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

27:28Your first investment was Confluent, which is now a, whatever, five, six, eight, ten, whatever, given the day. Whatever it is today. Yeah, a billion-dollar valuation. We talked about Amplitude Public Company. So your first two were public, right? Also, Benchling, we mentioned. Contentful's doing quite well. Kind of your first cohort of businesses. Cerebris, we talked about AcuityMD, 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 up versus your own kind of instincts on some of these things?

28:15I think a tremendous amount was just the structure and the model. And a tremendous amount was just luck, like right time, right place. It turns out it was good to be an enterprise SaaS investor, infrastructure investor. You've gotten luckier more than most, I will say. Joining in 2014, it's pretty helpful. Yeah, yeah, yeah. My guys, multiple appreciations and all that. What would you attribute to Bill, like a learning from Bill that was helpful versus Peter maybe? I mean, they're very different. They're very different. They're all very different. And Mitch and Matt were all like, those were the four.

28:51That was the four when you joined. The four 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 like different in terms of like what they view. And I, you know, if you kind of, and it just goes to this whole idea that there's no one model of success in venture capital, right? You know, Bill thinks a lot about like markets and value, where value is going to be attributed, how it could trade, you know, if it were to grow up.

29:35He thinks a lot about like what the future state of the world is. he does think more about theses. 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.

30:25Like 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 they're all extraordinary um and you know it's not that peter doesn't think about markets because he obviously does not like bill doesn't think about people he obviously does and like and so forth so it's kind of like that's where the spike that's where the spike is maybe is a way to think about it or where they kind of uh retreat in terms of their consideration hey guys i'm jacob efron a partner of logan's at Redpoint.

31:00Wanted 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 for a few years, it was five of us. And all four 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.

31:36We'll have two or three 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 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?

32:13Right. In terms of like what their P and Ls look like and everything else. And so to some extent, like Peter doesn't have to think about how, as much about like how they would trade or what it would be worth because of like, yeah, it's a software company. And like, and so like that piece is, is there. And obviously I'm talking about his enterprise portfolio, not his, not the Twitters and Yelps and amazing consumer successes. And then, you know, for Bill, like, but if you think about like marketplaces and other things, they actually trade radically differently. Sure. And they like can be valued very, very differently basically.

32:44So 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 to engage on it, to take a look while you're going off and doing your work and diligence on 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, um, and, um, and get excited and, and like, and so forth.

33:27And so it's an advocacy model. Um, 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, and there's like lots of really good examples of, of this for me, The Cerebrus one really stands out because I think it was, and who knows what will happen with the company, right? There have 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.

34:01But 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? I'm looking at a hardware company. This is 2016. This is before NVIDIA ran. It's before Google launched the Tensor processing unit, the TPU. It's before any of this. So it's just like... We looked at this round. battery. I think you might be, 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.

34:47A lot of people got fired trying to do this. A lot of people like it. And so I go into the meeting and I'm like, why, why did I take this meeting? Right. And I didn't know Henry before part of the team. And so slide one's cover slide. Slide two is the team. And I was like, wow, that's a really credible team. Like they built, they built semiconductors, they built systems. Um, they've done them at startups, which actually turns out to matter a lot and, um, and, and really successful. And then slide three is, is the GPU sucks for deep learning. It just happens to be a hundred times better than the CPU.

35:25And it was one of those, like, yeah, fucking, of course, like, But to the whole insight point that we were talking about earlier, it was just like nobody said that before. Nobody had said that before that I heard at that point in time. And then he goes on, and then the details matter. He goes on to articulate, well, why? Well, this is why it's better than a CPU, but this is why it's less suboptimal. And he had four or five things that were very specific. You start to get very specific. And he's like, so what we propose to do is build something that is for deep learning. And then the rest of the deck, didn't understand.

36:07Didn't understand. I probably got to slide four and a half before I had no competency on it. So I come out of the meeting, and I was like, wow, this is really interesting. It's a really interesting idea. It's a really credible team. And if it worked, it could be really big. And so I go out and I talk to Mitch and Bill, I think, about it. And they're like, yeah, you just like this. And Bill gave me the really good advice. He was like, hey, we need the founders for this. We need the founders for this one. Benchmark founders. The benchmark founders. Yeah. Because none of the group had done hardware.

36:42Like, we had no idea. So I called Bruce. And Bruce joined us. 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.

37:23And 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. it. So, but I think my point on it was, you know, it was 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 invest. How do you think you've changed most as an investor since you joined Benchmark?

