EP 90: Eric Vishria (General Partner, Benchmark Capital) Behind The Scenes of Benchmark’s Boldest Bets

Welcome to the Logan Bartlett Show. On this episode, what you're going to hear is a conversation I have with Eric Vishria. Eric is a general partner at Benchmark, where we've been fortunate enough to share 2 investments together over the years. Eric and I both got into venture in 2014 and both focused on enterprise software. And so we have a discussion about how he views investments and what he looks for in founders as well as companies, which It's vastly different than the way I think about the world. And so, a fun conversation kind of going back and forth on his model versus mine, as well as Eric's background, having grown up in Memphis and graduating Stanford at 19 years old before joining LoudCloud, which became Opsware with Ben Horowitz and Marc Andreessen. Really fun conversation with one of the more thoughtful investors in venture capital that I've really enjoyed getting to know over the last couple years. You'll hear that conversation with Eric here now. All right, Eric, thanks for doing this.

Thanks for having me.

Right above your office. We've never recorded here in our Woodside office.

Oh, is that right? Well, I appreciate you coming down to do that.

Yeah, yeah, yeah. So you and I are both venture capitalists. I think we got into the industry around the same time. When did you start at Benchmark?

2014.

2014.

Okay.

That was 2014 as well. We invest broadly in similar stuff. We have 2 shared investments at Amplitude and Acuity. I think they would be remiss if we didn't shout it out. But I think how we think about things is vastly different, and I've enjoyed picking your brain. I, part of that's probably a function of stage. You're earlier.

Sure.

I'm definitely a little later, but I always enjoy asking like how you think about things. And so one of the, I guess just to start with, what, what are you looking for when you're taking meetings with entrepreneurs or, or meeting with businesses?

That's the right question.

Yeah.

I don't know if I have the right answer.

You told me a couple months ago that like within the first 5 minutes you met a CEO and you were like, We're going to— I'm going to make this investment.

That happens to me a lot.

So I don't really know what that feels like.

That happens to me a lot. I would say that, like, if I look at the investments that I've made over the course of my time at Benchmark over the last 9 years or 9 and a half years, I think all of them actually have that element where it was like you had this feeling very, very quickly that this is the kind of person you want to work with. That it's an idea that is really special and it could be something big. I think those are all, those are characteristics. Those are the 3 things that I would like say. And I think part of what manifests for me is when the entrepreneur makes you see the world differently. Like they say something Typically very early on that you haven't heard before, you haven't read about before, no one else has articulated. It's just a unique view of the market. You're like, huh, that's plausible. And then they go on to explain the intricacies of it and you're like, wait a minute, maybe there's something there.

Hmm.

And then the question becomes like, well, okay, let's say everything they said was true. If it worked, could it be a big valuable business? That's a very, very important question. And then do they have an angle of attack on the market, not just the insight, but also an angle that is defensible and not replicable and blah, blah, blah. And so I think those are kind of the things that they put out there, which is like, it is unique. It relates to this whole, do venture capitalists have a thesis or not, actually is a very— Interesting question.

You're preempting some of my questions. So you are a non-thesis guy.

Yeah, non-thesis. But I think part of it, what I realized on it, and maybe a better articulation of saying whether it's thesis or non-thesis, to me, is false categories, is like, who comes up with the thesis? And I think it's my view that entrepreneurs have the thesis. It's our job to assess whether we believe the thesis or not. And so they have the thesis. And because if we have the thesis, then a lot of people have it. If an investor has it, then a lot of people have it. And if a lot of people have it, that probably is not going to be that big an outcome. That's the thing. Now, I think to be fair, one of the things that's weird about our business, venture capital, is there's a lot of models of success. There's not one model. There's not one path. There's many paths.

Yeah.

And there are probably venture capitalists out there who are smart enough to have a thesis and be futurists and see the world and see where it's going and everything else. I'm not one of those people. And so I love it when I'm sitting in a meeting and someone's like, wait a minute, this is how this is going to go. And everybody thinks this, but it's really going to be this way. And you're like, huh. And it makes you think. And then you're like, well, one, I've never heard that before. Two, it's cogent, right? And three, if that happens, it could actually be really, really big. And then they have a path to kind of get there. And then that gets you really excited. And so I think that tends to happen to me.

You mentioned person, idea, and big was what I took down. And so I wanted to deconstruct each of those. But so on the person side, obviously there's the articulation, there's the viewpoint, the thesis that that person's able to articulate. And then you mentioned cogent. So that's also kind of tying into that. But are there characteristics of, I mean, you've backed very young people. I don't know, how old was Sajid when you invested in him? 23, 24?

Yeah, something like that. Young.

You backed older people, you backed experienced people. So there's not one heuristic across that type, but is there a personality characteristic or?

They're all learners. They just learn. And so like, I just, one of my big conclusions is it just doesn't matter where you start. The only thing that matters is the slope. And so you have these people who are just like, They're just learning. And you're like, you know what? Like, our business is long-term, right? We're gonna work on these companies. I've been working on Confluent and working with the Amplitude and Confluent teams for 10 years now, almost 10 years, 9 and a half years since I got there. And it's a long, long time. So you have a lot of time for that rate of learning to compound. And, you know, you have to have luck and you have to have the right market and like all of those other things have to line up, but If someone's learning at those rates, you're just like, wow. I had this, uh, the, the, my first meeting with Sagi at Benchling, it, it felt like he hooked a hose up to my head and just like sucked out everything he could.

Hmm.

Um, and now that's, that's the only real Series B that I've done, um, that I've led for us. And I knew nothing about the market. It's vertical SaaS for biotech. So I knew nothing about the market. Vertical SaaS is very in vogue now. You and I are working on one together.

Yeah.

But at the time, it wasn't like nobody thought of it. It was just like, eh, it's kind of whatever. And then, so it was kind of vertical SaaS in a market I didn't really understand and like everything else. But I think 2 things occurred to me in that meeting. One is like, wow, that is a special individual. And then 2, it's a SaaS business. Like, I kind of know SaaS a little bit, so like, I can kind of work with it. So like, those were like my 2 takeaways. And then the second meeting, I met his co-founder, Ashu, and we met together at their office, the 3 of us. And I had some questions and everything else. And I was like, hey, they made the claim that they had never seen a customer churn. You know, at the time it had 50 or 60 customers, which is pretty unusual. Like, you know, we look at SaaS companies all the time to get to 50 or 60 and never have a churn. Like, it is very rare.

Very rare.

And so you're like, huh, that's interesting. Like, that's worth it. And so I was like, I want to go through every customer. So they pulled up a spreadsheet because it wasn't— no CRM at the time. And I remember very distinctly the floor was sloped in the office. So you like had to hold on to the table so that your chair wouldn't drift. Which is also a good sign that they had shitty office. And we just like went line by line through the spreadsheet and like one or the other of them would talk about every account and what was happening at every account. And then, you know, we would ask, I would ask questions about different things and then they'd ask questions back to me or like, why are you asking that question? Why do you think that? And then I realized, I was like, shit, there's not one of them. There's two of them. There are two of them at the company that are like this. So that was, that was, that was pretty special.

And you can't bullshit that level of like understanding.

Like when you're, when you're That level of curiosity, and you just can't. And, you know, we work with Spencer at Amplitude, and Mike at Acuity, and obviously Jay at Confluent, and a whole bunch of others, and they're all like that. All the ones I work with are like that.

Do you have like a single thing that, to figure out that learning slope, or is it just a feeling when you sort of drill in, and the questions they ask?

