20VC: Benchmark's Victor Lazarte on Why Portfolio Construction is BS| Why SaaS Spreadsheet Investing is Dead | Why China is a Stabilising Force for the US | Three Traits All the Best Founders Have & The Lie All Big Tech Companies Have Been Telling

25:36So a lot of people don't think of me as an investor. So very little of what I want to do just comes in bound and sounds like, hey, go meet this company. Most of the time you're talking to really high quality people and you ask I'm like, Hey, what has impressed you mostly? Or you get you get super interested in a in a sector and then say, Okay, like what are all the we'll go to someone's a hey, like what are all the companies in the sector and you do a little homework and then it's like, Oh, okay, this is a doesn't interesting company. I think I've done four companies since I started a benchmark three have been this way.

26:08And then the fourth one, the fourth one I actually, I'm a cool founder. I started the company with some of that that I knew for a long time. You started a company? Yeah, we're still we're still in stealth. So like we're not we're not talking too much about it, but maybe I hear from that I'll come back and tell you all about it. When we go back to McCorme Bracks, as you said there, their revenue scaling, I think Bracks was 18 months to 100 million McCorme's 11 months insane. The challenge that I have is have revenue rules broken in terms of scaling expectations. And have we lied to a generation of founders that triple, triple, double, double.

26:41And now that's just not the case. I think SaaS was a moment in time where like a Ruby is investing works really well. I get you $10 million in revenue, like your category winner. I think this is no longer true. Why? I think it's because the nature of the revenue, I think a lot of the AI revenues experimental. And the other is it's now incredibly easy to take JetGPT and say, okay, what are companies using JetGPT for? Let's say their lawyers are using Chatchy PT to write the man letters. So, okay, I'm going to meet this very thin workflow around Chatchy PT. And then I'm going to go after every law firm that writes the man letters.

27:24I say, hey, buy my tool. And you are going to get revenue. You're going to get millions of dollars. But if that's all you're doing, there's just no enterprise value. The reality is, as the models get better, the workflow you're building becomes less valuable. So one task that we always do is when a company comes in and pitches, first, you have revenue growth, like it's still worth something. It's not worth what it was worth before. But it's like, hey, you have revenue growth. Okay, we should pay attention. But then the first question that we ask is if models get a lot better, is their company worse or is your company better?

27:58And if your company is worse, then it's going to be very hard to touch it. But if your company is like, hey, as the models got better, my company gets better, then it's like, oh, like that's a great, That's a great place to be in, right? So for example, Omar Corps, well, got me excited is, so first, one thing that I think is super exciting right now is just replacing people. It sounds really bad when you say this way, but it's the most exciting opportunity in venture right now and it's actually gonna be fantastic for humanity. So it's like, okay, figure out what's a profile of person that does knowledge work that you can replace with a model.

28:31And Omar Corps was replacing a human, like replacing a recruiter. It's like, oh, that's pretty cool. I think models are gonna be better interviewing than people. And the recruiting process now is just so inefficient that if you have a model interviewing, that's gonna make it a lot better. But then there's a few things that make it super interesting, which is interviewing someone is a very hard problem. You talk to the best founders in the world, Elon Musk, Bezos, they always spend a ton of time interviewing. Because figuring out who's the right person, you continue to have gains to quality. So, okay, there's a very, there's a problem where we already have value now, but it continues, like as you get better, it continues to be valuable.

29:12And so investing a lot of money, so that specific problem is valuable. And then if you get specific data, it's like you hire people, you see how they perform, you know, adjust your model. Like having that model is just incredibly valuable. And the other thing is you have this network of facts with like, okay, there's a platform everyone is coming into the platform, so you have this marketplace of people. So to me, it's like, okay, at the time they didn't have a lot of revenue, like they because they had a million dollars, was a go. This is a place where AI's, we're gonna do a much better job than humans.

29:39And you have like a lot of defensibility. We spoke about kind of quality of revenue and applying that to McCool. I had them on the show, loves it guys. People were like, not revenue. It's not like ARR, Harry. And I had like smart people in my DMs, be like, Harry, that's not revenue. Is it revenue? Is it not revenue? Was I wrong? No, it's revenue. It's revenue for sure. is it Aero? You don't have an annual contract that people are signing this annual contract. It's a run rate. So some people criticize and the criticism that I hear is you have this recruiter and your building is platform. And a lot of the growth is coming from labs and the labs, they need, before there were like three stages of language models.