38:04I 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 everyone yeah yeah uh 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 i try to project forward three or five or seven years like um much much more than i did um before and try to think about like what those possibilities are, which both closes me off from some opportunities that I probably would have, um, previously pursued and opens me up for new possibilities, um, that I didn't.

38:54So it's kind of both good and bad maybe, um, in terms of what I'm like looking for. I have a, I really, even more than before prioritize and think about like the learning aspect of the entrepreneur. It's not, I think I, it took me a while to figure out that that's what I gravitate towards. Like that is the characteristic that I gravitate towards. Um, 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.

39:35Um, and so So that's also been a big, big change. Do you think being a founder and an executive at a big-sized business benefits you more as an investor or a board member? Definitely as a board member, not as an investor. The career investors are all better. They're better. How do you think the rock-melt experience did benefit you as an investor? I mean, I think I really learned the value and power of storytelling and a 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 Rockmelt, like, we came out of the gates so hot.

40:25And 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, six weeks from launch. Like, it was, like, insane. What year is this? This would have been 2010. Yeah. and it was like zero to a hundred thousand like six daily active with insane engagement you know and then we got stuck and we really got stuck at like 200 250 000 dAUs and it just got stuck like stuck in the mud like couldn't go anywhere on it and it just it all happened so fast like this the the both the success in it and the failure of it yeah um so that that's what i would say is What about, I mean, the fleeting of success could apply to being a founder as well.

41:13But having gone through the journey of being a founder, 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 like i understand the improbability of it i also understand there's a whole bunch of stuff that's in your control there's a whole bunch of stuff that isn't in your control and so i think that you know i think there's this like we tend to portray we as in the collective we portray the successes as like 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.

41:55I think a lot of the failed companies have remarkably fabulous people who have a totally reasonable thesis. And these are all whatever 51, 49 probabilities of any outcome. And it's just like 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 to the story arc of a kid from Memphis, Stanford, Opsware? 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.

42:45So I did that for a year. Um, and then I, I had, uh, I had driven down Palm drive at Stanford and, um, obviously I was like into math and computer science and whatever. And so it was, uh, I knew Stanford from that, but driving down Palm drive, I remember just simply was like, I want to go here. So I only applied to transfer to one place and transfer to Stanford and transferred coming out. I actually like didn't, I, you know, I studied mathematical and computational science and human biology. Like I wasn't a, uh, I didn't know anything about business. Like I didn't study anything about business.

43:25Um, and so I actually took a tech M and a banking job, um, out of school at, at, uh, Broadview. Um, and, uh, it's funny cause you think you're going to learn about business and banking, but you're, you're obviously learning about banking. And so I did that for six 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 six months that, you know, it's like years worth of stuff. And this is 1999. And you're, you're, you graduated early. I graduated early. 19 at the time? Yeah, I was 19. I was 19 when I graduated.

44:00And then I turned 20, whatever that's similar. 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 non-stop and and there was tech companies everywhere and so i was like i gotta get in fight like i gotta get in there um and uh you know there was this new company loud cloud uh started by uh mark andreason ben horowitz and Tim Housen and so on. And it was still in stealth. And my cousin was friends with a marketing guy there and whatever, submitted my resume.

44:49Ben was looking for an assistant. And so I got an interview with Ben and Mark 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, so 50 or 60. It was growing really fast. I was like three months old. Did you know, like, did you have other options that you were going to go or were you sort of single-threaded through this one? Single-threaded, actually, USC, single-threaded to Stanford, single-threaded to LoudCloud. 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 and got exposure.

45:32You know, I'm 20, and I got exposure to them. I got exposure to all of the company running, fundraising, like lots of different pieces. And then became a product manager, product marketing, ran product management, ran product marketing. And then ultimately ran most of marketing over eight and a half years. Loud Cloud, went public, became Opsware, got bought by HP. So it was a long journey. You got bought by HP in 2008, 2007? 2007. Yeah, 2007. Oh. What was the unique... The business pivoted. It was worth X. Totally. Then fell down. I mean, people can read hard things about hard things. You could get you on documenting it.

46:17But what was unique about the culture or the group of people? Yeah. Did that come from Ben? Fucking grit. Yeah. Just like... Chewing glass. Determination. Chew glass. 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're going to 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, and I didn't want to just be a CEO. I wanted to be a great CEO, which I obviously fell short of, but I, 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.

47:14Rockville had, we talked about, a big run and then sort of the plateau and then ultimately sold to Yahoo. Yeah. 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. 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.