I think it's a feeling. I think A lot of entrepreneurs are trained to sell. And like, we all have to sell. Like, at the end of the day, you and I are glorified salespeople.

Yeah, we're on a fucking podcast.

Yeah, exactly. And so, like, we're all selling all the time. And like, a CEO has to sell a lot. Like, that's part of their job. It's a huge part of their job, whether it's to investors or customers or employees. And as part of that process in a fundraise, you want to feel like they're engaging authentically. Like, they're selling, but they're also listening. Like, they're hearing, they're engaging. And maybe a good way to say that, which my partner Sarah uses, is like, they're truth-seeking. Like, they're seeking truth. Like, they're trying to get to fundamental ground of like, what is it and what the right way to build the company is. And the reality is, if you message entrepreneurs, it's just like, None of us are investing in your idea, your million in ARR, your $3 million in ARR. Like, you know, sometimes you get these decks and it's like a company's at a million ARR and they're showing their NRR and all these metrics and you're like, who cares?

Maybe.

Like, maybe. Like, none of that is extrapolatable, or most of the time it isn't extrapolatable. And so you're investing in what could be and what the potential could be. And the reality is, because the future is unknown, you are going to encounter, as an entrepreneur and as someone who's building and leading a company, you're going to encounter all kinds of things that you can't imagine, you can't foresee. And so what you're really betting on is someone's ability to navigate that obstacle course and those unknown obstacles in the future. And so I think that's why it shows up. And I think you can tell through the interactions, a lot of times you can tell, it's not perfect, but I think you can tell a lot of times in the interactions just how they think about things and are they truth-seeking in that way and are they trying to learn and get better.

Are there any commonalities in investments that you haven't done that you wished you would have?

Yeah, actually, I think— The mistake is underestimating the trend because you had questions about the person.

Got it. So—

The trend just overwhelmed.

Yeah.

It just worked out by itself. And then maybe the person, you underestimated the person too, but like—

That's a hard one because Ultimately, especially when you're investing, you don't know the other companies that are going to come down that are identified the same trend. And so we were at Battery, we were invested in BlueJeans, and then Zoom came in, or InVision, and then Figma came in. Right. And there's these trends that are very true. And if you look, you can get false precision about like, oh, well, it's the best company out there. Right. Which is true. Both those companies were the best companies until they weren't.

Until they weren't. Yeah. Yeah. I think it's just like one of these dynamics where, you know, like we saw the Snowflake Series C, right? Which was this, I think it was a Series C.

The Altair round?

Yeah, I think it was Altair. Yeah. Yeah.

Everyone saw that round. No one wanted to do it.

No one wanted to do it, right? It was like $2 million AR, or something like that. Yeah.

But like small customers.

Small customers. Burning a lot. And I was like, Okay. So the bet is like they're going to out AWS on AWS.

It's so funny. That was the exact thing I said internally at Battery. I was like, come on, they're going to— this is AWS. And this was AWS at its like peak, peak pound.

And, you know, it's like, fucking oops.

Yeah.

That really, That was a bad read on it. And maybe not understanding or believing enough the technological advantage or whatever else that ended up being very real and durable.

I don't think I've said this here before, but one of the analogies I've started to use more and more is like the best CEOs see a flame and they're like, that looks hot. And then they see a stove and they're like, that looks hot. And then they see a bonfire and they're like, that looks hot. And they Ask for help before they touch any of them.

Right.

Now, the very good CEOs touch the flame and they're like, oh gosh, that was fucking hot. And then they see the bonfire and they're like, that reminds me of that stone there, that flame thing. And it's like, that's very good. The best ones like notice that there's smoke emanating from it and touching it probably isn't a good thing. But it is nice when there's that iterative learning loop of—

So my encapsulation of that very same idea, which I said is like, The best CEOs are making all new mistakes.

Yeah.

You're always making mistakes.

Totally. No, of course.

But they're all new.

That's funny. As you think about something being big, there's kind of the moats and the defensibility. There's the size of the market as what it could be versus the rate of growth versus what it is today. How do you sort of think about what the big element of it is?

Yeah, I think there's a lot of different ways, and this is one that we can get wrong. And because like a lot of companies that start That was a knock on Benchling, right? Yeah, it's a knock on Benchling and a lot of the vertical companies, but it's been a knock on a bunch of things. It was a knock on Shopify really early, which is—

It was a knock on Veeva.

Yeah, exactly. And so there's so many where it's just like, well, okay, so what does big mean? And actually, just one other point about this is you actually want to be kind of tight to start because then you have a chance to dominate. Dominate and build value and get the word out and so forth. The big thing that I kind of think about is, is there something changing in the world that the company has nothing to do with, but such that the future state of the world would yield a bigger outcome for that company, if that makes sense? That's poorly articulated, so let me try it in a different way, which is, I use this analogy sometimes, which is there's the boat. So every entrepreneur comes in and they pitch their boat and they're like, hey, we have a better hull design and we have a better rigging system and we have a better crew and like so forth, new materials, whatever it is. And the most important thing isn't actually the boat, it's the wind. Now, the boat designer has nothing to do with the wind. The wind is the wind, at least at first. But in a strong wind, even the shittiest dinghy will fly. And if there's no wind, an America's Cup boat is going to sit there. And so the wind is what is changing in the world or in the market that is enabling this new thing to be and can allow it a chance to exist. And so I think that is like a really important question of like, what, you know, what can be big? And so I think if you kind of go back and you kind of like take a look at a Shopify or you look at something like that, it's just like, well, like, is e-commerce going to be enormous? And like, is that going to be the way of the future? Then you can, you might, you might come to a different conclusion than you would've initially.

What's your perspective on artificial intelligence right now?

Look, I think it's a It's an incredibly important technology. I think that how it is going to impact things and what benefit is going to go to incumbents versus not, like, all these are all things that are out there. Like, what's my original thought on it? I don't know. I don't think I have an original thought on it, on where it's going to go or what it could be. But I do have conviction that there's a lot of value to be built.

At like a GDP layer?

At a GDP layer. Yeah, I agree with that. At a GDP layer. And figuring out where it's going to go and how it's going to be attributed is really hard. I think my partner Sarah had this post about basically you can sell the work now. We used to sell software, now you can sell the work. You can sell the work that the AI is doing, which is potentially a much, much larger market.

Like the output?

The output. Yeah, exactly. Like one of the recent investments that we've led, which is not yet announced, but it's basically, they're like, yeah, everyone's going after these like software tools dollars, but like the labor dollars are 10 times that, that are being spent there. And like, that's what the AI can do. And that's such a very powerful idea and very expanding in terms of what it could be.

You guys haven't done any like model Any foundational model. Yeah, we have a foundation model. Which is a little different. I mean, the funding and the structure is a little different than I think you guys typically play in.

No, we typically do.

Yeah.

Thanks to what we've inherited and the success of the founders and prior partners and everything else, we have a lot of flexibility in terms of what we can do. And so we try not to be religious about You know, hey, it's like people will ask you, what check size are you in? Or sometimes entrepreneurs ask you, I'm sure they ask me, like, where are you in your fund cycle? And I'm like, don't worry about that. Yeah. You know, that's not like an important question.

If any entrepreneur wants to know, I think they're fairly evergreen. I know you have different fund structures, but I think your LPs are—

We're going to be fine. And so we try not to be constrained about that. So I think if there's an opportunity, that we really believe in, we'll do something weird. Like, we're not unwilling to do that. But the core of the model is partnering with early-stage companies in a high-engagement way, which is typically less than 10 people. It's often no revenue, sometimes a million or 2, and that's what we're partnering with. And we're partnering with on a journey that hopefully lasts a really long time.

