Uncapped with Jack Altman
· Jack Altman, Peter Fenton
[00:00:00] S0: So what are the big ones? [00:00:00] S2: The biggest thing— I’m not going to pick on the off-target things. The on-target things are: when I want a co-founder, what questions do I ask? Do they make me a better version of myself? Do they provide the kind of expansion of my horizons that makes me feel more joy every day for doing this work? Do they keep me honest? Are they available? Do they put me first? A lot of winning, as opposed to serving… Winning is a moment in time. We average 10+ years on our boards. If you go back and look at the history of my boards, it’s 10+ years. Maybe three or four executive teams, as you say, might go through those years. The sense of continuity of, “my partner is there.” Not to pick one, but I love my relationship with Howie Liu at Airtable. Howie’s going through a genesis right now and a creativity that I think occurred at the beginning of Airtable. It is so fun to watch. But I understand the human and I know what he’s gone through. I know how to help him at parts, to say, “This is an area you want to be asking some questions about.” I think that’s different from winning. Winning was a transaction: “Take my capital, I’ve got to get onto the next one.” Because if you win, you’ve got to win the next one. We say yes once or twice a year, and serve for a decade long. The differentiation of that—because our incentives aren’t the same as deploying capital—creates in the entrepreneur’s mind that they have to ask the right questions. What do you want in that co-founder? Because you can’t fire your board member.
· Jack Altman, Ev Randle, Peter Fenton
[00:00:00] S0: I’ll take a shot at one of the things I think is off target. It’s become a thing to sell “no board seat”. The pitch is, “one of the advantages of working with our firm is we’ll give you all this capital with no board seat.” I think there’s a misunderstanding of boards as governance and control rather than boards as signing up to work on the company, which is how it should be understood in 99.9% of cases. But I think it has been very effectively and somewhat disingenuously sold to founders because it sounds good. You keep control of your company and there’s no risk. That means we don’t have to help, so we can deploy a lot more capital. [00:00:00] S4: It probably says something about the experience of the average founder with the average board member. Can you blame a founder for thinking that’s a good pitch based on the experience that they’ve probably had with the average firm? [00:00:00] S0: Yeah and also you hear about a terrible situation once and it makes a big impact without nuance. It’s hard. [00:00:00] S2: It’s going on right now. These seed rounds at over a hundred million with no board. I know how it ends. It’s just that between now and then, the amount of entrepreneurs that will miss the opportunity to really seek out a close partner, it’s such a shame.
· Peter Fenton, Jack Altman
[00:00:00] S2: It’s going on right now. These seed rounds at over a hundred million with no board. I know how it ends. It’s just that between now and then, the amount of entrepreneurs that will miss the opportunity to really seek out a close partner, it’s such a shame. [00:00:00] S0: Here’s one of the things I wanted to ask you all about. I’ll take it as a premise that we probably all agree a great entrepreneur is unique or odd or strange or just beats to their own drum in some important way. Maybe there are examples where it’s not like that. We can talk about that too. Do you think to be a great investor you have to be the same way? Do you have to be unusual as a person to be a great investor? Or is that not the case? Can you just be a regular person who can spot unusualness? I’m asking selfishly because I don’t think I’ve got the oddities that sometimes I wish I had.
· Chetan Puttagunta
[00:00:00] S1: One of the things about Benchmark in our conversations with Ev… I think Peter framed it perfectly, which is that when you know, you know very clearly. Given our structure of equal partnership, you’re essentially refounding the firm every time somebody new comes on, because the whole dynamic of the partnership changes. The conversations change, the feel changes, everything sort of changes. So it feels like a refounding moment. There’s some alignment that happens. It goes back to the core of what values you prescribe to as a person. Part of it is that you are competitive. I think that is important. There is a competition aspect to this asset class. At the end of the day, we are investment managers. You enter a company and there’s competition to enter the company, then you invest, and then the company itself faces competition at some point. You can run competition-free for maybe twelve months, and then the big guys show up. Each of us has faced immense industrial competitive threats from external bodies. You have to have some kind of competitive, persevering spirit about you that can be that stabilizing force for the founders. You also have to have that empathy that the founders feel it 10-100x more than you. At the end of the day, you as an investor are diversified. You get to work on lots of projects. The founder is simply not diversified at all. This is the only thing they get to work on. This value system of hyper-competitive energy and empathy, that is actually not present in a lot of people.
· Jack Altman, Chetan Puttagunta
[00:00:00] S0: You and I talked about this a little bit with Max at Legora. It’s an interesting example. You did the seed. We’re not here to pump Legora, but while we’re here— [00:00:00] S1: Let’s pump. [00:00:00] S0: It was in YC. It’s a legal tech company in Stockholm. There was already Harvey. The question I think I asked you right before we sat down was: why’d you meet? I think once you meet Max, you can see it’s good. But to the extent that that’s a case study in spotting someone who I think is unusual in a very positive, strong way, what was that for you?
· Chetan Puttagunta
[00:00:00] S1: Peter and I actually met Max in this exact room together, and that was the first meeting we had. I think within fifteen to thirty minutes, we both came away with that unspoken language between us that we want to be in business with this person. Yes, it was legal tech, but there was some core purpose with him as he was expressing it and the founding story of how he picked that problem. They’re sitting in Stockholm watching Harvey. At the time of our seed round in March 2024, I think Harvey had already raised at a billion and a half dollar valuation or two billion. By the time the product had launched in October of 2024, I think their number one competitor had already raised at a three or four billion dollar valuation. But what we were backing was him and his co-founders. When we invested, it was a team of five people. They had a very core insight on how to attack the legal market and why LLMs were the perfect fit for lawyers. When he expressed it… Eric likes to say this a lot. There’s a magic when founders explain something very complex and they explain their unique insight into it, and it becomes very obvious. That’s obviously how the world should work, and with their fire and their energy, that will probably be how the world works. In Max, we saw it right away. So we needed to be in business with him. That was it. The conversation immediately went to, “Great. What are you doing the rest of the day? We just want to spend time with you because clearly you’re spectacular. Clearly there’s something here.” It’s been amazing. We didn’t see it right? The product didn’t launch until six months after our money went in. You don’t start to see the amazing stuff that a person can do for a while, but it’s amazing.