30:27I think the first stage of language models is you just take text from the internet, you train your model and you have like GPT -3, which was very cool, but people didn't like to use it. And then first, again, RLHF, which is models produced, so you take your base model, you produce a bunch of answers, and then you have humans pick what they like best, and then you build a model that give answers that humans like a lot more, and then I have Chatchy PT. That was the big Chatchy PT innovation was like RLHF. And now like we're getting to this third moment in models, which is like pure RL, I think this is the most interesting thing happening right now in AI, which is models, they, if you're not getting a model to be better in something, what you do is like you find a deep experts in that subject and the expert will create a question that the model is not able to answer.

31:18And then instead of like giving the model the answer, it will create a rubric to tell the model is like, hey, for any answer to that question, here's how you're going to rate it. And then once that's done, the model produces like a very large number of answers. And then you have like this very large number of pairs of like question and answers that are graded and use that to train your model, right? So this is the most interesting thing happening in RL. And like this is a big in AI. And like this is a big deal because what this means is we're getting to a point where if you're able to create a benchmark for any task, then through reinforcement learning and like just through throwing a lot of compute at it, you're able to create a model that surpasses that benchmark.

32:01Where does Mercor come in? It turns out that to create questions that the models are not able to answer and to find people that are able to create this rubrics, this evaluation criteria, it's very hard. You've got to be an amazing interviewer to find this people. That's the interviewing that Mercor does. Mercor helps like all the labs get a lot of the really best people. And then so the president's like, Hey, is this recurring? It's not an annual contract, but the reality is for as long as humans are better than computers at any knowledge desk, you're going to need people to create the Z -Vows so that you create this RL environments that will make better models, right?

32:43Completely on the sound and agree. My question to you is, am I getting paid for the risk that I'm taking? And when you have a reduction in revenue quality, like revenue run rate versus enterprise or as AERROR, or I'm just like take a, hey Jen. A lot of it, like other people in the space, it's experimental revenue, it's not super sticky service now revenue. You need to be paid for the risks that you're taking. Do you think we're getting paid for the risks that we're taking, giving the price premiums that AI companies are demanding? It's very much on the case by case. Like hey Jen and Mercor, I think they're like very cheap rounds.

33:18And you know, I feel so lucky that I was able to like, Do you think two billion was cheap? I was talking about the round that I did. All right. Yeah. Oh. And then, but then just a framework to talk about like the rounds in general, right? I think as an asset class, like is there a bubble are people getting paid for the risk they are taking, right? So think about like I don't know, like entropic, at 60, or you think about perplexity at 15, right? I think the reality is, AI is a big shift. I think AI is much bigger than mobile, maybe like all the other amount of the internet. And then if you take a basket of the winners, it's going to work out.

33:58What I'm telling you is, in the next three years, I'm sure someone will start a company that is going to be worth a trillion dollars. How do you make sure you're in this company? It's like, okay, where's the best place to find this company? It's like, what are the interesting spaces that have great teams and it's working? So, okay, there's this Trident Dollar Company is out there and the space, like, okay, the early winners, they're not that many, right? So I think smart investors are saying, hey, if software's spending in the US is like a Trident Dollar, but labor spend is like 10 Trident and now the AI companies are going after the labor spend and so the outcomes are going to be like insanely larger than they were before.

34:39So okay, there's going to be huge winners. So we've got to make sure that we're there. Like we've got to make sure that we're in this company, right? So I think on average buying the winners today will work out. Are there some winners that are overpriced? In retrospect, Dan's will be yes. There's a girl he's spoken before about passing on Google on price and his lessons from that, and I always think of that. The question is, if you see this shift in budget from labor to technology spend, something that I just worry inherently about is like the increasing chasm between rich and poor and the inequality that comes as a result.

