Uncapped with Jack Altman
· Eric Vishria, Peter Fenton
[00:00:00] S3: Yes. We do have that. [00:00:00] S2: By the way, Bill Gurley and I had that where there’s almost no intersection. This actually relates to any entrepreneur thinking about working with a venture firm. A friend of mine was raising money, a family friend so it wasn’t appropriate for Benchmark. He asked, “How do I choose?” I said, “The question I would be asking if I was an entrepreneur is: which of these esteemed venture capitalists is most personally resonant with you and committed to you?” They’re going to say they’re committed because they want to win. Codify it. Make them be explicit about the kind of commitment they’re going to make and make it uncomfortably concrete. With most of the entrepreneurs I work with, we speak every Friday. Make it real. If you don’t want to put the time in, if you don’t feel that response for you with running your fund and for us individually… I knew with Max at Legora, Chetan would be 24/7. He’d fly to Stockholm on a moment’s notice, and he has. And he is today. [00:00:00] S3: You’re going today?
· Eric Vishria, Peter Fenton, Jack Altman, Chetan Puttagunta
[00:00:00] S3: You’re going today? [00:00:00] S2: He’s going today. So there you go. As you introspect in your commitments, does it clear that threshold for you personally? Because if it doesn’t and you’re doing it because it’s a good investment, that is a reliable path to a bad investment and a bad relationship. I think you’re going to find… Chasing what is it that you see and then allowing that to get washed with experience… Sometimes you’re going to get it wrong. When you get it wrong, you learn. “Okay, don’t make that mistake again.” Because you’ve seen me make that mistake, and vice versa. [00:00:00] S0: So it’s interesting that you guys have these Venn diagrams. Let’s just say they don’t touch, to make it simple. But they’re both good. I know you both make very good investments. Is that basically because you can cultivate any set of tastes as long as it includes the good stuff? Is that basically what you shake out to? [00:00:00] S1: There is a lot of overlap on the people, though. If you look at the people in these Venn diagrams that the four of us have, there is overlap in that. [00:00:00] S3: In the qualities of the people.
· Eric Vishria, Jack Altman, Chetan Puttagunta
[00:00:00] S3: In the qualities of the people. [00:00:00] S0: Something Keith and Vinod said something interesting when I talked to them together is that they’re really different people. It’s very apparent when you talk to them. But they said one thing that they basically always agree on is: did we walk out of the meeting with a founder and was that person special or not? I thought that was interesting because I wouldn’t have expected that out of the two of them. They’re quite different, so I would’ve thought there would be very different tastes in there. That doesn’t mean they always want to make the same investment. [00:00:00] S1: It’s very rare that one of us thinks a person is special and the other person thinks absolutely not. [00:00:00] S0: Another question I always have is: with really special people, can you miss it? [00:00:00] S1: Yes definitely. [00:00:00] S0: Is it a special ability to identify special people? Let’s take Max at Legora. Let’s say you have a hundred reasonably okay VCs who’ve been doing it for a while. Do you not think most of them would’ve come out and been like, “This guy is great”? Is it unique to be able to see greatness early, or is it more about getting into the right room with Howie and Jack Dorsey at the right time?
· Jack Altman, Eric Vishria
[00:00:00] S0: Is it a special ability to identify special people? Let’s take Max at Legora. Let’s say you have a hundred reasonably okay VCs who’ve been doing it for a while. Do you not think most of them would’ve come out and been like, “This guy is great”? Is it unique to be able to see greatness early, or is it more about getting into the right room with Howie and Jack Dorsey at the right time? [00:00:00] S3: That’s a good question. I think most of the time people react similarly. People who are good at this will identify or see that specialness. We miss it, everybody misses it sometimes. But there’s a bigger thing that happens, which is that people talk themselves out of stuff for other reasons. The competitive situation. Can the outcome for what they’re working on be big enough? Those kinds of things. Take Alex at Scale. You met Alex and you were like— [00:00:00] S0: Something’s going on. [00:00:00] S3: This guy is a winner. We saw it very early. We saw it together. Those were particularly painful because we absolutely recognized that he was amazing and a super special person. We absolutely recognized that the autonomous vehicle labeling revenue was bullshit and going to go away in not that long. So the facts and the read were correct, and the conclusion was incorrect. It’s like, “goddamnit”. That’s a particularly painful one and a good lesson for me. [00:00:00] S0: But you thought he was special and you passed anyway? [00:00:00] S3: Yes.
· Eric Vishria, Jack Altman
[00:00:00] S3: Yes. [00:00:00] S0: Have you ever passed on a special person because you didn’t like something else about the setup and still been glad you did that? Or is the lesson just always to back them if you feel that way, no matter what else? [00:00:00] S3: At this particular moment in time, I would say: yes, I did. With the hindsight benefit, if you feel that way… And I think you have chemistry with the person, that’s part of it. Who do we respond to?
· Peter Fenton
[00:00:00] S2: We’re focusing on the positive case. The negative case, which is useful also to think about—and it’s actually true if you’re an entrepreneur—is this word “inauthentic.” It’s easy over time, over many decades, to see the masks, the fakeness, the posing. If there was one trigger for all of us—and I think this is true in entrepreneurship, it’s true for the employees you’re recruiting—it’s that they think you’re faking it. If there’s a little “fake it to you, make it” thing, put that aside. I think that’s broadly bad advice. If someone’s not willing to be vulnerable with us in the meeting and expose what they don’t know and be real, then how can we have a relationship? There have been people who’ve come in here, who’ve done well, who’ve raised money. Particularly now in the cycle, you get people who are playing a promotional game because there’s something attractive in the external metrics. It could be a research background—pick your favorite—and they think, “Okay, we’ve got to sex that up a bit and then we’ll flip these people.” One of the common threads in Benchmark investments is that there’s very low representation of the promoter. There are exceptions. The case where you find someone who’s really talented but they’re in the wrong market and we don’t back them but we love them, that happens. But when we get in trouble as an industry is when we start to become quite accepting of the… Forgive me, this is the distinguishing trait between founders and entrepreneurs. In a market like the one we’re in, the number of founders increases geometrically. I think the number of entrepreneurs stays as a fixed constant. So what happens is we have a lot of founders. Anyone could be a founder. I could be a founder. You were a founder, but you’re also an entrepreneur. Entrepreneurs have this guile. There’s a sense of leverage. Brendan at Mercor to me is an entrepreneur in any cycle, in any market. He happens to also be a founder right now. I think that’s not the case for a number of people who found companies who would otherwise, if the market was shitty, be employees at big company X, Y, or Z. As a founder, you have to introspect. Do you have the entrepreneurial qualities? Study entrepreneurship. A vast majority of entrepreneurs drop out. The phenotype of the personalities is that they don’t want to be validated by a system they didn’t create.