Benchmark GP, Victor Lazarte: The 3 Traits All the Best Founders Have

Summary

In an insightful conversation on 20VC with Harry Stebbings, Victor Lazarte of Benchmark GP delves into the key traits that define successful founders, discusses the future of AI, and shares his passion for supporting groundbreaking companies. With a history of backing ventures like Brex, Lazarte highlights the significance of market understanding and timing, as well as the importance of maintaining strong founder-investor relationships. This dynamic exchange covers a breadth of topics, from the transformational impact of AI on various industries to the evolving roles of board members in venture capital.

Highlights

• Victor's emphasis on founders being both open-minded and disagreeable. 🎯
• The transformative potential of AI in replacing routine tasks and enhancing human capabilities. ✨
• Lazarte's passion for being an active and supportive board member. 📌
• The impact of great market timing, as demonstrated in ventures like Brex and Mccor. ⏱️
• Envisioning a future where AI-driven apps guide daily human decisions for improved happiness. 🌟

Key Takeaways

• Victor Lazarte identifies open-mindedness and disagreeability as crucial traits for successful founders. 😎
• Market timing and a keen understanding of current trends can be pivotal for startup success. 🚀
• AI's potential to revolutionize industries, including knowledge work and social interactions, is immense. 🤖
• Lazarte values being a thought partner and building a deep relationship with founders. ❤️
• The evolving landscape of venture capital requires adaptability and a focus on catalyzing founder ambitions. 📈

Overview

In this episode of 20VC, Victor Lazarte from Benchmark GP provides a masterclass on what makes a startup founder truly exceptional. Victor emphasizes the unique combination of traits such as open-mindedness and the willingness to disagree, which he believes are key indicators of a founder's potential. Through anecdotes and insights from his journey with successful ventures like Brex, Victor reveals his strategic approach to investing.

Victor's discussion broadened as he talked about the profound impacts of AI on the future of work and daily life. He envisions a not-so-distant future where AI becomes a personal companion, revolutionizing how we interact with businesses and technology. His excitement is palpable as he discusses potential paradigm shifts, such as AI transforming knowledge work and social connectivity, resulting in massive opportunities for innovative businesses.

Beyond individual investments, Lazarte shares his broader vision on the role of venture capitalists as partners in strategic growth. He elaborates on the changing dynamics within the venture capital ecosystem, stressing the importance of amplifying founders' ambitions and the evolving definition of success in the tech industry. His insights not only highlight the need for investor agility but also underscore the strategic foresight necessary in nurturing nascent technological advancements.

Chapters

• 00:00 - 00:30: Introduction and AI's Role in Business The chapter discusses the role of AI in business. It addresses common concerns about AI replacing human jobs, arguing instead that AI is augmenting human abilities. It raises questions about the future impact of improved AI models on companies, particularly whether advancements will benefit or harm businesses. Despite these uncertainties, the chapter expresses optimism about AI's potential, suggesting that a major AI-driven company could soon emerge, potentially reaching a trillion-dollar valuation. The overall sentiment is that investing in leading AI innovations today is likely a sound strategy.
• 00:30 - 01:00: Introduction of Guest Victor Lazarte The host has thoroughly researched Victor Lazarte by speaking to several individuals connected to him, including Peter Chathan, Sarah Bruce, Dun Levy, Pat Grady, and the Brex founders. This introduction highlights the depth of preparation and interest in Victor's background. Victor expresses his appreciation for being on the show.
• 01:00 - 02:30: Victor Lazarte's Entrepreneurial Journey This chapter discusses the entrepreneurial journey of Victor Lazarte, highlighting his rise from humble beginnings with just $100 to building a massive gaming business generating $350 million in revenue. The focus is on key moments and lessons that shaped Victor's identity and entrepreneurial philosophy, showcasing his commitment and vision in the mobile gaming industry.
• 02:30 - 04:00: Market Timing and Insights The speaker reflects on their challenges in raising venture capital for a business focused on mobile games in Brazil circa 2011. Despite the narrative appeal, they faced difficulties obtaining funding primarily due to a less developed venture capital scene in Brazil at the time and a lack of business sophistication on their part. They had a strong passion for mobile games and believed in the potential of their idea.
• 04:00 - 06:30: AI Companions and Future of Social Interaction The chapter discusses the challenges and considerations in the realm of AI companions and their impact on future social interactions. Emphasis is placed on the importance of having a well-thought-out business thesis when seeking investment, as illustrated by the anecdote where a company was offered $50,000 for half of their business. This cautionary tale is contrasted with a successful case where 'Glo' in Europe managed to sell a third of their business for a significant amount of money. The chapter also touches upon the potential horror stories faced by investors, particularly referencing the Brazilian market during a specific time period.
• 06:30 - 09:00: Investment Strategies and Founder Traits The chapter discusses investment strategies and focuses on the traits of founders. It highlights a scenario where less sophisticated investors agree to terms that are detrimental to their control over a company, such as a 20 times liquidation preference. This lack of sophistication can lead to losing ownership of their business. The narrative underscores the importance of understanding contract clauses and being cautious when raising funds to maintain company control and ownership.
• 09:00 - 11:00: The Role of a Board Member The chapter titled 'The Role of a Board Member' discusses the initial insights and decision-making process that led the narrator and their brother to venture into the mobile gaming industry. It was during their college days when they realized their passion for video games and initially considered a business collaboration with Nintendo. However, they soon recognized the impracticality of that idea. Instead, they observed the booming trend of app downloads, which informed their decision to focus on developing mobile games.
• 11:00 - 15:00: The Venture Capital Landscape and AI In this chapter, the discussion focuses on the exponential growth in mobile app downloads between 2008 and 2009, highlighting a 42-fold increase. This market trend was identified as a significant opportunity, particularly in the mobile gaming sector. The chapter underscores the importance of recognizing market shifts and leveraging technological advancements in venture capital decisions, particularly in the context of developing mobile games leveraging artificial intelligence.
• 15:00 - 16:30: Global Competition in AI The chapter delves into the topic of global competition in AI, using insights from personal experience in starting a company. The narrative outlines the challenges and learnings from early stages of business, highlighting the importance of understanding current market conditions instead of trying to predict the future. It suggests focusing on what's currently effective as a strategy for success.
• 16:30 - 18:00: Future Predictions and Technology Adoption This chapter begins with an anecdotal story about Jeff Bezos, who, while at D Shaw, recognized the rapid growth of the internet, noticing it was expanding 23 times a year. This insight led him to consider starting a business on the internet. The chapter then draws a parallel to the present day, noting that the usage of large language models (LLMs) has surged 100 times over the last two years. This growth can be measured in the increase of flops (floating-point operations per second) from 1x to 100x, highlighting a similar opportunity for technology adoption and business innovation.