35:10even if there are 5 ,000 people in that company, this worth a trillion dollars, it could replace a trillion dollars of spend on labor. Do you share my concern? And is that just in an inevitable progression? 100%. What percentage of knowledge work as we know today will exist in 10 years? Like, if you define knowledge work as work you do behind a computer, I think it's probably like 1%. And you know, the thing that I worry most about is if you're college, If someone coming out of college, what are the things that you can do, if you're coming out of law school? Like what are the things that you can do that in order won't be able to do like in three years?

35:49There's not only that many things. And at the same time, like companies would be more valuable because they're gonna reduce costs so much. So people that own companies, people that own shares will get richer, founders will get way richer, even have this $3 .00 companies being done by very small teams. So that's a very destabilizing force. And that's something that is something to worry about. And I think all the things that controversial, so like you see this big leader stalking like the big company CEO talking about Oh, no AI is not replacing people AI is actually Augmenting people's abilities like this bullshit, you know, like it's fully replacing people my favorite line that we get on the show Which is not hiring you, but we're keeping everything as is you're like really?

36:30Yeah, you know Net net. I think this would be tremendous for society because because companies are humanity's best invention. And if we need less people to create companies, we're gonna have more companies, right? So I grew up in Brazil and Brazil is not a great place to grow up in and then I moved to the US and the Bay Area turns out it's a fantastic place to live. And the principal difference between Brazil and the Bay Area is the quality of the companies. So overall, it's gonna be fantastic for society, but then there's a huge problem of, okay, how do you distribute that wealth? I don't buy UBI by the way.

37:04I think that is fundamentally lacking. No, humanity requires purpose. If you add UBI, you remove purpose and people say, oh, we're going to fish and we're going to paint. I promise you that is not how human psychology works. That's why we have addiction. That's why we have drugs. That's why we have gambling. That's why we have prostitution. Sorry. This is the dark side of humanity. We will not paint and write poetry. Yeah. Well, I think we either have UBI I or it's the end of democracy. Talk to me about that. Like, imagine this society where there's a lot of abundance, a lot of wealth, but the majority of the people are not accessing that wealth.

37:38Like that wealth is very concentrated, but it's a democracy. And it turns out that it's not know what we have today. It's gonna get way more extreme. And the other thing is, it's gonna be much harder for politicians to not do what's best for the entire population. Because the entire population will have a very powerful way as system on their pockets. So they will know like they'll just ask the assistant is like hey this politician like the stuff that he voted on is that good for the general population or not And then someone who come in and we have an agenda that is like hey big British revision of wealth It's like a very popular is like a very popularist agenda and then I think people if people very selfishly ask their AIs like hey Is this politician better for me or not like is this politician gonna get me more material wealth or not?

38:21I think people that want to restrict with the ship in a lot like they'll they'll get full So I think that's very destabilizing for democracy. And then a lot of people there in control, they're saying, hey, right now, you have people there in control. Are they going to like, just see control? Are they going to be less powerful? Are they really going to let go of all the influence that they have? But I think there's one. So I think AI is a destabilizing force because it makes the entire population way more informed and knowing what's best for them. And at the same time, it concentrates wealth, which makes the scenario more propensed to like, hey, the population wanted to get more.

38:59I think China is actually a very stabilizing force because I think the US right now has this external threat. And the US cannot spend a lot of time with internal conflict. We're at a very important moment in time. We're like, someone who got you to a Powerful AI very soon. And it needs to be the US because we wanna leave in the world were like, we're like, parfway ice controlled by the US. And if we spend too much time like an internal conflict, China will do it, right? So, so I think China is actually a very stabilizing force for the US. The best way to unite is to have a common enemy. That said, I don't feel the US is winning the race against China.

39:38I think China are absolutely crushing the US. I mean, Europe's not even in the fucking race. Yeah. When you look at the investments that China have into the education and for shirtless systems and the depths that talent. Respect for the, and the work ethic that they have. Yeah, it just completely destroys anything we have elsewhere on the planet. Yeah, I think China has better work ethic and have more people. So they have more people working harder, but I'm still so bullish in the US because there's so much knowledge here. Like I think our advantage is, it's like the true network effects of the city, right?

