Benchmark's Five Partners on AI, IPOs, and Silicon Valley's Comeback

Connie Loizos (0:00)

Hi, I'm Connie Loizos.

Alex Gove (0:01)

And this is Alex Gove.

Connie Loizos (0:03)

And this is StrictlyVC Download.

Hello, listeners, and welcome to the newest episode of StrictlyVC Download. I'm your co-host, Connie Loizos, and this week we are running an interview from this year's TechCrunch Disrupt, which was held in San Francisco just a few short days ago. It was a busy, energizing weekend, and one high point for me was sitting down on stage with the five current general partners of Benchmark, the famed early stage Silicon Valley venture firm. It was, I think, the first time the current lineup has gathered publicly together, and it is definitely a strong bench. Peter Fenton is, as many of you will know, the veteran of the group. He joined Benchmark 20 years ago after being poached from a rival Excel. I am sorry to tell you that I remember this was big news at the time.

Erik Vishria, a former founder who graduated from Stanford at the tender age of just 19, is the second longest serving general partner at the firm right now, having joined in 2014 Then came Chetan Puttagunta in 2018 after spending about seven years as an investor at New Enterprise Associates. If you followed Benchmark at all, you may have noticed that the firm tends to pull in very smart people in the early 30s, and the firm also has two very new members that fit that bill. Av Randle is a growth stage investor who previously logged time at Founders Fund, Bond and Kleiner Perkins. He joined the firm late last year to help it size up some of the later stage opportunities it should be diving into, primarily out of its own portfolio of companies. Meanwhile, the very newest member is Jack Altman, whose star has been rising in Silicon Valley in recent years. Altman, like his brother Sam Altman, is both a founder and investor. He ran the software company Lattice for years as CEO before spinning up his own venture firm Alt Capital and a popular podcast. Then Benchmark reeled him in too. It was a rare chance to talk with all five at once, and that candidly made it impossible to go deep on any one topic, but it did give attendees a decent peek into how the firm operates today, and how it's thinking about the fast changing landscape of startup investing, because it really is getting zany out there. I really enjoy talking with them. I think that you will enjoy getting their perspective on things, and we will see you back here next week.

Full house. How lucky are we?

So, Anthony just reminded you of what this firm stands for and has accomplished over the years, but I do think it's interesting. So, I think we all think of Benchmark as being associated with a few things. It's notable bets. It's flat partnership where everyone sort of enjoys in the same economics. And also, it's almost stubborn adherence to a small fund size. But this summer, you announced $2 billion in new funds across two vehicles. Peter, what happened?

Peter Fenton (3:15)

Well, you know, it's the Silicon Valley, our ecosystem is most distinguished, I think, by its adaptability. And that there are certain things that lead you to say, the next trillion dollar company is most likely to come from the Silicon Valley. I know you probably have a global audience, but it doesn't mean that there's a 0% chance outside of the Silicon Valley. And so, that question of adaptability and evolution is something that we inherited at Benchmark. And so, there's a craft that has not changed, which is the core fund that we have, working closely with founders at the beginning. Usually, it's a 10 to 15 year commitment, and we're really shoulder to shoulder. And that doesn't scale. So, it turns out, there's been inflation last I checked. It's more than the exact $500 million fund size that we held for 20 years. And so, our core fund has just inflated to be consistent with the existing economy. So, that's something that we had not done, and that was probably just a tactical error on our part, but it allows us to continue the core business as we practice it for the 30 plus years of the franchise.

The T1 fund, which is very much an expansion of our mandate, which is in some ways we get permission from the ecosystem to do more than just the core early stage business. And the permission we had was sort of a fork in our eye. So, there were a number of opportunities that would have been somewhere between 10 to 1000X that came to Benchmark, and we were constricted by our early stage focus. And, you know, the conclusion we came to is that there's enough of those opportunities to support a fund that is in the continuum of what we do, where we still think the return profile could be 10 to 100X, maybe 1000X, so it's asymmetric.