• 18:00 - 22:00: Advice for the Future and Personal Growth The chapter titled 'Advice for the Future and Personal Growth' discusses the importance of understanding the current trends and building upon them. It emphasizes that in the year 2000, establishing an internet company was a groundbreaking move, whereas by 2010, the focus had shifted to mobile gaming and app companies. The passage highlights the success of mobile gaming companies and other tech companies like Uber, emphasizing the evolution of business opportunities over time.

Benchmark GP, Victor Lazarte: The 3 Traits All the Best Founders Have Transcription

• 00:00 - 00:30 big company and co talk about like oh no AI AI is not replacing people AI is actually augmenting people's abilities like this is you know like it's fully replacing people but then the first question that we ask is if models get a lot better is your company worse or is your company better like is there a bubble are people getting paid the risk they're taking what I'm telling you is in the next 3 years I'm sure someone will start a company that's going to be worth a trillion dollars so I think on average buying the winners today will work Ready to
• 00:30 - 01:00 [Music] go victor dude I have basically stalked the out of you for the last 24 hours i spoke to Peter Chathan Sarah Bruce Dun Levy I spoke to um Pat Grady um the Brex founders i mean I did my work for this one so thank you for joining me it's great to be here thank
• 01:00 - 01:30 you for having me now when I spoke to Pedro he was like not many people know but you know respectfully Victor really came from nothing like $100 to building a huge $350 million I believe revenue gaming business can you take me to that bu business build journey and one or two moments that really shaped who you are as a person and what you learned so so yeah I bootststepped uh a mobile gaming
• 01:30 - 02:00 business and it it makes for a good story but the reality is we tried really hard to raise money like we didn't bootstrap by choice why don't you think you could raise like what did you do wrong in hindsight so so I was never like I wasn't very like business sophisticated and I mean this was like 2011 in Brazil so like the venture capital scene there like wasn't as developed right but the idea was like I loved mobile games and I thought it was it was going
• 02:00 - 02:30 to be a good business but there wasn't like a very strong wellthoughtout thesis and I I guess that's why like the best term sheet that we got is someone offered us like $50,000 for half the company right which obviously we we we couldn't take that's a relief we had Oscar on the show from Glo in Europe and they sold a third for a hundred,000 euros yeah yeah oh you know there's so many horror stories from like investors in Brazil at a at that time and I think
• 02:30 - 03:00 like less sophisticated uh so I wasn't very sophisticated but there were people that were even less sophisticated so I had friends that they raised money in Brazil and they agreed to like a 20 times liquidation preference which seems like a oh this yeah there's this clause in the contract but I don't really know what it is and yeah like people do that and they end up losing their own company their whole company right wow that's absolutely nuts okay so you're like we can't fundra no one's giving us money we need to build this business just
• 03:00 - 03:30 naturally what happens then I think that the core like the core insights like the core thing that made Uh so I I started a company with my brother and like the core thing that made us choose to do mobile games is like in college we we loved video games and initially was like hey like let's let's build a company with Nintendo but that sounded like a really bad business idea but then like we came like we looked at around like hey like what's working in the world and we saw that app downloads like this was
• 03:30 - 04:00 2010 we're studying the market and app downloads had grown 42 times from 29 from 2008 to 2009 app downloads mobile app downloads had grown like 42 times and I was like wow like this is like this growth is insane so so we should make mobile apps and we love games so like let's let's make mobile games right so like I think that was that was like a great insight and so we
• 04:00 - 04:30 started the company and the first few games we did everything ourselves like we didn't have any employees does that shape your thinking on market timing because what you basically just referenced% 100% so how do you think about that i think when people want to start companies a lot of times they're they're trying to predict the future but it turns out it's very hard to predict the future it's much easier to understand the present so a good aristic is like hey what's working what's working right now and there's the
• 04:30 - 05:00 famous story that Jeff Bezos he was at D Shaw and like he saw the internet was growing like 23 times a year and said "Hey like I need to make a a business on the internet right?" And that was that was the the initial insight and then like what's the insight right now and it's quite clear LLM usage has grown 100x in the last two years so if you measure if you measure like in the number of flops it went from like one x of flop to 100 x of flops now and like
• 05:00 - 05:30 of course this this data is not very precise but it's directionally correct so so I think the first thing is understanding like what's happening today what's working and then like how can you build on top of that so in in the two like in the year of 2000 building an internet company was an amazing thing in 2010 building a mobile gaming company building like any app company was a great thing and like that's why you have like some mobile gaming companies that were successful and other companies that were even more success successful like Uber and like
• 05:30 - 06:00 and Instagram and all that they were all started around the same time and now like LLM companies it's it's quite clear it's the best time in over a decade to start a company because we have this insane phenomena of adoption like adoption of LLM inference we started like okay how what's the thing in LLM that is working I think a year and a half ago there's basically like two things that were working I think there was like chat PT and and character AI I would say I would say character AI was one of the things that was really working uh and Now I think you can argue
• 06:00 - 06:30 that there's like character AI chatt and cursor right so like those those are okay what are the things that working that people love there's a lot of usage like like tens of millions of of users right and what these things have in common and a lot of times like the the great opportunities that they're adjacent to things that are working today so I think a great place to start is just like having a very profound profound understanding of of what's working and then build adjacencies to it
• 06:30 - 07:00 yeah or like build things that that that are inspired by it right so when you look at the the history of the best companies like the most impactful companies you know like Facebook was not the first social network like when Zach built Facebook that was uh MySpace and Fster before it right but you could see that there was there were things in that direction that were working and so the the thing that I'm most excited right
• 07:00 - 07:30 now like the thing that frankly I the company I would love most love to work on is an AI companion and I think I think in a few years we're going to look back and we're going to say that character AI was Friendster and what I mean by that is there's going to be a company that is going to be very important and we'll we'll look back and we'll say character was the precursor of that and and the reason I believe that is
• 07:30 - 08:00 before the internet the way businesses interacted with with people was like through physical branches and then you have the internet and business interactive websites and then in 2010 you had mobile apps and then like business interacts with like with mobile apps and now the really cool thing that we have is agents and this is just starting that the smartest the smartest businesses they realize that the way customers will interact with the businesses it's as if they were able to talk to the business
• 08:00 - 08:30 owner like they talk to this to this thing that feels like a person that knows everything about the business and is able to like solve anything you want and sell you anything you want so this agents right like I think some of the incumbents will reinvent themselves to have like an agent interface but whenever you have a shift like a UI shift of this magnitude a lot of the businesses like they don't adapt and so I think there's an opportunity to recreate a lot of the successful business of today in an agent format so
• 08:30 - 09:00 I think there's three categories like there's the category of incumbents that will adapt there's the category of incumbents that will not adapt and then startups will just recreate those businesses but on an agent first framework and then there's a third category which is businesses that weren't possible before but now are possible because the the agent interface is is is the right one right but but on on that topic I think like social networking and like we now have software that makes makes us more efficient at so