40:13So like we have Silicon Valley. And you say, hey, like I think China's winning. I think by all measures like the US is winning. If you look at all the AI products, like Chatchy PT is the most user AI assistant in the world, and sure you can talk about like, oh, how about DeepSeek and this and that? But the guy is like, like Chatchy PT still is the best product out there. Yeah, I mean, no. What's the better than Chatchy PT? I completely agree with what you say. I do not trust or believe anything that China says. And I think they have an armory of weapons, AI related, that they do not show the world, that they have ready to go.

40:52I think TikTok is a weapon of consumer data aggregation acquisition. They are so strategic and smart in how they've leveraged she in and team -oos well. They're infrastructure investments in Africa. I think people don't spend enough time on. It's a shit answer for me, because I'm not really giving you one. I'm just saying I don't underestimate them and I know that they are doing strategic things Which I don't even know about which I think we're not doing No, I agree. It's a very it's like a very serious competitor like I 100 % agree with you I think we're still in the lead But we cannot afford to waste time on anything else You know like we cannot afford to waste time into like internal Disagreements and stuff like that can I ask you you know, I think it's very easy for us to get excited by by transitions, by improvements in human lives, and how we won't be doing mundane tasks that we all kind of fucking hate doing anyway.

41:48But then it's very easy to get caught up in the kind of short term. Do you think we overestimate adoption in the short term and underestimated it in the long? Or do you think this will happen much quicker than we think? I think there's a lot of wisdom in saying like, hey, we overestimate what we can do in a year and understimate what we can do to 10, right? I think there's a lot of truth to that. I still think in AI, you look at three years ago, like we didn't have Chatchee PT, and now there's like close to billion people that use it every month, and they have like a meaningful different experience, right?

42:22So, and the next, not in the next year, but in the next five years, like lives would be menifly changed. So I think AI is gonna happen like way faster than people believe. What crazy thing, or what thing do we do today that we will look back on and go, that's crazy. Like, remember, like, hey, you'll find your loved one on a dating app. You'll bullshit, you won't. Hey, you put your credit card details in the internet. No way. What's that? I think this thing that will happen quite soon is like, we're gonna have an app and like, you're gonna wake up and you're gonna look at your app and you're gonna read what it says and you're just gonna do it.

42:58The app will tell us like, go do this. You're not gonna understand, but you're just gonna do it. And you're gonna do it and turns out that you're going to be happier after you do this thing. And over time, like, you just learn to trust app. It's going to be a complete reversal. Like, you're not going to apps to make it easier to do the things you want to do. For example, like, oh, I go in Instacart to like get my groceries. Like, you know what you want to do? You go there and it just makes it easier for that to be happen. It's like, you go to the app for the app to tell you what to do. And it just blindly trust and this whatever the app says.

43:30How far away What did you think that is? We see glimpses of this, right? So, you know, there's this companion app. Like there's a, it's like cinch or like this, like self -care pets, you know, it's like, oh, I'm gonna be your accountability buddy. I'm gonna help you like exercise every day and like I'm gonna help you like make sure you're drinking water and like taking your meds. So I think it starts with like this simple things, you know, like you open up your app. So for example, I try to work out every morning for like 20 minutes, but a lot of times like, you know, like I wake up and I just don't have the energy.

44:00But imagine you wake up and say, hey, it's your 20 minutes. Like, remember, because if you do that for like X days, you're gonna be better. And then they're just, just getting to this routine. Like it's gonna, like this apps, they're helping you like form routines. So that's like, I think that's the beginning. Like this apps that are helping you form routines, they're telling you what to do. And it gets to a point where like, AI's gonna be smarter than us. Like AI's gonna be smarter than us on most things. And they're just gonna learn how to trust their judgment. They have contacts on you, they know what your long -term goal says.

44:28And so you wake up and say, hey, go spend an hour like reading this book and I could just do it now like go Meet with that person and just do it. It's funny. I got asked the other day. What advice do you have for me? I'm leaving university. Sorry. I'm leaving school about to go into university And I said very simple become a brain surgeon or a dentist Promise you'll be safe for about 20 years Minimum. What advice would you have? I have the opposite feel like I think go study computer science really? Yes And to me, it's like the antithetical to what everyone is saying. That's a fascinating piece of advice.

