mark Zuckerberg, like whoever's model you're using, this technology is like really from the heavens. It just changes the set of things you're able to build. We think there's people, you know, a lot of these folks who are in their second or third act are just going to do wildly impressive things, you know, now that they're kind of unburdened by short-term capital needs.

So how do people— I assume you want to be found somehow. How do they find you? They find you on Twitter? Do they— what's the best way to get to know what you guys are up to?

You know, in person is all— it's always best, but obviously that's harder if we don't have a relationship. Our emails are open. It's our first names at saga VC.com. Like, I promise we actually read through what people send us.

Excellent. Well, thank you guys for doing this.

For sure.

This is great.

All right, thank you for having us. We really appreciate it.

Yeah, this has been the Something Venture Podcast. Ben Braverman, Max Altman, my guests. Talk to you next time.