• 09:00 - 09:30 that makes us more efficient at connecting with our friends you know like you have WhatsApp and you have like Facebook and Instagram what does an agent for that look like what's an what's an agent for for your social uh for your social life i mean is it not bluntly the removal of other humans it's a 24-hour a day constant companion that understands how you feel responds to you in real time and is your continuous on demand
• 09:30 - 10:00 friend so I think I think that's a really powerful idea do you know what astounds me Victor honestly and sorry you said beforehand you wanted something conversational and I agree with you i'm terrified about the mental health pandemic that we have today like the the young men are more likely to die of suicide than they are cancer that is a terrifying statistic and what I find astounding is that really the largest mental health company is is what calm respectfully it's not a huge business uh it's you know one and a half billion a
• 10:00 - 10:30 great fantastic journey but it's not a huge business if our jobs is to solve humanity's biggest problems what's going where's the disconnect i wouldn't even make like a a a larger claim and the claim is humanity like what do people want and like in the end people just want to be happy and there's a lot of study on like what makes someone happy right and turns out that wealth makes people happier like the the the more
• 10:30 - 11:00 material wealth you have the happier you are but it's actually it's not like a linear relationship it's like log linear right so if you you get to like $75,000 a year for a US household like it start to taper off and so making people wealthier actually does not affect their happiness that much and then what does technology do like technology helps us be more productive which is like hey it makes us wealthier and it makes us achieve the goals that we want like
• 11:00 - 11:30 better right so it makes us more productive but research shows that the biggest predictor of your happiness is like the quality and depth of your relationships right and technology has not attacked that but I think that the really cool thing now is we're able to have a digital friend and I think that would be fantastic i think you look at the studies and like like religious people on average are happier than than non-religious people a lot of the difference is explains because like religious people like they have the
• 11:30 - 12:00 stronger rel ties with the community but also religious people they have a relationship with God so like God is this friend that like you never see like you talk to to God but like God doesn't talk back and so to me like that's a existence like that that proves that you can have this entity that you never see that is an important relationship to you and that that makes you that much happier i say actually that the death of
• 12:00 - 12:30 religion is the thesis for CPG and consumer brand investors today and you're like what thesis for because we've shifted cultlike worshiing from God Buddha and these deis figures to hierox and CrossFit and Taylor Swift and Lululemon and they are ironically in the minds of modern consumers a community which consolidates beliefs and brings unity soul cycle it is this feeling of togetherness which is extraordinary to
• 12:30 - 13:00 say that's replaced God uh maybe is signifying of society but I think about that a lot question would you not say that social has brought more high quality and depth to relationships if you think about your ability to follow your friend's wedding on Instagram no I think social I think social is definitely positive and you know I first like I first started interacted with my wife i met my wife like three years ago and I first interacted with her like through Instagram we had like
• 13:00 - 13:30 friends in common so I started following her and like commenting on her stories and you know maybe our relationship wouldn't have happened because of Instagram and and she's the biggest source of joy in my life so incredibly incredibly grateful that that that these things exist but I think this thing just scratches the surface like I think the way Instagram is is set up like it does not help you connect nowhere near the way it would be able to right when you think
• 13:30 - 14:00 about why why is it adaptive to have friends and a lot of it is like okay we need to have a story that helps us understand what's happening with us right like we create our own like internal narrative and when you have a friends like you explain your narrative to your friends and your friends comments on your narrative and helps you shape it and that that makes you better able to understand yourself and where you're going right so humans they have this intense need to feel seen and understood and this is very adaptive we're at a
• 14:00 - 14:30 point where AI is able to do that for you like AI is able to help you shape like okay what is your personal narrative like I I have this very strong belief that five years from now for the majority majority of people the person that will understand you the most is going to be an AI is that a world that you want your kids to grow up in i think that's like that's where I disagree with a lot of people i think we're always very afraid of technology like humans are always very afraid of
• 14:30 - 15:00 what's coming next i actually think it's going to be wonderful you know I think people feel isolated and like being isolated is bad for a bunch of reasons cuz like you feel like you don't understand yourself like and if and if if you have a challenge you have a hard time thinking about this challenge like imagine you have this hyper capable friend that helps you understand yourself like knows everything about you and whatever situation you have he helps you like figure that out so you feel supported
• 15:00 - 15:30 like you feel you feel like you're never alone even more than that like I think a lot of people say oh this is very dystopic cuz like once you have this AI friends like you won't have like regular friends i I I think I think this is very untrue because in the end like this is will still want to see people in person and your AI friend not only not only will help you like understand yourself but it will help you connect with great people will help people like find out like hey I know you really well and turns out that there's there's a
• 15:30 - 16:00 hundred million people that I know really well and I'm gonna connect you guys but it's going to function like very much in the way that a person introdu introducing you to someone else functions which is like you got this intro but you have a common friend so you know you have to behave well because if you don't behave well it's like hey I'm going to tell your friends that that you're an and your AI friends is not going to introduce you to anyone anymore speaking of AI friends and the quality and depth of relationships when
• 16:00 - 16:30 I bluntly spoke to so many people about you there was one relationship in particular which struck me which was when I spoke to Pedro at Brex about you um and he mentioned a number of things which just really highlighted the depth of your friendship you invested pre-product pre-revenue can you take me to that and what that journey has taught you about investing company trajectory or shaped you so the way I met Pedro is so I was building my company in Brazil
• 16:30 - 17:00 and you know as I said we started uh we bootstrapped the business like we eventually grew it uh to over a billion users and there were very few people building technology companies in Brazil at the time and then Pedro he had a problem with a with an investor he was when he was 16 he he created his first uh payments company in Brazil and turns out that he signed a a a deal that he shouldn't have and he lost control of the company and the
• 17:00 - 17:30 investors made it impossible for him to capture any value so I spent a ton of time with him and like with lawyers and say "Hey how how do we get out of this?" And after and I had no shares like I was just like "Man," I was just "Hey this kid is so smart like this kid is so so good he deserves to succeed." Right so I really wanted him to succeed and then after a while like I was like "Hey man i'm selling like my mobile gaming company we sell things in the US." And and and the US is is is a much better market and you should just you should
• 17:30 - 18:00 just like let go of the company that you have and you should go build something similar in the US uh and so eventually he agreed to it and and so he moved to the US and he started Brex and then when I started Braggs he's like "Hey like can you can you invest on my seed round and like can you be my first board member?" And I was like "Yeah of course i I'd love to do that." And so I think our relationship came in from this shared distrust of investors and this idea that hey we're going to we're going to have
• 18:00 - 18:30 each other's back uh and and the other part that that I really enjoyed is like to me it was just so fun spending time with this young kid that just loved business so much and frankly I don't think I would have I would have invested in Merkore if I hadn't invested in Brex because when I met the Merore guys like you know at first glance like the business are so different but I met the Merur guys and like the company was doing a million dollars in in annual revenue but like Brandon reminded me so
• 18:30 - 19:00 much of the Brexers and because you know like there's this two traits that that I look for in entrepreneurs that they both have and the two traits that they rarely come together and so I like to invest in founders that they're very open-minded but they're very disagreeable and and normally like if someone is very open-minded like okay you say something and like he wants to learn more and is very curious about what you're saying