45:03Yeah. It's like, hey, go on computer science. To me, it's very, I feel very strongly about that. Before I had calculators, machines, we had human calculators. If you saw they're like a Apollo movie and they're typically women and they're like calculating these tables, people that are just doing math. And then calculators were invented. And then when calculators were invented, it's not like, oh, people are like, oh, we shouldn't study math. No, people should study math. And if you study math, the reality is like, you're studying math in high school and like you're studying math in college, like the first few years of college, you're doing stuff that computers can do, but it doesn't matter.

45:41Because like, first, like you're understanding the technology and two, like there's so much transfer learning. When we train models to code, they get better at a lot of other stuff. Why I advise people like, hey, go on computer sciences, the transformation right now, it's technology transformation is an AI transformation. So go study computer science, because even if you're not going to be a developer, and you're probably not going to be a developer, but just having the basis to understand how that's done, it's going to be extremely helpful. And then the transfer learning of like, hey, just being very logical and be able to take a big task and break down your small tasks and be very rigorous, I think that will continue to be very valuable.

46:22When you look at the AI companies of the last 18 months, You're in several absolute bangers, which one are you nodding that you had the chance to, and you just missed? Yeah. So we may like, we're participating in one round of cursor. Well, I think the coding space is very interesting. I think, like, that's an interesting one. You participated in one round. I'm just interested. Like, benchmark a famed for, like, the leading the A. How do you think in the partnership now about plasticity around stage, and whether you have to lead. You know, I obviously know Fountainwell and he did our table, I think the C.

46:58Giolli's had flexibility around, how do you think about the rigidity of no, we have to lead the A? I think rigidity is nonsense. Frankly, what defines benchmark? We wanna be a partner to the most important companies being created, which is similar to most venture firms out there. And I think the difference is, we wanna be the first goal. Like we wanna be the first goal to like every, every entrepreneur that we work with. And in order to do that, like the easiest way to do it, it can be a dick as your friend. Every bc says that. I don't even wanna be a first cool, but your mom should be your first cool.

47:34Yeah. Nothing that's there. I wanna be your worst cool in terms of like, when the shit really hits the fan, cool me. Yeah. It may never happen, but that terrible time on the person who's gonna help me. Yeah. All else being equal, I think everyone wants to be the closest partner. But I think the part that changes like they all else being equal, right? I think it's like hey, we're willing to take a lot of trade -offs in order to be to be a very close park Right, so why does benchmark make very few investments? It's because we spend more time with our companies and you know, you're saying like all investors want to be their first call I don't think it's true because the reality is if you're a financial investor You don't want to be the call you want to okay?

48:15You made your investments. You want to find the next company and like And there's a lot of investors that are really smart investors that say, Hey, you know what? Like I hate the boardwork. You know, I want to write, write a check and there's some investors that say, Hey, like, that's not the product that I have. I get put my check in and that's it. Do you think an investor can move the needle for a founder? And Keith for boys says, you know, the best founders don't need you. Yeah. If you call the people that I work with, you should call them. And it's like, I did. I think you can. Right. And like, so, so one thing that made me very happy is like a few months back, like Peter came to me and said, Hey, man, I'm so grateful that, that you've been a partner on this and you're the closest thing that I have to a co -founder outside of the company, right?

48:53And can you make a difference? I think it's actually very hard to make a significant difference from the outside, but the way you do it is, founders need a thought partner and founders need a way to like access all the knowledge and ecosystem and you can catalyze that. But I think like the good founders, like they have access to a bunch of people, the good founders, like they don't work on isolation, they have access to a bunch of people, But the difference, the thing that you can do as a board member that is very hard for all the people to do is, I've been at the Brexport for, I don't know, like, seven years.

49:25And for every important hire that he did, I discussed that with him. And I've done so many, say, like, close calls or candidates that once he has a problem, like, he calls me just because I have way more context than he does, than other people do it. So I think, like, how do you add value? What's the way to add value? He's like, hey, you have a lot of context, but the thing is, it's just very costly to context. And that's why we, the reason we do very few deals is because gaining context on the companies, like takes a bunch of time. If you're then flaxy on your insertion point, maybe participating in the course around or doing a later round, do you have that ability to add context even because you're probably not on the board?