Do you have any views? You said, said no, no specific insights on the artificial intelligence, but there's— it's hard not to sort of think about the implications of it for software, where we both spend a fair amount of time, and the dislocation that could occur. I think probably the vast majority goes to some of the incumbents, much in the same way mobile Salesforce was Salesforce, right?

Yeah, sure, sure.

It's probably, you know, AI Salesforce is probably Salesforce. I don't know, but like maybe not. Maybe Salesforce trips up in some execution. Anything that you're thinking about, uh, with regard to new attack vectors or dislocation or opportunity sets? That the outcome one is interesting, or the output one.

But yeah, I think, I think, you know, if I kind of say there's, call it 3 categories of stuff right now. So there's the foundational model stuff, which is I think it's very expensive. It's very quickly depreciating. It's maybe the fastest depreciating thing in human history. And so like that's the foundational models game. But obviously if you have one and it ends up being really defensible, you're in a very powerful position. You know, we can argue about whether it will be defensible or not. You know, it doesn't matter.

They seem to get commoditized fairly quickly.

They get commoditized very quickly. That's what I mean by the fastest depreciating thing in human history. Like just, it's just like, You spend $250 million building one and 6 months later people build them for $2.5 million. That's just like, we have never seen that, Chris, ever.

Yeah.

Buying a Bentley is a better investment.

Yeah.

And driving it off the lot. And so, 2, you have, there's a lot of ML infrastructure kind of companies. that are basically make it easier to manage this stuff, make it easier, whatever. And there's been fits and starts in that area, and there have been things that are working and not working there. I think there's the question on those is really like, hey, how much of it do the cloud providers take? How much of it is there room for an individual new provider? Are you just like— bundling and unbundling maybe, but maybe that's all business. So, you know, that's kind of that piece. And the third one is vertical stuff, which is like, okay, it's like an application, like we're going after it, and you're kind of delivering in value to the customers. And I think that's where we've seen tremendous revenue traction, right? Like all of these companies, like if you look at the Jaspers of the world and, you know, CopyAI and And Ryder and those types of companies have just evened up. They've had tremendous revenue traction, amazing. And they've grown. And I think the question for them is just like, well, what's defensible? They've had many, many copycats also, and the wrapper's been thin. And so each one of these areas has a different set of questions that you have to kind of have point of view or conviction on. And, you know, it's been interesting for us to kind of go through that.

Those are kind of the B2B ones. The ones that I don't even know how to think about are the net new sort of weird AI stuff and the character AIs or the Midjourneys or the Runways or the ones that are just like, this is different. It's more consumer, prosumer, or whatever, but like, I don't even, That's the one where you could end up being really wrong to not participate in them, right?

Yeah, absolutely.

Some of those other ones, like we know what the foundation model, I don't know, but the infrastructure tooling stuff, we sort of know what those businesses look like.

Yes, we do.

We know what Mongo looks like and Confluent looks like and we sort of know what vertical software companies look like, right? These other ones, people talking to bots all day, I don't, you know.

Yeah, we have no idea. You know, what do you do? You keep looking at 'em. And partially what you believe.

Where does price fit? You guys are almost entirely Series A, some Series B, with some exceptions, I guess. But how does price fit into that consideration?

Like price of the company?

Yeah, like valuation you're willing to pay versus not.

It's funny. It matters, but it doesn't matter. Yeah, totally.

I mean, everything you just said would lead me to be like, I mean, if we want to do it, we'll do it.

I think that's the reality. There's a problem on it, which is price isn't the right indicator of it. So price doesn't matter, ownership matters. And we're kind of traditionalists, and you could poo-poo us for being traditionalists in that way, but we are traditionalists in that sense. And the reason is because of the level of engagement, right? We work on boards for a decade plus. That means that you're kind of constrained by the number of opportunities you can have that you can work on. And we're high engagement with those CEOs. Like today, before this, what, it's 1 o'clock in the afternoon, 1:30, I've talked to 4 CEOs that I work with today. So like if you're in that kind of place and you're having that level of engagement with people, then you're time constrained. And so you just have to get return on that in order for our business model to work. And so our business model is kind of dependent on ownership in that way. Peter said this to me very early on, right after I joined, and I was looking at a company and I was like, oh, well, maybe I would do it here, but I wouldn't do it here. And he was like, that's sloppy venture capital thinking.

Stop.

He was like, look, either you think it can be a multi-billion-dollar company and you believe that, or you don't. And if you do, it doesn't matter. And if you don't, it doesn't matter. And so it kind of doesn't matter. And so there's an element of that which is true, but of course, the complexity is you do have to believe you can generate enough return on it to make the business model work and the opportunity cost justified, basically.

And so then when you're thinking about that, is there an underrating? Are you thinking, hey, can this position be worth $1 billion when you dream the dream?

Or is it just like a I would say every one of us at Benchmark's probably a little bit different in this regard in terms of how we think about it. People say things like we underwrite it to a certain return or we construct this probability curve or whatever. I don't do any of that. I mean, I think the reality is if it's successful, it's going to be successful beyond our wildest dreams.

Yeah.

And so it just doesn't matter. And I want to be part of companies And I think we want to work with companies and we aspire to work with companies that have that, that have that, like, you could have never imagined.

Yeah.

And, you know, they won't all be that way. And like, not everything works and like, and, and that's okay. Like, I'm fine. I'm fine with trying and it not working. Like, it sucks, but like, I'm fine with that. But you want them to have that kind of special feeling where it's like it could be enormous and any probability curve I construct is just BS.

So you've had a fairly serendipitous run in 10 years. Your first investment was Confluent, which is now a whatever, $5, $6, $8, $10, whatever the— given the day.

Whatever it is today. Yeah.

Billion-dollar valuation. We talked about Amplitude, public company. So your first 2 were public, right? Also Benchling, we mentioned Contentful's doing quite well, kind of your first cohort of businesses. Cerebras, we talked about Accu at AMD, a bunch of interesting companies along the way. How much of this success do you think was guided by the structure of Benchmark and some of the mentorship you got from Peter and Gurley and whoever else in the early days of you joining versus— Your own kind of instincts on some of these things?

I think a tremendous amount was just the structure and the model, and a tremendous amount was just luck, like right time, right place. Like, you know, it turns out it was like good to be an enterprise SaaS investor, infrastructure investor.

You've gotten luckier more than most, I will say.

Yeah. Joining in 2014, it's like, it's pretty helpful. Yeah.

Yeah.

Yeah.

Nice multiple appreciation and all that.

Yeah.

What would you attribute to Bill, like a learning from Bill that was helpful versus Peter, maybe? They're very different people.

Yeah, they're very different. They're all very different. And Mitch and Matt were all like, those were the 4— That was the core team. The usual 4 when I joined was Mitch, who had Riot and Snap and Discord and many others as his big companies. And then Matt Kohler, who's had just an unbelievable track record, both as an operator or not. And then Peter and Bill. Each of them is actually different in terms of what they view. And it just goes to this whole idea that there's no one model of success in venture capital.

Right.

Bill thinks a lot about markets and value, where value's going to be attributed, how it could trade if it were to grow up. He thinks a lot about what the future state of the world is. He does think more about thesis, like what's the thesis for this ahead of time? And I think that's been talked about a lot. So he thinks forward a lot and kind of tries to imagine future states and then goes and looks for all the companies in the category and stuff like that. I think Peter's more founder-driven and he's more oriented around who's the individual and What makes that person tick and so forth. Yeah, exactly. You know, I think Matt is very trend-driven in terms of how he is. And Mitch, Mitch and Matt, but Mitch in particular has an artistic view of things that is impossible to replicate. Like, you just can't. It's like taste, you know, which is like impossible to describe and everything else. But in some ways, that's really unfair to all of them because they're all extraordinary. And it's not that Peter doesn't think about markets because he obviously does. It's not like Bill doesn't think about people. He obviously does and so forth. So it's kind of like—

That's where the spike maybe exists.