48:07So I didn't like that. 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 founded Rockmelt, you know, someone had planted, actually Jim Geth, planted this seed in my head that I should be a venture capitalist. And so in 2013, when Rockmelt got bought by Yahoo, Bill and Peter had emailed me and were like, hey, you know, chat. 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 Benchmark team and also spent a lot of time with early stage companies.

48:52and really liked it. Like I just spent time with early stage companies trying to be helpful and evaluate. And 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 were 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. They both ask the same question. What drew you? I mean, your former boss also started a firm as well that you had raised money from Andrews and Horowitz, too.

49:29What was the thing that drew you to benchmarks? I think the model fits my personality very well. I think it's quiet, and we kind of do what we do. Um, it's, it's a, we operate at a certain scale and, and, um, and you're just like striving for absolute excellence in that individual craft. I think the appeal of not managing anyone at that point in time and not like running to just like, this is my job. I'm like, I'm an individual contributor. And it's just like, was like incredibly appealing. The interest of 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're recruiting, which I was not one.

50:27So we've honestly never talked about it. We never have 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 spout 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? 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, you know, with founders, so much of it's around building the team around them and the management team around them.

51:07So I think that that part like 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 one, two, three areas. Yeah. I think one of the big things that 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, and I guess that just really hasn't been my experience. My experience hasn't been that, um, black and white. My experience is that like oftentimes there are people who are just bad, but for a lot of good people, um, they can be great if the conditions are right and they can be good or great at certain things and not, and bad or okay or average at other things.

51:54And so I think one of the mistakes that CEOs make is, especially early on, because it's not having enough fidelity on what they're looking for in the role. Like, what do they actually need out of that role in that job? And then testing candidates on that, on exactly what they need. And then understanding kind of what that like skill matrix or whatever of that individual is and like what they're going to be great at, where they spiked, 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, um, that CEOs and founders have to learn, like they have to learn how to, to kind of gradate that.

52:39And 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's one of my big lessons is just like Sometimes someone said this recently. It's just like, oh, they're way better than me. It's like, well, you suck. So, you know, it doesn't say much. Especially when you're stepping outside of your competency as a CEO. Everyone should be better than you. Everyone should be better than you, not a high bar. So, like, you got to find people who help you evaluate in those places. The last one was the best CEOs.

53:09Every person they add to their management team raises the bar. The new hires should be better at their domain than anyone else's at theirs. I guess that's what ties in at the same point. How do you think about bringing new people into benchmarks? Mark, you've now, I guess since you've been there, Miles has come on board, Sarah, Chathan, and now Victor. Victor, yeah. How do you think about Interject? It's so small, right? And every person, back to the points we were just talking about, like every incremental person changes the DNA. We think of it as like a refounding moment. It's an opportunity to re-found the firm and rethink things.

53:43And Bruce said this to me really early on. And I was like, wow, we 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 I, it was like so freeing to like hear that and, and, and see that. And, 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, 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.

54:18Absolutely. To get to where you're going. Totally. You have to. And 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. Yeah. Dust, ash, ash. You know, 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 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 when they're refounding it, they have that freedom.

54:48They have the freedom to go do that. And I think it's really important. And the founders, most of the time, are very, 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 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, 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, Vicker, I guess, is different. He was a portfolio company. He was a portfolio company, so you knew him.

55:25But 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 Shathan as examples where we had overlapping boards. So you got to see them over the course of years working. And that's part of why that ended up being 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? 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.

56:07And 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 um you know it's it's much more fluid than that i would say um you're kind of you're looking for excellence yeah and you're looking for the possibility of excellence you're looking for someone who's going to make it their life's work to be an excellent venture capitalist and and he's going to raise the bar for all of us And that can come in a lot of different forms. Like, of course, are you sensitive to sector coverage or are you sensitive to experienced investor versus an entrepreneur like Victor or whatever?

56:52Sure. 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. There's a funny thing that I 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 is tied to. I can't go do anything else. Like, I don't know. 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. it. And I've thought about like people that are successful CEOs that then step into being a VC and their identities probably pretty comfortable with their first act of being a successful CEO.

57:41And 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, I know a 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, um, you know, aspiration of greatness versus fear of failure and like all these other things. And, uh, like lots of different things can work. Um, there are people who like, you, you think about these CEOs who, who go from like, who do it over and over again.

