Benchmark II
Ben and David sit down with all five current Benchmark GPs for one of their legendary weekly dinners, during which we ask all of the unresolved burning questions from Part 1.
Kyle’s Rating: 4/10
While it was fascinating to hear directly from all five Benchmark partners around their iconic table, the conversation often fell back on familiar VC tropes rather than diving into the nuanced decision-making and trade-offs that make their model unique. The partners seemed more focused on reinforcing their mystique than providing genuine insights into how their equal partnership actually navigates conflicts or difficult investment decisions. This guest episode highlights why Acquired’s standard format works so well, David and Ben’s deep research and analytical frameworks consistently deliver more substance than even the most prestigious practitioners can provide about themselves.
Benchmark Partnership
Ben and David have dinner with the five current Benchmark General Partners: Peter Fenton, Eric Vishria, Chetan Puttagunta, Sarah Tavel, and Miles Grimshaw at their iconic triangle table.
They are equal partners in the legendary venture capital firm Benchmark, known for early-stage investments in iconic companies like Uber, Twitter, Snapchat, Instagram, and more recent ones like Confluent, Chainalysis, and Docker. Their significance lies in maintaining Benchmark’s unique model of a small, equal partnership focused on serving entrepreneurs without growth funds, memos, or hierarchical structures, emphasizing curiosity, commitment, and high returns through asymmetry.
Notable Facts
Benchmark partners operate without offices, sitting together at a custom-designed round table to eliminate hierarchy and foster unified conversation, emphasizing equality and preventing sidebar discussions.
The firm uses no memos, agendas for Monday meetings, or structured processes. Decisions emerge from open discussions, with partners often calling references or entrepreneurs on speakerphone mid-meeting for real-time truth-seeking.
All departing partners have “fired themselves” voluntarily, reflecting a culture where individuals leave when they can no longer contribute more than they take, ensuring continuous rejuvenation without forced exits.
Benchmark partners invest in about one or two companies per year, allowing deep commitment. This enables actions like a partner flying internationally on 48 hours’ notice to support a founder’s emotional decision-making.
The firm’s LPs include retired partners as some of the largest investors, with active GPs paying fees and carry on their own investments, reinforcing equality and aligning incentives without creating overlords.
Key Decisions
Deciding to maintain a small, equal partnership without a growth fund.
Motivated by focusing on early-stage founder service and maximizing fund multiples (e.g., aiming for 50x returns) rather than scaling assets under management. Partners rejected picking up “million-dollar bills” from later rounds to avoid conflicts, distractions like managing staff or CRMs, and diluting curiosity-driven work.
Outcome: Preserved high availability and commitment, leading to better founder outcomes (e.g., less dilution, higher subsequent valuations), though it risks missing deals due to limited outreach. Analysis: This reflects anti-incumbent leadership, prioritizing joy in craft over institutional growth, enabling competitive advantages in cycles (e.g., thriving in 2022 downturns) by pursuing excellence via peer pressure and focusing on asymmetry in volatile startups.
Implementing unstructured Monday meetings and dinners as core habits.
Driven by nurturing collective curiosity and effervescence, inspired by Ben Franklin’s dinners. Rejects agendas to allow roving, truth-seeking discussions without pre-selling or side conversations.
Outcome: Fosters teamwork, like joint calls to experts, and deeper relationships, but can feel uncomfortable for newcomers from structured firms.
Analysis: Leadership here emphasizes vulnerability and group alignment over efficiency, countering industry trends toward machines and hierarchies, sustaining greatness by making the firm a “collection of habits” that destroys incumbency internally.
Committing to rapid, in-person support for portfolio founders in crises.
Exemplified by Chetan Puttagunta’s last-minute flight to Europe after a Sunday night call and group chat, prompted by Peter’s insistence on face-to-face over Zoom/phone.
Outcome: Shifted dynamics positively without intervention, signaling unwavering support and turning emotional turmoil into resolution.
Analysis: Demonstrates founder-first leadership, where commitment as a “best caller” (proactive, not reactive) influences outcomes amid competitive pressures from passive “bet-making” VCs, highlighting how small teams amplify impact through trust and de-risking.