50:07Not in all, when we're participating, like, we don't have that ability. And that's why we don't do it. So normally, and the reason we do it sometimes, like, hey, maybe this is a way to like start building a relationship with a founder and like over time, like we'll grow our position and like we'll build a relationship. But the reality is like, if you write a small check and like, you're one of many, then like you don't make any difference. It doesn't matter how smart you are. Did you feel the weight of the benchmark GP role when you come into any investing role, it's a lot of responsibility. Respectfully, you're GP a benchmark.

50:39That's your first investment. I know you're like a billion dollar founder, but it's still like a steep position to come into. Yeah, you know, the thing that I love about Benchmark is, so I came in and the partner said, hey, you're coming here to co -found the forum. Like there's a lot of tradition, but adventure from that is like sticking to tradition is soon gonna be very relevant. So we believe a lot in like creative destruction and like you feel like, oh, okay, you almost feel like, really? And then I met with the founding partners or is that a benchmark? And it was like, hey, yeah. Like the only way, like the only way we continue to be a great forum is like, if we have no attachment to just how the way things were done, right?

51:19And I actually think that this is a big advantage for a benchmark, because we don't have any process and we have a small team, it's easier for us to like change things, right? So anything ventures changing, I think ventures changing a lot. How do you think ventures changing? Something a big difference is, when you think about like a couple of decades ago, So the role of a born member was governance. It's like capital is so scarce, they say, hey, once you put capital into a company, a lot of your jobs is managing the downsides. Like, hey, make sure that this guy is not going to lose all your money.

51:52And that's understandable because there had been less big outcomes in tech. So people that invested their kind of a frame, you know, like fast forward to today, everyone knows investing in technology. It's a great thing. People should do that. And it turns out that it's more important to maximize the upside than it is to manage your losses. In the way this changes the role of a board member, you're not that concerned. Some of your investments are going to lose money. Your role is not governments. Your role is not there to say, hey, founder, you can do this or you can do this. Your role is to maximize what the founder wants to do.

52:31So it goes from like oversight to like catalyzing, to amplifying the founders' ambition. Really? If you... I agree with you. But like, officially the job of a board member is to, you know, have a fiduciary duty to shareholders. Fiduciary duty to shareholders is not always the same as maximizing a founders' ambition. How do you think about that? So I think if you're taking a lot of decisions in isolation, it's like, oh, okay, like in this case, I believe that if we do this, it's gonna be better for the shareholders. But if you look at an aggregate that your policy is, I'm gonna choose the best founders.

53:11And I'm gonna trust them. And my fiduciary duty comes in at the moment where I write the check. It's like I'm underwriting that person. It's like, hey, do I think this guy will be a good CEO? And once you're there, it's like, I'm here to enable this guy. And even when I disagree with him, I'm just gonna help him do what he wants to do. If you have a lost faith in a founder. Describe, describe what the lost faith means. When you no longer believe that actually they are the right person to drive the company and actually don't trust the decisions that they make are the best decisions. Yeah, so the reality is, like the reality is, I have another ton of investments, right?

53:45But I've done a couple of, like I've done a couple of engine investments where it didn't go well. Like one of the things that I learned, like after joining benchmark and I work a lot of Peter and Peter sits on two of my boards and I sit on two of his boards. You see this company's go through these ups and downs. I think the thing they learn is we don't give up. It's like, hey, as long as the founder wants to do it, and it's completely un -economical, completely un -economical. So I was talking to Peter and those accompany I wasn't doing well, and it's like, I know what we have to do. A lot of venture capitalists would say, hey, just cut it loose.

54:20Forget about this thing. We should double the frequency of the board meetings. It's like, okay. And it's because we're here, as long as the founder wants to try. So it's like, you made the commitment to the father and from that point on, you tried to be through to this unconditional belief in the founder. You mentioned Peter there. What would you most change about the current process benchmark has for investment decision -making? It's a very lightweight process, which is very good. So the way we work is, you know, if I'm a company, if you like it, you need to like get your partners, your partners opinion, but you don't need to get your partners approval.