58:18And it's just like, it's made, or the entrepreneurs who do it over and over again. It's amazing. Um, and, 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 a Stanford or something like that, which is like getting in is really hard. And if you want to be like a B plus student, not hard. Like once you're there, getting in really hard. B plus, not hard. A, A plus, fucking hard. And so you're in this place where, and venture capital is like that. Getting into venture capital is really hard.

59:05If you want to be a mediocre venture capitalist, not hard. And you can do very little, like very little work. Feedback loops are very long. It's hard to know how hard you're working. Taking the incremental meeting. Like, you know, whatever. I'm on vacation. Yeah. And so, like, 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, 2099 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.

1:00:08It's no longer construction or healthcare or whatever. We're seeing more niche markets popping up or some of the things that we discussed 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. So are we at some like asymptote where it's the seventh or eighth inning of that? I mean, sure. Like, you know, every kind of thesis has its duration, but this is the best thing about the market, the industry that we work in is like, there's a new thesis. And so like, there's always something new. Right. And, um, and, and so like, yeah, I think for like SAS or enterprise SAS 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?

1:01:01And 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 there's just optimistic about it. And, um, and so I actually am really bullish and optimistic. How has investing in early stage changed, uh, over time? You know, it's always, it's, it's like, it's more expensive and there's more competition and, And there's more seed rounds and there's more people willing to write these checks and like all those things.

1:01:38Like, okay, sure. Like all that stuff's changed. People have been bitching about that for the last 10 years too. Or 40. 40. 10 since I've been in it. Yeah. It's just like everywhere. Like always, right? Like it's just like, sure. Like great. on the other hand like you know look this magical like alchemy of a founder who like 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 like that's what we're looking for and like has that changed? Not really like you know people keep coming up with stuff and And they are excited about it and they want to make it their life's work and it's important.

1:02:29And so 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, five of you now? Six of us. Six 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 or Sequoia?

1:03:13All the time. Yeah. All the time. I mean, like, you know, what the downside of our model is like, is it doesn't scale, uh, covered really hard. Um, seeing everything is really, really difficult. Um, and you know, it's, it's six people, but six people who probably average, I don't know, eight boards each. So it's like, it's eight boards too. And you're trying to be, you know, if we, 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.

1:03:54There's so much stuff that venture capitalists ask, investors ask. 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 like earning the first call or like 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.

1:04:33let's maximize that, that potential of that, of that company. And that's super high level and like whatever. So what does it mean in practice? Well, like, you know, sometimes it, it, it means, um, like helping lift the entrepreneur up when they're down. Sometimes it means bringing the entrepreneur down when they're too high. Sometimes it means, um, you know, sometimes it means like asking a hard question. Sometimes it means being supportive through a tough time. Like it can mean all of those different things. And, you know, the job and the emotions and the heart rate of an entrepreneur are like, like this, like it's just, it's manic.

1:05:17And so, um, 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 mediate that, then you're helping the entrepreneur think clear 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 through time. Like sometimes it's strategic, sometimes it's very tactical, sometimes it's emotional.

1:06:14You know, it's all of it. I heard you say the value of a partnership with an entrepreneur is only two to three times a year, helping with the consequential decisions, which is something I agree with. Do 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. It's actually there's another one of these that we can come back to, which is a power law thing with venture capital, which is like it's people looking at the data. So it's like, yes, the two or three times a year, there's some inflection directional bending opportunity for a company.

1:06:53Like it's not, you know, it's not every day. It's not every week. It's whatever. It's some handful of times. 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 two or three things, you have to both have enough context on the company and enough space outside the company to be useful, right? Like these entrepreneurs we've talked about, they're hyper learners, like everybody's learning.

1:07:33So they're consuming all the podcasts, they're consuming all the books, they're reading all the blog posts. Like they, they have all 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 moment. 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 are the customers saying? What are those people's motivations? And in order to do that, you have to do some day-to-day work.

1:08:07but if you're mired in that and you're in the trench then you don't have the value of the perspective um and so it's kind of it's a fine balance of of combination of perspective and knowledge of the detail that um i think allows you to be most useful and help navigate those moments um but i think all the value comes from yeah um so that's interesting we've had discussions over the years at different points in times about constraints as benefits for companies. How do you think about that? I think every time we've seen a company that is unconstrained, whether it's like capital or headcount or growth even, or like whatever, it's just like on the one hand, it can be really good, but it also yields a lot of badness, right?

1:09:01And I just think constraints rates are good. Like I've had, they force a clarity of thinking, they force a hard decision making, they force these kinds 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, go forward. And when you want to be really like disciplined and controlled, most of the time you're in between, you know? 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, 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, and cut, right?

