Benchmark Part I

**Ben Gilbert** (0:00)
All right, let's try and do it as one, and we're going to hustle.

**David Rosenthal** (0:03)
Okay. Well, let's try and do it as just one, but I don't think we should hustle. Because especially those early days, that's what people don't know.

**Ben Gilbert** (0:10)
All right. No trade-offs.

**David Rosenthal** (0:12)
And we'll let the chips fall where they do.

**Ben Gilbert** (0:16)
It's a very anti-Benchmark approach we're taking to this episode. Trade-off, nothing. Go full-depth into Gen 1 and Gen 2, fine. Yeah.

**David Rosenthal** (0:26)
All right. We'll see how this goes.

**Ben Gilbert** (0:45)
Welcome to Season 11, Episode 4 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

**David Rosenthal** (1:00)
And I'm David Rosenthal, and I am an angel investor based in San Francisco.

**Ben Gilbert** (1:06)
And we are your hosts. The hardest thing to do in venture capital is create those massive, outsized returns that only come from investing in one of the five or so truly important companies each decade. Then, once you've done that, the next hardest thing is to keep doing it with an entirely different generation of partners. Today, we are going to talk about a firm who built one of the top franchises in venture capital, Benchmark, that has incredibly managed to do both. Our Sequoia and Andreessen episode were about the empires that those firms chose to build. And this episode is about the empire they chose not to.

**David Rosenthal** (1:47)
Or maybe. Well, there was a flirtation with an empire in there, as we'll get into.

**Ben Gilbert** (1:52)
There was. Benchmark famously believes that venture capital doesn't scale. They have zigged when others have zagged. They have not grown their fund size. They haven't tried junior partners. They don't have a platform team. They are not multi-stage. And I've heard they don't even have a CRM.
And yet, they are the big early backer of so many of the world's most important companies. There were early e-commerce companies in the 90s like eBay, eShop, 1-800-Flowers, or Ariba. Semiconductor and networking companies like Synopsys and Juniper Networks. And of course, in the next generation, OpenTable, Zillow, Twitter, Instagram, Uber, WeWork, Snap, Riot Games, Asana, Discord, New Relic, and our friends of the show at Modern Treasury. We are at the moment of the changing of the guard. Bill Gurley is not a general partner in the next Benchmark fund, and the majority of the current partners joined in the last five years. They clearly transitioned from the eBay generation to the Uber generation. And the question is, can they do it again? Will this third generation of Benchmark continue to set the Benchmark for all-time greatest venture capital funds in history?

**David Rosenthal** (3:05)
I like what you did there. I like what you did there. That was good. Ben teed this up before we started recording of, like, I really like my intro on this one. If you don't like it, stop me, but I like that. That was good. Well done.

**Ben Gilbert** (3:17)
Thank you. Well, listeners, we did a very different thing in preparing for this episode. We're trying to embrace raising the bar in different ways as the show grows. So for this episode, we talked to several current partners at the firm, several former partners, some of the original founders of the firm, portfolio CEOs, and even public company CEOs who used to be portfolio CEOs to get a whole bunch of different perspectives on Benchmark. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (3:47)
So Crusoe, as listeners know by now, is a clean compute cloud provider specifically built for AI workloads. NVIDIA is one of their major partners and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded, or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (4:13)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (4:18)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (4:36)
Yep. Obviously, it's a huge benefit for the environment and for customers on costs since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. And these lower energy costs get passed on to customers.