Uncapped with Jack Altman
· Jack Altman, Ev Randle
[00:00:00] S0: That’s quite a lot. [00:00:00] S4: That is the North Star and KPI of what’s giving you fulfillment? Do you like the founders? Do you like the companies? Or is it just the fact that you’ve shoved capital into four investments and four companies? [00:00:00] S0: This gets at one of the things that was a noteworthy difference for me, going from running a company to now doing investing. As a company, money’s involved, but the primary work is about a product and customers. In venture, there is at least one way to practice it where it’s primarily about dollars. I just don’t think that’s a path to happiness. [00:00:00] S4: It can be for some people. This is a group that’s very much self-selected into maybe the Charlie Munger punchcard approach, where over your lifetime you might only have ten meaningful partnerships. So every single one of those partnerships should be unbelievably meaningful for you and for the founder you’re working with. I think that fundamentally comes into conflict with the idea of each of us going out and doing eight investments a year or scaling up massively. [00:00:00] S0: What are the principles or foundational tenets of Benchmark? If you had to describe the three to five things that define what Benchmark’s about, how would you name those?
· Jack Altman, Chetan Puttagunta
[00:00:00] S0: What are the principles or foundational tenets of Benchmark? If you had to describe the three to five things that define what Benchmark’s about, how would you name those? [00:00:00] S1: We want to be the first call for an entrepreneur. We want to be their most important and most impactful partner. It’s pretty easy to quantify. You can ask any of the companies we all work with. Who do you call first when you hit a patch of bad news? Who do you share that with? We want to be that person. That can only come from being there for the founder, having full trust between you and the entrepreneur, and the entrepreneur knowing that when they speak to one of us they’re getting an authentic experience. I’ve noticed with these large groups that we’ve all been part of, boards and stuff, whenever bad news gets presented in a board meeting, you can see panic in some people in the room because they have to go tell their boss, with the board meeting notes afterwards, “Things are off track.” [00:00:00] S0: By the way, it’s also a reflection of something in the relationship if they’re learning bad news live in a board meeting.
· Jack Altman, Chetan Puttagunta, Eric Vishria
[00:00:00] S0: By the way, it’s also a reflection of something in the relationship if they’re learning bad news live in a board meeting. [00:00:00] S1: Sure, 100%. We’re working with such unformed companies and people that there’s going to be bad news. If you aren’t expecting that, then you’re doing this job all wrong. Things go well, things go badly, things go sideways, things go up, things go down, stuff happens. As long as the entrepreneur knows that they can call you and you’re going to be there and there’s trust there and you’re that first call—that’s what we aspire to in every single one of our relationships. [00:00:00] S3: So there’s that part of it, which we’ve talked about a bunch. And then the other part is the equal partnership. I think that’s a very special thing. Ev’s been here for a quarter, Peter’s been here for twenty years. I think I’m on eleven. You’re on what, eight? [00:00:00] S1: Yeah. [00:00:00] S3: That equal partnership is really special and something that also doesn’t scale, frankly. It has a very special dynamic. I remember when I joined and you’re just this new person. It’s my first investing job. Peter and Bill and Mitch and Matt, who were the four that I joined, they’re asking me about doing things. You’re like, “I have no idea. I have no idea how to do this job or anything else.” But I think it relates to this deep belief in the equal partnership. I think it’s very empowering for a new person. I found it very empowering. [00:00:00] S0: Ev told me he was disempowered.