55:01Do you bring them into early meetings with team with founders? Do you kind of hunt a solo? How does that work? Do you tag team? It's all optional. It's like all optional. The one thing that is not optional is like you have to present the idea to the other partners. And everything else is optional, but the way typically it works is like you meet a founder, do a second meeting like where you bring another partner in, so you guys can have a discussion. But then like if you know you want to do it and you like it, typically like you bring the company in, everyone talks to the company, and then people vote, but it doesn't matter what the vote is, if you really want to do it, you can do it.

55:36And so why vote? The vote is just a temperature gauge. So the vote is you disambiguate what people actually think. It's like you got a clear clear signal because you're going to bring a company in. It doesn't matter what the company is. There's always a ton of reasons to do it and a ton of reasons not to do it. And then people will do arguable sides. So you force them to put a number to it. That number carries a lot of information. So we go from one to 10 and you can't vote five. I asked Peter, what should I ask him? He said, the one question I'd really want to know from Victor is if you look back in 10 years, in what ways do you want to have meaningfully changed benchmark to prevent its extinction?

56:15I don't know if like prevents the extinction as the function we're trying to maximize. I think the function we're trying to maximize is like there's going to be 10 ,000 dollar companies created in the next decade. How do we make it so that we're in a large number of them and we have a deep relationship with those founders. I think that's a maximizing function. And to me, it's just like, it works backwards from, how are you like, obviously, the right choice for the founders that have a ton of choices? And right now, benchmark, when we wanna do something, we typically do it. We have the chance to partner with the companies that we went apart.

56:53But the problem is, because we're small forum, because a lot of stuff that we don't even see. And then sometimes, like, people are raising around that doesn't look like a benchmark round. And I think, I think that is the thing that is most important for us to change. It's like a lot of times people think, oh, this is a benchmark round. Like this is not a benchmark round. What it means, like, it needs to be clear to everyone's like, hey, what's a benchmark round? And a benchmark round is when there's a founder that is very capable going after a very big market. As long as you have that, like that's a benchmark founder.

57:23It doesn't matter if you're raising like five million or if you're raising like 200 million. It's a fun size. Now a constraint. The constraint always was beautiful to everyone. when it was craft of benchmark. In today's AI landscape, the rounds we just see are so big, that 25, 50 million to start. Shit, if you want 15 % ownership, you're putting 10 % of the fund out on the first check. My first check of benchmark was a $55 million check into Hey, Jay, right? So this was my, this was my, in our room. $55 million? Yeah, I wrote it, yeah. So this was my first check, 55 million dollar check. And yeah, because, you know, And then like, hey, we got to be true to, no, I never did that.

58:05That's 10 and a half percent of the fund. If it's a 500 fund. It's actually a 600 million dollar fund. That's a law. I mean, that's amazing. Yeah. I think a lot of funds, they think about, you know, portfolio construction and this and that. But they're guys like, RLP's, like, they're the same old P's in all funds. So if you want to do like, like, one like, $3 billion funds, or if you want to do like, five, like, $600 million funds, like, for RLP's, like, it's actually the same. And so I think the fun size has never been a constraint. I think the constraint is where we can make a difference is like in the beginning.

58:37So it's like early. And we work best with founders that want to have a relationship. Some founders are like, hey, I do think it's bad which have a sounding partner that is going to have a lot of context on the business. And if you're believing that, then it's like, yeah, benchmark is a good fit. And most early rounds are less than 50 million. But you know, we've done things there later, like we've done larger checks, and like sometimes if we're gonna do a lot and larger check, we do an SPV. But the check size, it's not, it's never been a constraint. Final one for a quick file. Just like Brett Taylor coming and pitch to partnership.

59:13Like he's a special dude, Sierra's a special company. I think Brett's case is like, I think had dinner with the partners, it was more like a conversation than a pitch. I think Brett Taylor's case, you know, I think it's a good example. was like, hey, the guy's so accomplished. Like he could race from anyone, we do whatever he wanted. But I think he valued the relationship with Peter. And it's like, hey, like I think it's gonna be valid, which like have you along this way, right? And because it's a legal partnership, it's like, hey, this people, they're gonna be part of this in this company. So it's like, it's like, get to know you much more and it's like, hey, like I'm pitching you, right?