That's where the spike is maybe is a way to think about it or where they kind of retreat in terms of their consideration.

Wanted to take a quick break from the episode to let you know that Redpoint's AI podcast, Unsupervised Learning, now has its own YouTube channel. We have an incredible set of guests really at the forefront of the AI revolution.

So if you're interested in what's happening in AI, what it means for businesses in the world, definitely subscribe. Now back to the show. One of the beauties of the model is like, you know, for a few years it was 5 of us. And so, and like all 4 of them are obviously incredibly accomplished. And so you're sitting in there and you're looking at every company, and I would just, I would go to lots and lots of meetings with them, like initial pitches. We'll have 2 or 3 partners in initial pitches all the time, and you're like looking at it and you're seeing what questions they ask and you're like learning what they learn, and you're kind of trying to debrief from them afterwards, like quickly in that. And like, it's just, you're just absorbing as much as you possibly can in terms of how do you evaluate these things and everything else. And some of it does actually, like sector actually does matter and it impacts these things, right? One of the reasons, like, you know, software companies, SaaS companies, they kind of, at the end of the day, at some level of scale, they all kind of look the same, right? Right. In terms of like what their P&Ls look like and everything else. And so, To some extent, Peter doesn't have to think as much about how they would trade or what it would be worth because of, yeah, it's a software company. And so that piece is there. And obviously I'm talking about his enterprise portfolio, not the Twitters and Yelps and amazing consumer successes. Exactly. And then to some extent for Bill, but if you think about marketplaces and other things, they actually trade radically differently.

Sure.

And they can be valued very, very differently based on— so he does have to think about some of those elements. As you're kind of going through it. And so, it does matter in those cases. The way our process works, to the extent we have a process, is you meet someone and you get excited about it, and then you pass the ball. You get another partner engaged on it to take a look while you're going off and doing your work and diligence on the idea and opportunity and so forth. and you're spending time with the entrepreneur, but you're having your other partners look at it and raise questions. And you want them to raise questions and like ask questions and push back on you and, and get excited and, and like, and so forth. And so it's an advocacy model. And then ultimately, you know, as, as most venture capital firms, you, you get them in front of everybody and then we like look at it. And, and then when you get feedback, you're kind of calibrating on this. And there's like lots of really good examples of Of this, for me, the Cerebras one really stands out because I think it was— and who knows what will happen with the company, right? There've been periods of time where it was like, holy shit. And then there are periods of time where it's like, holy shit. And so I don't know, but it's been a really fun one for me to work on. But I think the story of how we came to invest most typifies the Benchmark approach. And I think it's one of the reasons that a whole bunch of other firms wouldn't have done it. So I meet Andrew on a Wednesday and I'm walking into the meeting. I tell my assistant, I'm like, why the fuck did I take this meeting? Like, I'm looking at a hardware company. This is 2016. Okay. This is before NVIDIA ran. It's before Google launched the Tensor Processing Unit, the TPU. It's before any of it. So it's just like—

Oh, we looked at this round at Battery. Yeah.

Yeah.

I think you might've I forget where it ended up landing, but I remember everyone being like, hang on, we have this software thing going on and we want to go to a chip thing.

Yeah.

There were a lot of people that got fired trying to do this chip thing.

Yeah. A lot of people like it. And so I go into the meeting and I'm like, why did I take this meeting? And I didn't know Andrew before or the team. And so slide 1's cover slide, slide 2 is the team. And I was like, wow, that's a really incredible team. They've built semiconductors, they've built systems, They've done them at startups, which actually turns out to matter a lot, and really successful. And then slide 3 is, the GPU sucks for deep learning. It just happens to be 100 times better than the CPU. And it was one of those like—

Yeah.

Fucking of course. But to the whole insight point, that we were talking about earlier, it was just like an in— like nobody said that before. Like nobody had said that before that I heard at that point in time, you know? And then he goes on and then the details matter. He goes on to articulate like, well, why? Like, well, this is why it's better than a CPU, but this is why it's less suboptimal. Like, and he had like 4 or 5 things that, that were like very specific. Like you start to get very specific and he's like, so what we propose to do is like build something that is Like, that is for deep learning. And then, like, the rest of the deck, didn't understand. Didn't understand. Like, I probably got to slide 4 and a half before I had no competency on it. So I come out of the meeting and I was like, wow, this is like really interesting. It's a really interesting idea. It's a really credible team. And like, if it worked, it could be like really big. And so I go out and I talk to I talked to Mitch and Bill, I think, about it. And, um, and they're like, yeah, you should just like, and, and, and Bill, Bill gave me the really good advice. He, he was like, hey, we need the founders for this. We need the founders for this one.

Benchmark founders.

The Benchmark founders. Yeah. We need it because, because none of, none of the group had done hardware. Like we had no idea. So I called Bruce, um, and Bruce joined us. And so we met again on Thursday with, I don't know who all, Mitch, Bruce, Bill, me, whoever else. And he goes through it, and I remember debriefing with Bruce afterwards, right? And he's like, look, he's like, as far as teams go, and like the approach, totally makes sense. He's like, but there's no market for this. And I was like, well, the one thing that I have a lot of confidence in is there's a market for this.

Deep learning.

Like deep learning, there will be a market for this, right? And so, And, you know, and we kind of continued on and so forth. And Peter in the end actually like really, I think I wanted to do it. I had the hardware concern and Peter really encouraged me after actually spending the night before he met it trying to talk me out of it. But after they pitched, he, you know, and I think he'd say like our job is to help enhance each other's instincts and your instinct was to go do it. So, but, but I think the, my, my point on it was, you know, it was a, a whole bunch of people coming together with different views of the market, and it was the collective whole that gave us the conviction to, to invest.

How do you think you've changed most as an investor since you joined Benchmark? I, I know you had, I've read, I don't know where this was from, but after your first year you said, I've seen about 180 companies. The first few weeks I was like, oh my God, these are all investments.

Everyone. Yeah. Yeah.

So clearly, Not that anymore, but if you look back to 2014 versus now, what do you think?

Lots of changes. I'd say I project forward a lot more. Like, I think about the possibilities of what each company could be, not next year or the year after, but I try to project forward 3 or 5 or 7 years, like, much, much more than I did before, and try to think about, like, what those possibilities are. Which both closes me off from some opportunities that I probably would've previously pursued and opens me up for new possibilities that I didn't. So it's kind of both good and bad maybe in terms of what I'm looking for. I really, even more than before, prioritize and think about the learning aspect of the entrepreneur. It's not, I think it took me a while to figure out that that's what I gravitate towards. Like, that is the characteristic that I gravitate towards. You had a feeling initially, but it wasn't articulated. Now it turns out it matters. And part of the reason is because if you then project forward a bunch of years, you're like, wait, like there's all going to be a bazillion challenges and you need someone who is going to be able to navigate them. And so like that, that's also been a big, big change.

Do you think being a founder and an executive at a, you know, big-sized business benefits you more as an investor or a board member?

Definitely as a board member. Yeah. Not, not, not as an investor. The career investors are all better. Like they're, they're better.

How do you think the RockMelt experience did benefit you as an investor?