• 19:00 - 19:30 like you make a whole argument and then you start feeling okay like I convince this person because he's just so interested in what I have to say but then by the end of it it's like the person says "No I actually think that the opposite is true so this idea that I'm I'm interested in what you have to say but I have no problem disagreeing with you to the point that it's going to upset you and both Pedro and Brandon had that to like a very high high degree and and the other thing is like I think a great way to
• 19:30 - 20:00 to understand founders is like ask them like how they spend their free time i think I think if you understand like how founders spend their free time like you got a very deep uh window into into who they are can you unpack that when you ask that how do the best display themselves so what are the variance of answers and like and to be honest like this is a trick this is a trick that that I stole from uh Yuri Milner so I was I was having breakfast
• 20:00 - 20:30 with Yuri and I asked him like hey like what makes you a good investor and he was telling me like oh you know when I meet a founder I asked him like hey what's your day like but it's not like oh what tell me two three things no no what time you wake up what is the first thing you do and then walk through the entire day and they're like what time you go to bed and what do you do in bed and the choices that people the choices that people make on their free time are the ones that that really tell you who they are and
• 20:30 - 21:00 for Pedro it's like hey on my free time man I love sitting in front of my computer and tracking the packages that iOS uh that the iPhones send to servers because I really understand like how that architecture is done because if I pay enough attention then I'm I get a chance to like hack it like that's how
• 21:00 - 21:30 he he he found like one of the one of the jailbreaks that that that like back in the day he was he was the first person to find one of the jailbreaks that for the iPhone right but he did that for like no reason like you know like he didn't make money out of it it's just like you know like it's just okay i like going very deep on this on this technical thing and then with Brandon you know like our first conversation like the guy's okay the guy's 21 years old but you're talking with him about business and it feels like you're it
• 21:30 - 22:00 feels like you're talking to your peer about business and he was telling me you know like what is it like to work with Bill Gurley like I I've read all the blog posts and like man like why would you read like all of Bill like Bill Ger's blog post from like years and years and years ago and yeah like I heard all the podcasts and like there wasn't a specific reason for the person to do that but he's like hey I just love like studying studying businesses and like how does businesses work when you
• 22:00 - 22:30 have very young people that they spend a ton of time on something that just it's like an intrinsic passion for them like this thing compounds really well over time right so so to me it's like hey really smart kid in a very promising space but it's a kid that is not just smart it's like very very special because of this almost obsessiveness of like understanding businesses right and then little did I know that Merkar and Brendon would have something else in common which is Brex went from like zero
• 22:30 - 23:00 to 100 million in revenue like in 18 months after launch and Meror went from like a million dollars in revenue when I invested to like over 100 million like in 11 months i I want to talk about the revenue scale i do just want to talk about actually emotional maturity i look back to myself when I was 21 i I work with 21 year olds as brilliant as they are and as insightful as they are in my mind you gain scar tissue nuance just a
• 23:00 - 23:30 little bit of wisdom with age and you can plant that with great mentors but do you find you have to change the type of investor that you are the board member that you are the coach that you are with a younger founder yes like I think 100% and you know I think a lot about what's the what's the role of a board member i think it's related to like what's what's special about Silicon Valley and you know I was I was trying
• 23:30 - 24:00 to come up with a number but if you start a company in the west coast of the United States like you are a thousand times more likely to build a a gi a tech giant in the west coast of the United States than you are anywhere else in the world right so and like the the the raw math is um like 70% of the largest tech com 70% of like all companies in the world were starting the west coast of the United States like like Bay Area Seattle and I think 0.1%
• 24:00 - 24:30 of people live there so like you do the math it's like roughly like a thousand times more more likely right so so why is that because because people are just as smart like in Silicon Valley that they are in Europe or like in Brazil but the big difference here is there's so much knowledge about how companies are built and when someone starts a company like he's able to access all that knowledge right so when when Zach did uh Facebook like he hired a bunch of people from Google and like he had board members that had been at other places so
• 24:30 - 25:00 I think a lot of the the role of a board member is how do you like how do you catalyze that how do you help a founder access all the knowledge of what has worked before and then in in the Brandon case it's like okay he's a 21-year-old running a company doing $100 million a year like there's very few people that have been in that place but turns out that Pedro has been in that place you know like early 20s running a company hundreds of millions and like there's a bunch of
• 25:00 - 25:30 common pathologist that that emerge and then it's like hey I'm going to connect you guys and they go they spend time together and then like hey Pedro like what were the things that you didn't know that that you wish you did and those types of things are very valuable right i think the way a board member add adds value is like it's it's a function of two things one is like how exposed have you been to hyperrowth in the past and then how much time do you put in to actually understand the context of that
• 25:30 - 26:00 company so that they that you're able to draw from the from the right lessons do you like being a board member i love being a board member i wish I wish that was the job how many companies do you meet a week on average net new i probably meet like one or two companies a day okay so like five to 10 a week interested how many of those are raw inbound like one one a week
• 26:00 - 26:30 that's pretty that's pretty good so So one inbound nine outbound is that good do you do active outbound like where you're like No so so so the majority like the majority of what I do is like outbound like the majority of what I do is Yeah and and frankly like everyone thinks you join Benchmark or you join Sequoia and just deals come to you deals just come does that happen so there's a lot of things that come to you but but the question is
• 26:30 - 27:00 are the deals that that you want to do are they coming to you or not and and and my I think as you build like as you build your network and like I'm not from Silicon Valley and frankly like I've been a founder for 13 years and I've been an investor for like a year and a half so a lot of people don't think me don't think of me as an investor so so very little of what I want to do just comes in bound and someone's like hey go meet this company most of the time it's like you're talking to really high quality people and you ask them like hey what has
• 27:00 - 27:30 impressed you mostly or you get you get super interested in a in a sector and then you say okay like what are all the you go to someone say hey what are all the companies in the sector and you do a little bit of homework and then it's like oh okay this is this is an interesting company yeah so I've done I've done so I'm in I've done four companies since I started benchmark three have been this way and then the fourth one the fourth one I actually I'm a co-founder so I started the company with someone that that I knew for a long time you started a company yeah we're
• 27:30 - 28:00 still we're still in stealth so like we're not we're not talking too much about it but maybe a year from now I'll come back and and tell you all about it i I absolutely love that um okay so we have that can we ask when we go back to Mccor and Brex as you said there yeah revenue scaling i think Brex was 18 months to 100 million mccor was 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
• 28:00 - 28:30 triple double double and now that's just not the case yeah I do think that I think SAS was a moment in time where like a rule based invest investing worked really well you know like you got you get to $10 million in in revenue like you're you're a category winner i think this is no longer true so why revenue i think it's because the nature of the revenue i think a lot of the AI revenue is experimental and the reality is it's