59:44That is insane one. Like Brett could fund it himself for the rest of eternity in many respects. But he values Peter so much that he brings him in at that stage. That's pretty special. And I think it's a smart choice. And I think the best people, what they're going to maximize for is like, hey, how do I get my conditions, my initial conditions, right? How do I get like the smartest people around the table? Because in the end, the initial conditions, like they affect so much, what do you can actually do? I could talk to you all day. Do you mind if we do a quick fire round? And then I'll let you actually get on with some proper work.

1:00:17What do you believe that most around you disbelieve? I believe that pretty soon we're going to have an app and like, which is gonna wake up and do whatever the app tells us to do. In a way, we're gonna be obedience to machines and we're gonna love it. Single biggest lesson from working with Peter Fenton. I think the thing that Peter does better than anyone I've met is he can understand people and he can get people to open up. So lots of times before we decide to work and a founder, Peter takes people to dinner and a lot of times I want to introduce people to Peter and I think Peter to dinner or someone.

1:00:51So for example, I took the Braxia Wolt, which I have dinner with Peter, and it's someone that I've known for many, many years. At dinner like that, two and a half hour dinner, I felt like I knew the person a lot better than I did before. Peter does this thing where he's able to make people open up in a way, and the effect that it has is like, people leave the dinner and instead of wow, I just had a really special dinner, right? So I think it's a super power, and I think it's kind of known that this thing happened. And so a lot of times, like if you want to spend time with someone and like it's kind of hard, a lot of times I have like, hey, like you want to go have dinner with Peter and I.

1:01:27And most times people say yes. People say yes. They have a fantastic experience. And then they'll tell them more people's like, you forget the life. I would love to find out that it's like, nah, sorry, I'm watching Netflix.

1:01:41I'm sure you'll happen at some point, but that hasn't happened yet. I don't think it's going to happen. Don't worry. That's just too funny. You can buy and hold one public company stock for 10 years. What do you buy and hold? Duolingo. Why help me understand that? It's like AI, like man, AI is going to change people's lives in really important ways. One really important thing is like the way we're going to Lauren's going to be the way AI teachers and and Duolingo I think it's very sneaky. It's nidgin a good way like they're starting like this language app But they're making like they're making your AI friend that teaches languages And then they're going to teach more stuff and Luis, the founder, is a total genius.

1:02:20So I think he's going to make a free AI tutor for everyone that's going to be incredibly important to humanity and it's going to be a very valuable company. You can invest in one seed fund and one growth fund. I'm not choosing A because that's tough for you. Who do you choose? There's an objective answer to that. It's like, I'm an investor in green oaks. I think they're pretty good. Neil Mason just taped me already. I mean, God, this man is brilliant. That is amazing. I really like him. And then I'll go, like, I'm already, I'll go with conviction, because I think Sarah is great. Totally agree.

1:02:55What she's done in like a short time frame for a new firm is incredible. Final one, when you think about the next 10 years for you, if we do this in 2034, why do you want to be then? What do you want to have achieved? What does Victor Lazarte look like then? I want to be an important part to the most important companies created and that can be a Early board member and that can be a co -founder, but I want to look back and say hey AI is gonna solve so many of humanity's biggest problems You know like from like education to security This companies are being created now to companionship and I want to be an important part of their story I am so glad that we had this schedule that I completely ignored and I think you saw that it was a much more free -flowing discussion.

1:03:43I so appreciate you rolling with the free -flowing discussion. You've been fantastic to have on. Thank you so much for joining me, man. Thank you, man. This is a lot of fun. I mean, that was such a special show to do with VickTriff. You want to watch the full episode you can find it on YouTube by searching for 20VC. That's 2 -0VC on YouTube. And before we leave you today, turning your back of a napkin idea into a billion dollar start -up requires countless hours of collaboration and teamwork. It can be really difficult to build a team that's aligned on everything from values to workflow, but that's exactly what Coda was made to do.

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1:06:58As always, I so appreciate all your support and stay tuned for an incredible episode with Jason Lemkin coming on Thursday, where we break down the latest fundraisers, acquisitions, IPO opportunities, it's a fantastic conversation coming this Thursday.