I mean, I think I really learned the value and power of storytelling And narrative in that, you know, and just like what the pieces are. And I think I also actually learned a lot about the fleet, you know, how ephemeral success can be because with Rockmill, like we came out of the gate so hot and it was just like the list and we like flew to 100,000 daily actives, which at that time was like a pretty good-sized number in like 6 weeks from launch. It was insane.

What year is this?

This would've been 2010.

Yeah.

And it was like 0 to 100,000 daily actives with insane engagement. And then we got stuck and we really got stuck at like 200,000, 250,000 DAUs. And it just got stuck, stuck in the mud, couldn't go anywhere on it. And it just, it all happens so fast, like this, the, the, both the success of it and the failure of it. Yeah. Um, so that, that's what I would say is.

What about, um, I mean, the fleeting of success could apply to being a founder as well, but having gone through the journey of being a founder, do you, do you, do you think at point of investment about anything from that experience?

Not normally. I mean, I think you're empathetic towards the founder journey and you're just like, you just like, I empathize, like I understand how hard it is. I understand And I understand the improbability of it. I also understand there's a whole bunch of stuff that's in your control and there's a whole bunch of stuff that isn't in your control. And so I think that there's this, we tend to portray, we as in the collective, we portray the successes as based on that individual and the failures based on that individual or that team. But I'm much more fluid in my view of it.

I understand.

I think a lot of the failed Companies have remarkably fabulous people who had a totally reasonable thesis. And, you know, these are all whatever, 51-49 probabilities of any outcome. And it's just like, you know, the coin landed wrong.

So backing up, you grew up in Memphis.

I did.

Your dad was a financial advisor?

Financial planner. Yeah.

Financial planner. Can you take me through the story arc of a kid from Memphis Stanford, Opsware, like, how did that whole path happen?

So, out of my junior year in high school, I left my junior year in high school and went to USC, University of Southern California. They had this program to take juniors out of high school and kind of combine your senior year in high school and your freshman year in college, so to speak. So, I did that for a year, and then I I had driven down Palm Drive at Stanford, and obviously I was into math and computer science and whatever. And so it was, I knew Stanford from that, but driving down Palm Drive, I remember just thinking, I want to go here. So I only applied to transfer to one place and applied to transfer to Stanford and transferred. Coming out, I actually didn't I studied mathematical and computational science and human biology. Like, I wasn't a— I didn't know anything about business. Like, I didn't study anything about business. And so, I actually took a tech M&A banking job out of school at Broadview. And it's funny because you think you're going to learn about business and banking, but you're obviously learning about banking, not business.

Yeah, yeah.

And so, I did that for 6 months. It was actually an incredibly valuable experience because You learn how to model, you learn basic accounting, you learn like a whole bunch of stuff in 6 months that, you know, it's like years worth of stuff. And this is 1999.

And you graduated early.

I graduated early.

Were you 19 at the time?

Yeah, I was 19. I was 19 when I graduated. And then I turned 20, whatever, that summer. So, and you're like, it's hard to describe because that time, to some extent, maybe this AI craze right now is similar to what it was like here in '99. Because, you know, in the Bay Area, and it was just like everything's happening and 101 was jam-packed traffic, like nonstop, and there was tech companies everywhere. And so I was like, I got to get in the fight. Like, I got to get in there. And, you know, there was this new company, LoudCloud, started by Marc Andreessen, Ben Horowitz, and Tim Housen and Sik. And they, it was still in stealth. And my cousin was friends with a marketing guy there and, you know, whatever, submitted my resume. Ben was looking for an assistant. And so I got an interview with Ben and Marc to be assistant to the CEO. And we hit it off and they hired me and I joined LoudCloud as Ben's assistant.

How big was the company at the time?

50, 60, something, some 50 or 60. It was growing really fast. It was like 3 months old.

Did you know, like, did you have other options, uh, that you were gonna go, or were you sort of single-threaded through this one?

Yeah, single-threaded actually. USC, single-threaded Stanford, single-threaded to, to LoudCloud. Um, and then, you know, it was always meant to be like a kind of training position. I worked with Ben on a bunch of cool stuff, um, and got exposure. You know, I'm 20, And I got exposure to, to them. I got exposure to all of the company running, fundraising, like lots of different pieces, uh, and then became a product manager, product marketing, ran product management, ran product marketing, um, and then ultimately ran most of marketing over 8 and a half years. LoudCloud went public, became Opsware, got bought by HP. Um, so it was a long journey.

It got bought by HP in 2008? '07?

'07.

Yeah, 2007.

Okay.

What was the unique— the business pivoted, it was worth X, then fell down. I mean, people can read Hard Things About Hard Things. They do a good job documenting it. But what was unique about the culture or the group of people?

Grit.

Yeah. Did that come from Ben?

Fucking grit. Yeah. Just like determination to last, keep moving, keep pounding out. It's a very loyal team and grindy, like willing to just keep going. And I think that, I think it made a big difference.

Do you think you were gonna be a founder after that?

Yes, absolutely. I wanted to be, I always, like I wanted to be a CEO actually. And I think, and I didn't wanna just be a CEO, I wanted to be a great CEO. Which I obviously fell short of, but that was my aspiration. And so my mental model the whole time was like, learn as much as I can, see as much of the business as I can, so that when it is my shot, I have a shot.

Rockmill had, we talked about, a big run and then sort of the plateau and then ultimately sold to Yahoo.

Yep. All right.

Did you think after that, journey about running it back or going to be a CEO somewhere else?

That's a great question. To be honest, I was tired. Yeah. Like, I didn't have the energy to found another company. I definitely bore the, like, I failed piece. And so, I just didn't, I just, I felt like I failed and I didn't have energy. We had, my wife and I had twins, like baby twins. And so I was just destroyed at that point in time. So I was like, and I did not like being a big company junior executive at all.

Hmm.

So I didn't like that. I didn't, so I didn't know what I was going to do. It was a little crisis of confidence, to be honest with you. But a few years earlier in 2008, before we founded Rockmill, You know, someone had planted, actually Jim Goetz planted this like seed in my head that I should be a venture capitalist. And so in 2013, when Rockmill got bought by Yahoo, Bill and Peter had emailed me and were like, hey, you know, chat. And you never, you didn't have any money from Benchmark? Did not have any money from Benchmark. Through the course of the next year, I spent a bunch of time with the benchmark team and also spent a lot of time with early-stage companies and really liked it. Like, I just spent time with early-stage companies trying to be helpful and evaluate. I really liked it. It's fun. And so, yeah, so then I was like, hey, I think this could be cool.

I asked both Spencer and Mike for questions, and they both wondered why you aren't a CEO. Like, they both, that was both of their independent questions.

They're like, I think you should be a CEO?

And I was like, oh, that seems like he's happy doing what he's doing.

Never going to happen.

Yeah, they, they both asked the same question. Uh, what drew you— I mean, there's, there's, uh, your former boss also started a firm as well, uh, that you had raised money from, Andreessen Horowitz too. What was the thing that drew you to Benchmark?

Um, I like— I think the model fits my personality very well. I think it's quiet, And we kind of do what we do. We operate at a certain scale, and you're just striving for absolute excellence in that individual craft. I think the appeal of not managing anyone at that point in time and not running— just like, this is my job. I'm an individual contributor.

Yeah.

It's just like, was like incredibly appealing. You know, like the Andreessen Horowitz has done amazingly well. They've been really successful. At that point in time, their model was like very successful CEOs were the people that they were recruiting, which I was not one. So, and we've honestly never talked about it. We never talked about me joining them.