• 28:30 - 29:00 now incredibly easy to take chach and say okay what are companies using chacht for let's say their lawyers are using chatpt to write uh demand letters so okay I'm going to make this very thin workflow around ChachiPT and then I'm going to go after like every law firm that that writes demand matters and say "Hey like buy my tool and you are going to get revenue." Like you're going to get you're going to get millions of dollars in revenue but if that's all
• 29:00 - 29:30 you're doing it's there's just no like enterprise value because the reality is like as the models get better like the workflow you're building becomes less valuable so so one test that we always do is company comes in and pitches first you have revenue growth like it's still worth something it's not worth what what it was worth before but it's like hey you have you have revenue growth okay we should pay attention but then the first question that we ask
• 29:30 - 30:00 is if models get a lot better is your company worse or is your company better right and if if your company's worse then it's going to be very hard to touch it but if your company is like hey as the models get better my company gets better then it's like oh like that's a that's a great that's a great place to be in right so for example on mercur what got me excited is so first thing
• 30:00 - 30:30 one thing that I think is super exciting right now is like just replacing people it it sounds it sounds really bad when you say it this way but but I I actually think it's the most exciting opportunity and venture right now and it's actually going to be fantastic for humanity so it's like okay figure out like what's what's a profile of a person that does knowledge work that you can like replace with a model and and was like replacing a human like replacing a recruiter i like oh like that's pretty cool uh I think models are going to be better interviewing
• 30:30 - 31:00 than than than people and and like the the recruiting process now is just so inefficient that if you have like a a model interviewing like that's going to make it a lot better but then there's there's a few things that make it super interesting which is interviewing someone is a very hard problem you know even you talk to you talk to the best founders in the world like Elon Musk like like Bezos they all spend a ton of time interviewing because like figuring out like who's the right person it's
• 31:00 - 31:30 it's you continue to have like gains to quality right so okay this is a very this is a problem where we already have value now but it continues like as you get better it continues to be valuable and so investing a lot of money solving that specific problem is valuable and then if you get specific data like you hire people you see how they perform you adjust your model like having that model is just incredibly valuable and the other thing is you have this network effect with like okay there's a platform
• 31:30 - 32:00 everyone is coming to the platform so you have this marketplace of people right so to me it's like They at the time they didn't have a lot of revenue like they had a million dollars but I was like oh this is a place where AI were going to do a much better job than humans and and you have like a lot of defensibility we spoke about kind of quality of revenue and applying that to Mccor you know had them on the show uh love the guys um people were like it's not revenue it's not like arr and I had
• 32:00 - 32:30 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 and then on the defense is it is it AR no it's not it's not like you don't have like an annual contract that people are signing this annual contract it's it's a run rate right yeah and I think I think a lot of um so some people criticize and the criticism that that that I
• 32:30 - 33:00 hear is okay um you have this recruiter and you're building this platform and a lot of like a lot of the growth is coming from labs and like the labs they need before there were like three three stages of uh language models right like I think the first stage of language models is you just take text from the internet you train your model and you have like GPT3 which was very cool but people didn't want didn't like
• 33:00 - 33:30 to use it and then and then first like you had RLHF which is models produced so you take your base model you produce a bunch of answers and then you had humans pick like what they like best and then you you build a model that give answers that humans like a lot more and then I have chat PT like that was the big chat PT innovation was like RHF and Now like we're getting to this third third moment in models which is like pure RL so it's like this I
• 33:30 - 34:00 think this is the the most interesting thing happening right now in AI which is models they if you want to get a model to be better in something what you do is like you find a deep expert in that subject and the the expert will create a question that the model is not able to answer and then instead of like giving the model the answer it will create a rubric to tell the models like hey for any answer to that question here's how
• 34:00 - 34:30 how you're gonna rate it and 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 of pairs of like question and answers that are graded and you use that to to train your model right so this is the most interesting thing happening in in RL and like this is a big in AI 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
• 34:30 - 35:00 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 right and so what where does Merore 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 got to be an
• 35:00 - 35:30 amazing interviewer to find these people and that's the that's the interviewing that that that that Merkor does so Meror helps like all the labs get get a lot of the the really best people and then so the criticism is like hey is this recurring it's not it's not an annual contract but the reality is for as long as humans are better than computers at any knowledge task you're going to need
• 35:30 - 36:00 people to create the evals so that you create this you can create this RL environments that will make better models right completely understand 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 AR or I'm just like take a um 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
• 36:00 - 36:30 you're taking do you think we're getting paid for the risks that we're taking given the price premiums that AI companies are demanding so I think I think in the case of uh it's it's very much on a case by And I think like Hey Jen and Meror I think they were like very cheap rounds and you know I feel so lucky that that I was able to like Do you think two billion was cheap like we I was talking about I was talking I was talking about the round that I did ah right yeah uh
• 36:30 - 37:00 [Music] uh and then but then like 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 for the the risk they're taking right so you think about like I don't know like entropic at 60 or you think about perplexity at 15 right uh I think the reality is AI is a big shift i think AI is much bigger than
• 37:00 - 37:30 mobile maybe like the order of magnitude of the internet and then if you take a basket of the winners it's gonna work out because I what 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 and how how do you make sure you are in this company it's like okay where's the best place to find these companies is like what are the interesting spaces that have great teams
• 37:30 - 38:00 and it's working because okay there's this trillion dollar companies out there and the space like okay the the early winners like they're not that many right so I think smart investors are saying hey if software spend in the US is like a trillion dollars but labor spend is like 10 trillion and and now like the AI companies are going after the labor spend and so the outcomes are going to be like insanely larger than they were before so okay there's going to be huge
• 38:00 - 38:30 winners so we got to make sure that we're there like we got to make sure that we're in these companies right so I think on average buying the winners today will work out are there some winners that are overpriced in retrospect the answer will be yes absolutely um listen Gurley has spoken before about passing on Google on price and his lessons from that and you know I always think of that um the question is if you see this shift in budget from labor to technology spend something that I just worry inherently
• 38:30 - 39:00 about is like the increasing chasm between rich and poor and the inequality that comes as a result even if there are 5,000 people in that company that's worth a trillion dollars it could replace a trillion dollars of spend on labor do you share my concern and and is that just an inevitable progression 100% what percentage of knowledge work as we know today will exist in 10 years like if you define work knowledge work as work you do behind a computer I
• 39:00 - 39:30 think it's probably like 1% you know the thing that I worry most about is if you're college if you're someone coming out of college what are the things that you can do like if if you're coming out of law school like what are things you can do that that a model won't be able to do like in three years you know there's not going to be that many things and at the same time like companies will be more valuable because they they're going to reduce cost so much so people that own companies people that own shares will get richer founders will get