· Jack Altman, Eric Vishria, Chetan Puttagunta
[00:00:00] S0: Ev told me he was disempowered. [00:00:00] S3: He was disempowered right out of the gate. I think it is very empowering for the new person. It also creates, for the right kind of person, a lot of internal drive and expectation because you’re like, “Oh, I better not fuck this up.” I think that’s a magical piece of it. [00:00:00] S0: Why is it so hard for most people to do this? I think a lot of other firms want it, but it effectively rounds to zero the number that can do it. [00:00:00] S3: I have this belief that the biggest leap wasn’t at the founding of Benchmark. The founders came together and figured out how to cut things up, and they decided it’s equal. But then they had an amazing first fund. Benchmark I was a legendary 70x return or something like that. [00:00:00] S0: eBay. [00:00:00] S3: So they built all this brand value. [00:00:00] S0: They gave it away. [00:00:00] S3: And then they gave it away. I think that was the leap. [00:00:00] S0: Nobody can do that. [00:00:00] S3: That, I think, is the hard part, right? It’s like, “I built the firm, I built the brand. I should get some economics from that.” Whatever it is. [00:00:00] S1: No residual economics is the craziest thing. [00:00:00] S0: Nobody does that. [00:00:00] S3: It’s the craziest thing. It’s the craziest thing. [00:00:00] S0: There’s no incentive really to do it unless you really care about legacy and something other than yourself. The incentives are very thin.
· Peter Fenton
[00:00:00] S2: It’s also just rooted in the culture of Benchmark. You go back to Bob, Bruce, Andy. All the founders have played their part. But it was rooted in this idea of respect and affection. You should have a partnership where you really respect and admire your partners. You’d give all your money to any of your partners but then you admire them. There’s an old saying that a virtuoso is somebody who surprises even themself. I believe that about all my partners practicing the business. They’re virtuosos in the aspects of the business that motivate us to do the work. So Bob raised his hand, I was there, and just said, “It’s time. I’m out.” Others had left before, Andy and others, but there was never a conversation. It was actually the opposite. We gave him economics in the fund. They weren’t giant economics, but it was just a way of saying thank you. I think as soon as you get into the parts of everyone’s identity that are ego-driven, they lay claim to things psychically that make sense to them. It would never make sense to ask for something from this firm that would entail taking more than you’re giving. It’s a weird thing to say, but it’s a pressure that I feel as the last of the prior generations. I want to be raising my hand first, before I realize I’m not contributing more than I’ve taken out. Not because it’s an explicit trade, but it’s a cultural ethic. Cultures, as you’ve found in your company, are so durable. The inertial forces of a culture that gets founded… You asked, what is Benchmark? If I read one book that captures Benchmark, it’s Carl Rogers’ book, On Becoming a Person. The premise of the book is very simplistic in a sense. It was the apex of client-centered psychotherapy. The premise of the book is that to be useful in a relationship, you have to first permit yourself to understand the other person fully. I think if Benchmark is doing its best work, an entrepreneur comes in here and says, “They see me.” I bet if you ask Andrew at Cerebras who understands him and the founding team most fully—the purpose and the vision of the company—it wasn’t that we found this hire for him, or we gave him this advice about negotiating a contract with company XYZ. It’s that Benchmark understands what he wants to do. We then do something else that I think is equally important: unconditional positive regard.
· Peter Fenton, Jack Altman, Eric Vishria
There are examples in the past at Benchmark where that’s been broken. I think an immune system builds around those failures and says, “How do we not do that again?” as opposed to saying we’re defined by that one act. So what you see in the current lineup at Benchmark is a really emboldened immune system. We’ve had some vaccinations from past experiences to basically say that we never want to be in a position where the relationship degrades, where there isn’t that faith that we’ve delivered unconditional positive regard. We believe in founders, oftentimes more than they believe in themselves. If you understand the founder fully and you have unconditional positive regard, then you really can empathize with what they’re going through. I think that nurtures the sorts of success possible with founder-entrepreneurs that we all hold out as the great examples of why we do this job. [00:00:00] S0: I remember when we spoke last, you talked about the fact that when the Benchmark seat was given to you, from the beginning it’s like, “I’m going to give this to the next person.” I can see why. You’re saying the seminal moment was actually the handoff, because that creates the instigation for all the future handoffs. [00:00:00] S3: Yeah and you feel responsibility with that. I think all of us feel responsibility. That was one of the big things we talked to Ev about as Ev was joining. [00:00:00] S0: The responsibility. [00:00:00] S3: That responsibility, you just feel it. Not everyone feels that, which is fine, but—