Oh, interesting. I read Something, I don't know where I dug this up from, that you find most management advice worthless, but there were a few things that stood out from your time at RockMelt.

Oh, gosh.

I want to ask you about each one. Start building your management team now and don't stop.

Yeah.

Was that something that you wished you had done or that you did do?

I wish I stretched more at different points in time because it never ends in companies. And like, if you think about where we spend our time, With founders, so much of it's around building the team around them and managing the team around them. So I think that part is really, it matters a ton.

Get really clear on what you need and what you don't need in a role. Hire for world-class strength on the most important 1 through 3 areas.

Yeah. I think one of the big things that people, we have a tendency to grade people like, this person's great, this person's good, this person's not good, this person's like whatever. And I guess that just really hasn't been my experience. My experience hasn't been that black and white. My experience is that oftentimes there are people who are just bad, but for a lot of good people, they can be great if the conditions are right, and they can be good or great at certain things and bad or okay or average at other things. And so, I think one of the mistakes that CEOs make is, especially early on, is not having enough fidelity on what they're looking for in the role. Like, what do they actually need out of that role and that job? And then testing candidates on that, on exactly what they need. And then understanding kind of what that skill matrix or whatever of that individual is, and what they're going to be great at, where they spike. where they're average, where they maybe are below average, and so forth, and then putting that together. And so, I think that's like a really important thing that CEOs and founders have to learn. Like, they have to learn how to kind of gradate that. And it's really hard because you have to learn it in areas that you're not an expert.

Yeah. Well, that was the next one, actually. Find domain experts that help you hire.

Yeah. That was one of my big lessons is just like, sometimes, Someone said this recently, it's just like, oh, they're way better than me. And it's like, well, you suck. So, you know, doesn't—

Especially when you're stepping outside of your competency as a CEO.

100%.

Everyone should be better than—

Everyone should be better than you. Not a high bar. So like, you gotta find people who help you evaluate in those places.

Yeah. And the last one was the best CEOs, every person they add to their management team raises the bar. The new hires should be better at their domain than anyone else is at theirs.

I guess that sort of ties into the same point.

How do you think about bringing new people into Benchmark? You've now, I guess since you've been there, Miles has come on board, Sarah, Chaitan, And now Victor.

Yeah.

How do you think about interjecting? It's so small, right? And every person, back to the, the points we were just talking about, like every incremental person changes the DNA.

You know, it takes, we, we think of it as like a refounding moment. Like it's an opportunity to refound the firm and rethink things. And, you know, Bruce said this to me like really early on. I was like, wow, we, I have like really big shoes to fill. And it feels, and he was like, I wouldn't think about that at all. It's your firm. Like, don't worry about it. Be great. And it was like so freeing to like hear that and see that. And for what it's worth, it definitely didn't work in the sense that I wake up every morning with this like, yeah, paranoid and like, and thinking about like, I, you know, you don't want to be the beginning and the end. You want to be like, you want to have taken it to new heights.

But you have to be willing to burn it down.

Absolutely.

To get to where you're going, totally.

You have to.

It's a lot easier if you're the founder of the firm to have that confidence. It's like, well, it came from nothing. I could bring it back to nothing. Dust to dust, ash to ash. You know, when it's when you're inheriting, I feel the same thing. When you're inheriting something that someone else started, you feel like a gravitas. You feel like John Scully.

Totally. Yeah. You feel that responsibility, and and um and I think that's why we think of it as a refounding moment, right? Because it's like every new partner is refounding the firm, and like in and when they're refounding it, they have that freedom. They have the freedom to go do that. And I think it's really important. And the founders of Benchmark were very thoughtful about building it that way. The answer is we spend a lot of time with everybody and we spend a lot of time with the people and so that we kind of know what it's going to feel like when they come in. And we spend time as individuals, like one-on-ones and two-on-ones, we do four-on-ones, That's why the process takes forever. Like I said, my process took almost a full year.

How long was— I mean, Victor, I guess, is different. He was a portfolio company.

He was a portfolio company, so you knew him, but they were all long, longish, and you're spending a lot of time with them. And so that's part of why it has been helpful with Miles and Chatham as examples where we had overlapping boards. So you got to see them over the course of years. working. And that, that's part of why that ended up being so, so fruitful.

Do you think about— I mean, there's obviously different domains or industries that you probably need to— oh, do we have someone that can do internet or consumer or whatever it is, right? Is what do you think about the augmentation of, hey, we really need someone that's cynical about XYZ thing, or Bill was really our public markets sort of thinking through business model thing. And so we need someone to slide into that, or is it No, not really.

It's not a, it's not a role team. Like, it's not a— we don't have roles. You know, it's, it's much more fluid than that, I would say. You're kind of— you're looking for excellence.

Yeah.

And you're looking for the possibility of excellence, and you're looking for someone who's going to make it their life's work to be an excellent venture capitalist and, and who's going to raise the bar for all of us. And And that can come in a lot of different forms. Of course, are you sensitive to sector coverage? Are you sensitive to experienced investor versus an entrepreneur like Victor or whatever?

Sure.

But those are all second and third order things. And I think we tend to justify those things after the fact. The real thing is excellence.

Here's a funny thing that I've thought about recently where you mentioned the life's work thing, which has made me think of it is if I don't succeed as a venture capitalist, like that's sort of what my identity, my professional identity's tied to. I can't go do anything else. Like, I don't know, I'm, my last time I did real finance was 11 years ago. Maybe I could go do that, I don't know. But like, I need to succeed in this for my own fulfillment.

Sure.

And I thought about like people that are successful CEOs that then step into being a VC. And their identity's probably pretty comfortable with their first act of being a successful CEO. And so that, that yearning of like life's work and the desire to not mess something up, there's something to that pressure, I think, that I'm sure you feel as like every single self-proclaimed failed entrepreneur. But like, I'm sure you feel this chip on your shoulder, desire to prove that out every day.

Yeah, absolutely. And look, everyone's different. Like people are motivated by different things and Aspiration of greatness versus fear of failure and all these other things. And lots of different things can work. There are people who, you think about these CEOs who go from, who do it over and over again, and it's just like, it's made, or the entrepreneurs who do it over and over again, it's amazing. And I stand in awe of them. But yeah, I think there is an element of the pressure and the responsibility that's really valuable. Because it's one of these jobs where it's a little bit like getting into Stanford or something like that, which is like getting in is really hard. And if you want to be like a B+ student, not hard.

Yeah.

Like once you're there. Getting in, really hard. B+, not hard. A, A+, fucking hard.

Yeah.

And so you're in this place where And venture capital's like that. Getting into venture capital is really hard. If you want to be a mediocre venture capitalist, not hard. And you can do very little, very little work.

Feedback loops are very long. It's hard to know how hard you're working, taking the incremental meeting, whatever. I'm on vacation.

Yeah. And so it's easy, it can be easy to coast. But being great and finding people and working with people who want to be great, like truly great, that's really hard and it takes everything. And I think the greats in the industry have been that.

Do you think we're getting long in the tooth in software investing?

In what sense?

Do you think the trends that you and I both benefited from, From 2014, even we could go back to 2007 if we really, or whatever, 2000, '99 Salesforce. Do you think those are getting long in the tooth in terms of, hey, we saw vertical software, we're going to smaller and smaller markets. It's no longer construction or healthcare or whatever. We're seeing niche or more niche markets popping up, or some of the things that we discuss are just— Similar-ish to the things we talked about 10 years ago. Like, open source business models seem figured out a little bit more by the look of it. So are we at some, like, asymptote where it's the 7th or 8th inning of that?