• 39:30 - 40:00 way richer you're going to have this trillion dollar companies being done by very small teams so that's a very destabilizing force and that's something that that is something to worry about and I think and people all these things are controversial so like you see these big leaders talking like the big companies co talking about like oh no AI AI is not replacing people AI is actually augmenting people's abilities like this is you know like it's fully replacing people right my favorite line that we get on the show we're just not hiring new but we're keeping
• 40:00 - 40:30 everything as is and you're like really yeah you know but net net I think this would be tremendous for society because I think companies are humanity's best invention And if we need less people to create companies like we're going to have more companies right so So I grew up in Brazil and Brazil is not a great place to to grow up in and then I moved to the US and like the Bay Area turns out it's it's a fantastic place to live and the principal difference
• 40:30 - 41:00 between Brazil and the Bay Area is the quality of the companies right so overall it's going to 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 i think that is fundamentally lacking no like humanity requires purpose if you remove if you add UBI you remove purpose um 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
• 41:00 - 41:30 addiction it's why we have drugs it's why we have gambling it'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 or it's standard democracy like imagine this society where there's a lot of abundance and like there's a lot of like there's a lot a lot of wealth but the majority of the people are not accessing that wealth like that wealth is very concentrated but it's a democracy is that not what we have today
• 41:30 - 42:00 it's going to get way more extreme and and the other thing is I think it's going to be much harder for politicians to not do what's best for the entire population because the entire population will have a very powerful AI system on their pockets so they will know like they'll just ask that 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 will come in and we'll have an agenda that is
• 42:00 - 42:30 like hey big redistribution redistribution of wealth and it's like a very populist like a very populist agenda and then I think people if people very selfishly ask their AI it's like hey is this politician better for me or not like is this politician going to get me more material wealth or not i think people that want to distri redistribute a lot like they they'll they'll get votes right so I think that's very destabilizing for democracy and then a lot of people that are in control they're hey like right now like
• 42:30 - 43:00 you have you have people that are in control like are they going to like just seed control are they going to be less powerful are they really going to like uh let go of of all the influence that they have so so I think AI is a destabilizing force because it makes the entire population way more informed and and knowing like what's best for them and at the same time it it concentrates wealth which which makes the scenario like more propens to like hey the
• 43:00 - 43:30 population wanting to like get more but then I think there's one I think China is actually a very stabilizing force because I I think the US right now has this external threat and the US cannot cannot spend a lot of time like with with internal conflict because like you know we're at a very important moment in time where like someone will get to to a powerful AI very soon and it needs to be the US
• 43:30 - 44:00 because like we want to live in a world where like where like powerful AI is controlled by the US and if we spend too much time like in internal conflict like China will do Right so so I think China is actually a very stabilizing force for the US i mean the best way to unite is to have a common enemy exactly so I agree with you that said I I don't feel the US is winning the race against China i think China are absolutely crushing the US i mean Europe's not even in the race um when you look at the investments
• 44:00 - 44:30 that China have into their education infrastructure systems and the depths of their talent respectfully it and the and the work ethic that they have it just completely destroys anything we have elsewhere on the planet yeah i think China has better work ethic and they 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
• 44:30 - 45:00 like I think I think our advantage is it's like the true like the true network effect is a city right so like we have like we have Silicon Valley and you you say hey like I think China is winning i think by all like I think by all measures like the US is winning if you look at like all the AI products like Chachi PT is the is the most used uh AI assistant in the world and sure you can talk about like oh how about Deep Seek and this and that but the reality is like like Chachi PT still is the best uh product out there yeah i mean no what's
• 45:00 - 45:30 like what's better than Chachi PT listen I I do not 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 i think Tik Tok is a weapon of consumer data aggregation and acquisition i think they are so strategic and smart in how they've leveraged Yen and Teimu as well
• 45:30 - 46:00 i I their infrastructure investments in Africa I think people don't spend enough time on it's a 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 it's a very it's like a very serious competitor like I 100% agree with you i think we're we're still in the lead but we cannot afford to waste
• 46:00 - 46:30 time on anything else you know like we cannot afford to waste time into like 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 you know transitions um by improvements in human lives and how we won't be doing mundane tasks that we all kind of hate doing anyway but 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
• 46:30 - 47:00 and underestimate it in the long or do you think this will happen much quicker than we think yeah I think I think there's a lot of wisdom and saying like hey we we we overestimate what we can do in a year and underestimate what we can do 10 right i think I think there's a lot of truth to that i still think a in AI you look at how much like three years ago like we didn't have we didn't have cache PT and now there's like close to a billion people that that use it every month and they have like a meaningful
• 47:00 - 47:30 different experience right so I personally think that in the next not in the next year but in the next five years like lives will be meaningfully changed so I think AI is going to happen like way faster than 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 do you remember like hey you'll find your loved one on a dating app you won't hey you put your
• 47:30 - 48:00 credit card details into the internet no way what what's that i think this thing that will happen quite soon is like we're going to have an app and like you're going to wake up and you're going to look at your app and you're going to read what it says and you're just going to do it like the app will tell is like go do this you're not going to understand but you're just going to do it and you're going to 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 the
• 48:00 - 48:30 app it's going to be that 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 on 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 to happen it's like you go to the app for the app to tell you what to do and it just blindly trust and does whatever the app says how far away do you think that is we see glimpses of this right so you know there's this companion apps like
• 48:30 - 49:00 there's a I don't know if it's like seen Finch or like this like self-care pets you know it's like "Oh I'm going to help you like access like I'm I'm going to be your accountability buddy i'm going to help you like exercise every day and like I'm going to help you like 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 you open up your app so for example I 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
• 49:00 - 49:30 just don't have the energy but imagine like you wake up and like hey it's your 20 minutes like remember cuz like if you do that for like X days you're going to be better and then like you just just get into these routines like it's going to like this apps like they're helping you like form routines so that's like I think that's the beginning like these apps that are helping you form routines they're telling what to do and it will get to a point where like AIS are going to be smarter than us like AI is going to be smarter than us on most things and they're just going to learn how to trust their judgment right so they they have
• 49:30 - 50:00 context on you they know what your long-term goals is and so you wake up and say "Hey go spend an hour like reading this book and like 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
• 50:00 - 50:30 opposite view like I think go study computer science really yes and to me to completely antithetical to what everyone is saying that's that's a fascinating piece of advice yeah they say like "Hey go in computer science." Like to me it's very I feel very strongly about that and to me it's like before I had calculators machines like we had human calculators right it's like like if you saw the like Apollo movie and like there's they're typically women and they're like they're calculating these like tables right there people that are
• 50:30 - 51:00 just like doing doing math and then calculators were invented and then like when calculators were invented it's not like oh like people 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 of college you're doing stuff that computers can do but it doesn't matter because like first like you're understanding the technology and two like there's so much