1:09:53Like build and cut. It's like, you want to be on whatever six week cycles for that. You don't want to be on six year cycles for that. There's a, I feel like we've talked about this before, but the two by two 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 full specific thing, like sample bias thing, didn't consume a lot of capital to get there.

1:10:27If you look at Viva or ServiceNow or Atlassian or Salesforce, you just kind of go down the list. It's an interesting thing. 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 today. 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. 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.

1:11:07And the dollars that you were raising in 2004 is different than the dollars you were 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 interesting when you look at especially the outlier ones like the Atlassians or the Vivas that like really didn't take in outside capital. And, you know, if you take it, if you look at Atlassian as an example, like it has grown very steadily between, what, 30 and 50 percent for 20 years. It's value compounded. Like, it's just like, and so, you know, it's a really amazing kind of story, but it actually didn't have these like 100%, 200 % growths that we are, you know, we often see in the early stages.

1:11:51So, 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 as 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 like make contact with the ball a lot.

1:12:33It'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, yeah. About incentives. Yeah. 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 their customers, but also their team and how they think about their team and what their team incentives are and how they manage it.

1:13:25And the reason is you tend to project yourself and think everyone works like things like you and has your mental modeling, your piece, that it just isn't, that isn't true. Like they don't, most of the 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.

1:14:03I'm pretty peppered with questions like career advice or people that are asking, do you have anything that you go back to or that people trying to break into venture or whatever version of this question you think is interesting? I think there's no model of success. I think there's no one model of success. Like you look at Moritz, and he was a writer, and what do writers do? They ask questions.

1:14:27You look at Doran. He's a career venture capitalist, but Intel sales guy or whatever. He was a salesperson. Pierre was the son of ABC. Yeah. And Bill was a Wall Street analyst. And so there are lots of models of success on it. But I think there is a common characteristic amongst – There are a couple of common characteristics amongst the venture advertisers, which is they're hyper curious and they're hyper competitive, competitive with themselves, competitive with the industry, whatever. It doesn't really matter, but competitive driven and hyper curious. And so, you know, it's kind of like you're always like 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.

1:15:08You're trying to figure that out. Why are all these great people going to this company? You got to figure that out. Like you can't. it bothers you that there's something that you don't have a explanation for, um, a view of. And so I think that's a common characteristic amongst, um, amongst the people who have been really, really successful in the business. And, um, and so maybe that that's a view of what it is. Um, 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 a all out challenging, you know, you're running everyday kind of job.

1:15:58Yeah. It's humbling too. Yeah. It's super humbling. It's full of regrets and everything else. So it's not, it's not easy in that way. It's an extraordinarily rewarding job in the sense that 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 and junior team being built to help the GP scale more than helping the companies themselves.

1:16:59How 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 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 were great. And they've had a ton of success. So I think that that part's there.

1:17:43Our 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 like these things, it means high commitment and high skin in the game. And so that's the model that, like, 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.

1:18:35That'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. And, but I've sort of found that having one person that wakes up with it number one on their list rather than.

1:19:19Matters. Yeah. It matters. It matters. Yeah. Like, like no question it matters. But I think my, my thoughts would actually more go back to the two or three times a year. Yeah. If all of that in the context. Yeah. You need to have the content. It's interesting. And so that would be my view of it. It isn't that, you know, 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 and on Invest Like the Best.

1:20:01I 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. We get to do... Do you do them here? We do them in Wotod and in San Francisco. We'll also travel for them. We went to New York for one recently with a CEO of a, you know, whatever, public. I don't know, 10-ish billion dollar company that we didn't invest in and didn't know, but just remarkable story and individual. You learn, 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?

1:20:45There'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 were talking about your podcast. But everyone's just an opportunity to learn more.

1:21:25and that part's really, really cool. Do you outbound these people? Yeah, we outbound all the time. And what's the pitch? Just like, hey, we'll come and pick your brain. Have great wine. We'll pay for your dinner. Some nice food. Yeah. We'll talk about what we're seeing in the markets and pepper you with questions. And just have fun. Yeah. And we have a pretty high hit rate on it. 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? And so that part of it's really special. I would also say it's good for our group.

1:22:02It's good for the six of us to spend that time. The social dynamic. Yeah, the social dynamic. And just like that, we spend all monies together, and we spend our dinners together. And just having that esprit de corps is valuable, too. You get a lot of stories on that. Yeah. So it's a really special and fun part of the partnership. Yeah, this is fun. Thanks for doing it. Yeah, thank you.