I mean, sure. Like, you know, every, every kind of thesis has its, has its duration, but this is the, this is the best thing about the market, the industry that we work in, is like, there's a new thesis.

Yeah.

And so, like, there's always something new. Right. And, and so, like, yeah, I think for like SaaS or enterprise SaaS or whatever, like, yeah, it's kind of like, but now we have a new like AI thing and we have some of the same questions that we had before, which is like, how is it going to monetize and where's the value getting delivered? And like, how big is it going to be? And is it really impactful? Is it not really impactful? And so on and so forth. And so, like, I guess I feel like there's always something new and it's just one of the amazing things about the industry that we work in, and people are always coming up with new ideas, and they're just optimistic about it. And so, I actually am really bullish and optimistic.

How has investing in early stage changed over time?

You know, it's always, it's like, it's more expensive, and there's more competition, and there's more seed rounds, and there's more people willing to write these checks, and like all those things, like, Okay, sure. All that stuff's changed.

People have been bitching about that for the last 10 years too, or 40.

40.

Well, 10 since I've been in this.

Yeah, right. It's just everywhere, always, right? It's just like, sure, great. On the other hand, look, this magical alchemy of a founder who knows some market and has a compelling idea and a unique insight and the drive and ambition to go do something that on the surface is irrational. That's what we're looking for. Yeah.

Has that changed?

Not really. People keep coming up with stuff and they are excited about it and they want to make it their life's work and it's important. I think in some ways, look at that, that really hasn't changed. And in the end, the vehicle that is used is a company, and they need help building the company, and building a company is hard. And so I think none of that stuff has changed.

Do you have the element of FOMO of things that are going on that— I'm sure you guys have pretty good fidelity into seeing early-stage opportunities, but inevitably there's only What, 5 of you now? 6 of us. 6 of you. You don't have a team of associates. You don't have a CRM, as we've joked about in the past. But do you have a paranoid element of like, hey, there's a whole team of Andreessen Horowitz or Sequoia that's—

All the time.

Yeah.

All the time. I mean, like, you know what the downside of our model is? Like, it doesn't scale. Coverage is really hard. Seeing everything is really, really difficult. And it's 6 people, but it's 6 people who probably average, I don't know, 8 boards each. So it's like, it's 8 boards too. And you're trying to be, if we're doing our job, we're setting the standard for what the board member engagement is. And so, yeah, the coverage thing is hard. It's a challenge of the model. But there's some advantages to it too, which is, It makes you very focused on what are the important questions for evaluating every opportunity. There's so much stuff that venture capitalists ask, investors ask, and it's just a waste of time. It just doesn't matter in terms of the outcome and what could be. And so you have to get really focused on that.

How do you view your role as a board member? Talked about earning the first call or that relationship, but—

The thing is doing everything you can To help the company succeed. And what I mean by succeed is realize its maximal potential. Not every company's maximal potential is the same, and we don't know. That's indeterminate at the beginning. But whatever its potential is, let's maximize that. Let's maximize that potential of that company. And that's super high level and whatever. So what does it mean in practice? Well, Sometimes it means helping lift the entrepreneur up when they're down. Sometimes it means bringing the entrepreneur down when they're too high. Sometimes it means asking a hard question. Sometimes it means being supportive through a tough time. It can mean all of those different things. And the job and the emotions and the heart rate of an entrepreneur are like, Very manic. It's manic. And so, and most people just aren't super productive. Like, they can't think as clearly through those very highs and very lows. And so, to the extent we can help, like, mediate that, then you're helping the entrepreneur think clearer. through that process and ultimately maximize their potential. I think the downside case is the board members who amplify that, and we've all worked with them, who amplify that manicness. So you want to be really careful not to be that. But the form of— it's interesting, it's like the form of support that you offer is really varied.

Yeah.

Through time. Like, sometimes it's strategic, sometimes it's very tactical, sometimes it's emotional. You know, it's all of it.

I heard you say the value of a partnership with an entrepreneur is only 2 to 3 times a year helping with the consequential decisions, which is something I agree with. You need to earn the right to have the credibility to help at that point in time, which is a daily task.

Yeah, that's exactly right. That's the part that gets lost in It's actually, there's another one of these that we could come back to, which is the power law thing with venture capital, which is like, it's people looking at the data. So it's like, yes, the 2 or 3 times a year, there's some inflection, directional bending opportunity for a company. Like, it's not every day, it's not every week, it's whatever, it's some handful of times. And if you can be an amazing sounding board for the entrepreneur in that moment to help them make a better decision that maximizes the probability of success and bends the trajectory of the company, that's everything. Like, all the value comes from that. Problem is, in order to be valuable in those 2 to 3 things, you have to both have enough context on the company and enough space outside the company.

Yeah.

To be useful, right? These entrepreneurs, we've talked about them, they're hyper-learners, everybody's learning. So they're consuming all the podcasts, they're consuming all the books, they're reading all the blog posts. They have all of that stuff. The kind of things that they're ultimately grappling with are very close calls that reasonable people could disagree on. And so it's trying to be a sounding board in that And to be a sounding board in that moment, you kind of have to understand to some extent, like, what's the team they're working with? What's the nature of the business? Like, what do the customers say? What are those people's motivations? And in order to do that, you have to do some day-to-day work. But if you're mired in that and you're in the trench, then you don't have the value of the perspective. And so it's kind of, it's a fine balance of of combination of perspective and knowledge of the detail that I think allows you to be most useful and help navigate those moments. But I think all the value comes from them. So that's interesting.

We've had discussions over the years at different points in time about constraints as benefits for companies.

How do you think about I think every time we've seen a company that is unconstrained, whether it's capital or headcount or growth even, or whatever, it's just like, on the one hand, it can be really good, but it also yields a lot of badness. And I just think constraints are good. They force clarity of thinking. They force hard decision-making, they force these kind of calls. And so you have to know when you want to have kind of an abundance mentality and just like do everything and be fruitful and like go forward. And when you want to be really like disciplined and controlled, most of the time you're in between. And I think we've like learned a lot of hard ways. And I guess maybe one other learning on this is, It's so much harder to reform after the fact. Like, it's so much harder. It's so much easier to kind of, you know, it's kind of the person who like whatever, like packs on a lot of pounds and then has to like trim and cut, right? Like build and cut. It's like you want to be on whatever, 6-week cycles for that. You don't want to be on 6-year cycles for that.

There's a, I feel like we've talked about this before, but 2x2 graph of equity value created by capital consumed. Have you seen that chart?

Yeah.

It's a fascinating one of just like, it's both, I think it's all software companies basically, but it sort of shows that with the exception of Snowflake, almost every company that has created a ton of value in the last 20 years in software, which is a little bit of a fool's—

Specific thing.

Yeah. Like sample bias thing, didn't consume a lot of capital to get there. If you look at Veeva or ServiceNow or Atlassian or Salesforce, or you just kind of go down the list. It's sort of, it's an interesting—

And VMware would be in that category too. But I would say this is the problem with some of these analyses, which is like, true, but—

Capital wasn't available to them. Yeah.

Well, and also like, was it, are we kind of like, is it kind of, they've created a lot of equity value, And done so very efficiently. But like, those aren't unrelated concepts, right? Very much so.

Right?

Like, there is just like, yes, because they were very efficient and grew very fast, they created a lot of equity value.