• 51:00 - 51:30 transfer learning i think when we train models to code they get better at a lot of other stuff so I think why I advise people like hey go on computer science is the transformation right now it's it's technology transformation is an AI transformation so go study computer science because like even if you're not going to be a developer and like you're probably not going to be a developer but just having the basis to understand like how that's done it's going to be extremely
• 51:30 - 52:00 helpful and then like the transfer learning of like hey just being very logical and be able to take a big task and break down into small tasks and be very rigorous i think that will continue to be very valuable when you look at the AI companies of the last 18 months you're in several absolute bangers which one are you not in that you had the chance to and you just missed so we made like we participated in in one round at cursor i
• 52:00 - 52:30 think that the coding coding space is very interesting like I like that that's an interesting one you participated in one round i'm just interested like Benchmark are famed for like the leading the A yeah how do you think in the partnership now about plasticity around stage and whether you have to lead you know I obviously know Phantom well and he did Air Table I think the C um gies have flexibility around how do you think about actually the rigidity of no we have to lead the a
• 52:30 - 53:00 I think rigidity is nonsense and frankly what makes what defines benchmark we want to be a partner to the most important companies being created which is similar to to most venture firms out there and I think the difference is we want to be the first call like we want to be the first call to like every every entrepreneur that that we work with and in order to do that like the easiest way to do Can I be Can I be a dick as a like as a friend
• 53:00 - 53:30 every VC says that and I don't even want to be first call like your mom should be your first call no I think that's fair i want to be your worst call in terms of like when the really hits the fan call me it may never happen but that terrible time I'm the person who's going to help you all else being equal I think everyone wants to be the closest partner but I think the part that changes like the all else being equal right and I think it's like hey we're willing to take a lot of
• 53:30 - 54:00 tradeoffs in order to be to be a very close partner 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 because the reality is if you're a financial investor you don't want to be the call you want to okay you made your investments you want to find the next company and like there's a lot of investors that are really smart investors that say "Hey you know what like I hate the board work you know I
• 54:00 - 54:30 want to write write the check." And there's some investors say "Hey like that's not the product that I have like I put my check in and that's it." Do you think an investor can move the needle for a founder you know Keith Ra Boy says that you know the best founders don't need you if you call the people that I work with you and you should call them and like I think you 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 uh man I'm so grateful that that you've been a partner on this and and like you're the closest thing that I have to a co-founder outside of the company."
• 54:30 - 55:00 Right so can you make 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 in the ecosystem and you can catalyze that but I think like the good founders like they have access to a bunch of people like the the good the good founders like they don't work on isolation they have access to a bunch of people but the difference like the thing that you can do as a board member that
• 55:00 - 55:30 is very hard for other people to do is you know like I' I've been at the Brex board for I don't know like seven years and for every important hire that he did like I discussed that with him and I've done like so many say like close calls with candidates that once he has a problem like he calls me just because I have way more context than he does than than than other people do right so I think like how do you add value like what's the way to add value he's like hey you have a lot of context but the thing is like it's just very costly to have context and like that's why we the
• 55:30 - 56:00 reason we do very few deals is because getting context on the companies like takes a bunch of time if you're then flexy on your insertion point maybe participating in a cursor round or doing a later round do you have that ability to add context even because you're probably not on the board so not in all when you're when we're participating like we don't have that ability and that's why we don't do it so normally
• 56:00 - 56:30 and and the reason we do it sometimes like hey maybe this is a way to like start building a relationship with the 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 a GP at benchmark yeah as your first in I
• 56:30 - 57:00 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-ound the firm and like there's a lot of tradition but a venture firm that is like sticking to its tradition is soon going to be very relevant so so we we believe a lot in like creative destruction and like you feel like oh okay you almost feel like really and then I met I met with
• 57:00 - 57:30 the with the with the founding partners at Benchmark and there was like hey yeah like the only way like the only way uh we continue to be a great firm is like if we have no uh attachment to to just how the way things were done right and I actually think like this this is a big advantage for benchmark is like because we don't have any process and a small team it's it's easier for us to like change things right so and I think venture is changing I think venture is changing a lot how do you think venture is changing you think
• 57:30 - 58:00 about like couple decades ago like the role of a board member was like governance it's like capital was so scarce that's like hey once you put capital into a company a lot of your jobs just like managing the downsides like hey make sure that this guy is not going to like lose all your money right and the real and that's understandable because there there had been like less big outcomes in tech so people that invested they're kind of afraid you know like fast forward to today like everyone knows investing in technology it's a
• 58:00 - 58:30 it's a great thing people should do that right and you it turns out that it's more important to like maximize the upside than it is to uh manage your losses right so and the way this changes the role of a board member is you're not that concerned that like oh like some of some of your investments like are going to lose money and like your role is not governance like your role is not there to say hey like founder like you can do this or you can do no your role is to like
• 58:30 - 59:00 maximize what the founder wants to do so it goes from like oversight to to like catalyzing like to amplifying the the founders's ambition really if you like I 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 founder's ambition how do you think about that if you're taking a lot of uh decisions in isolation like oh
• 59:00 - 59:30 okay like in this case I believe that if we do this like it's going to be better for the shareholders but if you look at in aggregate like your policy is I'm going to I'm going to choose the best founders and I'm I'm going to 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 just I'm here to enable this guy and like even when I disagree with him I'm
• 59:30 - 60:00 just gonna like help him do what he wants to do have you ever lost faith in a founder like describe describe what lost faith means so it's like when you no longer when you no longer believe that actually they are the right person to drive the company and actually you don't trust the decisions that they make are the best decisions it's the thing I find hardest yeah so the reality is like the reality is I haven't done a ton of investments right but I've done a couple like I've done a couple of angel investments
• 60:00 - 60:30 where it didn't go well and then in that case man like one of the things that I I've learned like after joining benchmark and like so I work a lot of Peter and like Peter sits on two of my boards and I sit on two of his boards and you know you see these companies go through the up ups and downs like the thing that I learned is like like we don't give up you know it's like hey as long as the founder wants to do it and it's completely uneconomical like
• 60:30 - 61:00 completely uneconomical it's like hey you know so I was talking with Peter and like there's a company that wasn't doing well and it's like I know I know I know what we have to do a lot of venture capitalists would say hey just cut it loose you know like forget about this thing like we should double the frequency of the board meetings okay and it's because we're here for as long as the founder wants to try so it's like you made the commitment to the
• 61:00 - 61:30 founder and from that point on you try to be true to this like unconditional belief in the founder so you mentioned Peter there um what would you most change about the current process benchmark has for investment decision making i think our process it's it's a very lightweight process which is very good so the way we work is you know you find a company if you like it you need to like get your partner your partner's uh opinion but you don't need