And, and the dollars that you were raising in 2004, uh, is different than the dollars you're raising in 2020. And a company that's very big was more likely to have been started in 2004, just because time is a vector of— it definitely distorts it. But it's an interesting—

it's interesting when you look at especially the outlier ones like the Atlassians or the Mevas that like really didn't take in outside And if you look at Atlassian as an example, it has grown very steadily between, what, 30% and 50% for 20 years. It's value compounding. And so it's a really amazing kind of story, but it actually didn't have these 100%, 200% growths that we often see in the early stages. Yeah. There's different dynamics on it. I kind of think of it I mentioned this venture capital thing, which is, you know, you hear this, it's like, oh, venture capital is a grand slam business and it's like all about these. And like, it's like, yes, it is. But I think one of the things that's really interesting is if you look at all the greats in the business, they're remarkably consistent. Remarkably consistent.

Yeah.

And they have lots of little wins in addition to a few big wins. And I think it just, again, it's kind of like a dumb thing to say because it's like, well, it turns out if you make contact with the ball a lot—

It's the best way to hit home runs.

It's the best way to hit home runs. And so it's kind of like this other thing, but I think that type of retroactive analysis actually yields bad behavior because it kind of says, oh, wow, All that matters is getting these really, really big ones, which is like, yes, true, but what's the best way to get the really big ones? Yeah.

About incentives. I consider myself top 1% of understanding incentives and I underestimate it every day. Why do you like that quote?

I think that founders don't think about it enough as it relates to both for their customers, but also their team, and how they think about their team, and what their team incentives are, and how they manage it. And the reason is, is you tend to project yourself and think everyone works like, thinks like you, and has your mental model, and your piece, and it just, it isn't, that isn't true. Like, they don't, most of the employees are employees, are not, they're not founders. They don't have the same equity thing. They don't have the same desire. They don't have the same ambition. And, or they're motivated by different things. And so you just like really have to kind of think about that and then how to incentivize the behavior that you want on it. And it is, it just matters.

I'm sure you get peppered with questions like career advice or people that are asking, do you have anything that you go back to or that, I don't know, people trying to break into venture or whatever, whatever version of this question you think is interesting?

No, I think there's There's no model of success. I think that there's no one model of success. You look at Moritz and he was a writer, and what do writers do? They ask questions. You look at Doerr and he's a career venture capitalist, Intel sales guy or whatever. Yeah.

And Leone was a salesperson. Peter was the son of a VC. Yeah.

And Currie was a Wall Street analyst. Yeah. And so, there are lots of models of success on it. But I think there is a common characteristic amongst— there are a couple common characteristics amongst the venture capitalists, which is they're hyper-curious and they're hyper-competitive. Competitive with themselves, competitive with the industry, whatever, doesn't really matter, but driven and hyper-curious. And so, it's kind of like you're always looking over, you're turning over, you're kicking over the next rock, and you're trying to figure out what's going on and trying to understand it and trying to listen to what motivates that person. You're trying to figure that out. Why are all these great people going to this company? You got to figure that out. Like, you just, you can't. It bothers you that there's something that you don't have an explanation for, a view of. And so I think that's a common characteristic amongst the people who have been really, really successful in the business. And so maybe that's a view of what it is. But, and I think I wouldn't, I think it's popular to say like it's an easy job or whatever. I have not found that to be true. I've not found that it's an easy job.

It can be.

Yeah, I think it can be, but I just, I think, but I've just not in general. I found it to be a very, like it is an all-out challenging, you know, you're running every day kind of job. Yeah.

It's humbling too.

Yeah, it's super humbling and it's full of regrets and everything else. So, it's not easy in that way. It's an extraordinarily rewarding job in the sense that you're just, you get to meet these entrepreneurs every day who inspire and excite and are building new stuff and trying new things and are rethinking fundamentals and reasoning from first principles and whatever. And so, you're just like, that part of it's Just awesome. And you're perpetually learning. So, I think it's very, very rewarding in that way. But to reap the benefits of that, it takes a lot of work.

One of the things I thought was interesting that you had said was about, and I think it's reflective of, I mean, you're kind of talking your own book here, but a platform team being built, an engineer team being built to help the GP scale more than helping the companies themselves. How do you think about that? And are there elements of the VC's job that you think can be well carved off and where you don't need to own the totality of the role?

I mean, I think, I just think the idea of platform teams is to help the firm scale.

Yeah.

And you do that in order to help the firm scale. And so the GPs can scale and they can take more board seats and they can, or not take more board seats, but make more investments and so forth. And that doesn't mean there's no value in that. There's value in that. And those models work great, like, and they've had a ton of success. And so, I think that part's there. Our model is different, and our model is dependent on a relationship a very tight relationship between the investor and entrepreneur. And it's a partnership. And that model, and we talked about incentives, and incentives, it means high ownership. It means these things. It means high commitment and high skin in the game. And so that's the model that, I think more than anything, it's the model we like. Like, that's the rewarding part of the job, and that's the part that we love. And so, I guess that's how I think about it. It's going to be different than prior framing, but it's just the rewarding part of the job is that engagement, and that's what we're dependent on. Yeah.

There's kind of the predictable revenue-ish side of things that if I think about where we get benefit from having people that help talent, customer intros as well. And having someone that wakes up every day with that as their number one job, that everyone sort of funnels stuff through, there's like an accumulation of knowledge that— and maybe it's— maybe your response would be, well, we get that from, you know, the integration of our partnership or something.

Sure.

I've sort of found that having one person that wakes up with it number one on their list rather than—

Matters. Yeah, it matters.

It matters. Yeah.

No question it matters. But I think my thoughts would actually more go back to the 2 or 3 times a year.

Yeah.

If all of that is not doing that, you need to have the context.

Interesting.

And so that would be my view of it. It isn't that It isn't incrementally valuable. It's just, is it trajectory bending? And trajectory bending is kind of the name of the game to some degree, or to a large degree in my view.

People have sort of become fascinated, I think, with your dinners. And you guys did the one with the Acquired guys on Invest Like the Best. I think Peter referenced one with Jeff Bezos you guys did recently. What do you find the biggest benefit from that to be?

They're so fun. I mean, we get to do—

Do you do them here?

We do. We do them in Woodside and in San Francisco. We'll also travel for them. We traveled, we went to New York for one recently with a CEO of a, you know, whatever, public, I don't know, $10-ish billion company that That we didn't invest in and didn't know, but just remarkable story and individual. And like, you learn like, what did we miss? What did we get wrong? What didn't we think about at that point in time? What motivates them and how are they driving? There's so many things to learn. We did another one with the CEO of an $80 billion public company recently. And, you know, and he talked about like how, this is a non-founder CEO, and it's just like how he expanded the product portfolio and like how he drove that and whatever. And so everyone is just an opportunity to learn more and obviously like build connections and network, just like you're talking about—

Yeah.

Your podcast. But everyone's just an opportunity to learn more and And that part's really, really cool.

Do you outbound to these people?

Yeah, we outbound all the time.

And what's the pitch? Just like, hey, we'll come and pick your brain and have great wine.

We'll pay for your dinner. Nice food.

Yeah. We'll talk about what we're seeing in the markets and pepper you with questions and stuff and just have fun.

Yeah. And we have a pretty high hit rate on it. And it's like, it's a good—

Listen, if people are saying yes to this podcast for me, I assume they're saying yes to dinner with you. Right.

So I can— and And so, like, that part of it's really special. I would also say, like, it's good for our group. Like, it's good for the 6 of us to spend that time.

The social dynamic.

Yeah, the social dynamic. And just like that, we spend all Mondays together and we spend our dinners together. And just like having that esprit de corps is valuable too. You get a lot of stories on that. Yeah. So it's, it's, it's a really special and fun part of the partnership.

Yeah, this is fun. Thanks for doing it.

Yeah, thank you.