• 61:30 - 62:00 to get your partner's approval right so do you bring them in do you bring them into early meetings with team with founders do you kind of hunt as 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 it typically works is like you meet you meet a founder and then you do a second meeting like where you bring another partner in so you guys can have
• 62:00 - 62:30 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 and so why vote the vote is just a temperature gauge so the vote is to disambiguate what people actually think it's like you got a clear clear signal because you know you're going to bring a company in it doesn't matter what the company is there's always like a ton of reasons to do it and a ton of reasons
• 62:30 - 63:00 not to do it and then people like they'll argue both sides so you force them to like give put a number to it that and that number carries a lot of information so like we vote from 1 to 10 and like 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 change benchmark to prevent its extinction?" I I don't know if like
• 63:00 - 63:30 prevents the extinction is the is the function we're trying to maximize i think the function we're trying to maximize is like there's going to be 10 trillion 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 like I think that's 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
• 63:30 - 64:00 founders that have a ton of choices and right now benchmark like when we want to do something like we typically do it you know like typically we have the chance to to partner with the companies that we want to partner but the problem is because we're a small firm like there's a lot of stuff that we don't even see and like there's a lot of stuff that 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
• 64:00 - 64:30 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 so I think what it means like it needs to be clear to everyone's like hey what 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 and as long as you have that like that's a benchmark founder it doesn't matter if you're raising like 5 million or if you're raising like like 200 million it's a fun size now a constraint the
• 64:30 - 65:00 constraint always was beautiful to everyone it was a craft of benchmark in today's AI landscape the the rounds we just see are so big that you 25 50 million to start if you want 15% ownership you're putting 10% of the fund out on the first check yeah so my first my first check at Benchmark was a $55 million check into Hey Jen right so like this was my this was my inaugural $55
• 65:00 - 65:30 million yeah I wrote Yeah this was my first check $55 million check and Yeah because you know and then like hey we got to be true to to No I know but dude that that's that's 10 and a half% of the fund if it's a 500 so it's like a It's actually a $600 million fund uh that's that's a lot i mean that's amazing balls dude and you know I think a lot of funds like they think about you know portfolio construction and this and that but the reality is like our LPS like they're the
• 65:30 - 66:00 same LPS in all funds so if you want to do like one like one like $3 billion fund or if you want to do like five like $600 million funds like for RLPs like is actually the same uh and so I think that the the the fund size has never been a has never been a constraint i think the constraint is where we can make a difference is like in the beginning so it's like early and we work best with founders that want to have a relationship like some founders some founders they're like
• 66:00 - 66:30 hey I do think it's valuable to have a sounding partner that is going to have a lot of context on the business and if you believe in that then like yeah benchmark is a is a good fit most early rounds are less than 50 million uh but you know we we've done like we've done things that are later like we've done larger checks and like sometimes if we're going to do a larger check like we do an SPV but this the check size is not if you're talking if you're talking
• 66:30 - 67:00 about like inception rounds like it's not a it's not it's never been a constraint does like Brett Taylor come in and pitch to partnership like that he's a special dude sierra is a special company does he like come in and be like this i think I think on Brett's I think on Brad's case is like I think he had dinner with the partners it was more like a conversation than uh than a pitch i think like Brett Taylor's case you know I think it's a good example was like hey the guy is so accomplished like he could raise from anyone he could do whatever he wanted but I think he valued
• 67:00 - 67:30 like he valued the relationship with Peter and he said hey like I think it's going to be valuable to like have you along this way right and because it's an equal partnership it's like hey these people they're going to be my partners in this company so it's like it's like it's like get to know you much more than like hey I'm pitching you right that is an insane one like Brett could fund it himself for for the rest of eternity in in many respects but he values Peter so much that he brings him in at that stage that's pretty special yeah and and frankly I think it's a and I think it's a smart choice and I think you know the
• 67:30 - 68:00 best people what they want to maximize for is like hey how do I get my conditions my initial conditions right how how do I get like the the smartest people around the table cuz in the end the initial conditions like they affect so much what it can actually do dude I could talk to you all day um do you mind if we do a quick fire around and then I'll let you actually get on with some proper work um what do you believe that most around you disbelieve so I think I I I believe that like pretty soon this
• 68:00 - 68:30 thing that we talked about I think that pretty soon we're going to have an app and like we're just going to wake up and do whatever the app tells us to do and in a way it's like we're going to be obedience to machines and we're going to love it single biggest lesson from working with Peter Fanton i think the thing that Peter does better than anyone I've met is he can understands people and like he can get people to open up so lots of
• 68:30 - 69:00 times before before we decide to to work with a founder like Peter takes people to dinner and and a lot of times like I would introduce people to Peter and like and I take him I take Peter to dinner with someone and even so for example I took the B COO to have dinner with Peter and it's someone that I've known for many many years at the end of like that two and a half hour dinner I felt like I knew the person a a lot better than I did before and so I think
• 69:00 - 69:30 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 I said "Wow like I just had a really special dinner right?" So I think it's a superpower and I think it's kind of known that that that this thing happened so a lot of times like if you want to if I want to spend time with someone and like it's kind of hard a lot of times I invite hey like you want to go have dinner with Peter and I and and most times people say yes and people say
• 69:30 - 70:00 yes they have a fantastic experience and then they'll tell more people like if you get the invite like you take I love the band that's like nah sorry I'm watching Netflix I'm sure it'll happen at some point but that hasn't happened yet no 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 dualingo man AI is going to change people's lives in in a very in really important ways
• 70:00 - 70:30 and I think one really important thing is like the way we're going to learn is going to be through AI teachers and and Dualingo like I think it's very sneaky sneaky in a good way like they're starting with 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 and and Louise the founder like he's a like he's a total genius so I think I think he's going to make a free AI tutor for everyone that's going to be
• 70:30 - 71:00 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 oh there's so many great ones like I I'm I'm actually an investor like so there is a there's a there's an objective answer to that it's like I'm an investor in uh Green Oaks i think I think they're pretty good uh Neil M just tape me already i mean God this man is
• 71:00 - 71:30 brilliant yeah he's amazing no he's I really like his I really like him and then I I'll go like on early I'll go with conviction because I think Sarah Sarah's great okay uh final one when you think about the next 10 years for you if we do this in 2034 where do you want to be then what do you want to have achieved what does Victor Lazarth look like then i want to be an important part to the most important companies created and that can be a early board
• 71:30 - 72:00 member and that can be a co-founder but I want to look back and say hey AI is going to solve so many of humanity's biggest problems you know like from like education to security and these companies are being created now to companionship and I want to be an important part of their story dude I am so glad that we had this schedule
• 72:00 - 72:30 that I completely ignored and I I think you saw that it was a much more free flowing discussion i I so appreciate you rolling with the free flowing discussion um you've been fantastic to have on thank you so much for joining me man thank you man this was a lot of fun