Recruiting partners based on shared boards and organic fit rather than theses.
Rationale stems from observing genotype (curiosity, craft love) over phenotype (sector expertise). For example, serving on boards together reveals true collaboration.
Outcome: Built a generalist team that evolved from consumer-heavy to enterprise-tilted naturally, without forcing swimlanes.
Analysis: This decision embeds industry awareness of disruption (e.g., AI, crypto) into hiring, ensuring adaptability and avoiding mediocrity, while competitive dynamics favor those who earn entrepreneur trust organically.
Decoupling capital from partnership in select cases.
Motivated by serving purpose over fees. For example, advising Tinder without initial capital, or considering capital-light models.
Outcome: Allowed high-impact involvement (e.g., Docker’s rebirth from zero valuation), questioning VC’s “hack” of bundling money with advice.
Analysis: Challenges industry norms of lifecycle investing, promoting leadership through vulnerability and founder permanence, potentially raising multiples by focusing on residual value amid risks from overfunded peers.
Key Quotes
“Job number one, don’t fuck it up.” – Eric Vishria, on joining Benchmark v3. Context: Discussing the pressure of inheriting a top firm during brunch with Sarah Tavel before her joining. Analysis: Captures the fear-based motivation to sustain excellence, linking to leadership playbook of service to entrepreneurs and powers like counter-positioning by avoiding bloat, ensuring the firm’s anti-incumbent stance shapes its enduring impact amid competitive scaling.
“We are their best caller.” – Miles Grimshaw, on proactive founder support. Context: Contrasting reactive “first call” tropes with Benchmark’s commitment, like late-night strategy sessions. Analysis: Highlights strategic shift toward vulnerability and teamwork, influencing industry trends by de-risking rounds and pivots (e.g., Discord), tying to scale economies through deep, non-transactional relationships that amplify success.
“Focus is when, in some ways, every bone in your body thinks that idea is a really good idea, but you don’t do it.” – Miles Grimshaw (quoting Jony Ive), on rejecting growth funds. Context: Explaining ruthless prioritization to stay early-stage despite opportunities. Analysis: Unpacks leadership principle of craft love over distractions, connecting to trends like cycle resilience and powers such as process power in curiosity-driven habits, enabling higher multiples and founder ownership.
“The single most important thing we have to do in our job is to partner with, earn the trust and respect, and earn the ability to be a partner and a guide.” – Peter Fenton, on recruiting ethos. Context: Describing paths to GP, like earning rapport with giants (e.g., Zuckerberg, Hoffman). Analysis: Reveals journey emphasis on genotype curiosity, impacting competitive dynamics by fostering organic sourcing and linking to network effects via entrepreneur referrals.
“To make great investments, you have to be okay looking crazy, maybe even stupid in the short term.” – Sarah Tavel, on contrarian bets like Chainalysis amid ICO hype. Context: Discussing conviction-building without data in fast markets. Analysis: Ties to trends in disruption (e.g., crypto), leadership through paranoia on missing icons, and powers like counter-positioning, ensuring adaptability in high-velocity environments.
Leadership Playbook
Vulnerability and truth-seeking in relationships: Using terms like “vulnerability snaps” and “truth seeking,” partners emphasize open trust (e.g., no memos to avoid bias, joint calls for feedback). Analysis: Shapes approach by aligning on purpose over agendas, linking to trends like disruption. Implications for VC leadership include sustaining excellence via peer pressure, countering hierarchical firms.
Proactive commitment over passive betting: Phrased as “we want to make a commitment” versus “make a bet,” with examples like in-person crisis support. Analysis: Drives founder permanence, tying to AI/crypto trends. Implies industry shift toward on-field impact, amplifying odds in competitive, capital-abundant environments.
Ruthless focus on craft and curiosity: Exact terminology like “nurturing curiosity... the essential lifeblood” via habits (e.g., dinners). Analysis: Enables generalism, connecting to enterprise tilt. Leadership implications involve self-firing ethics, ensuring anti-incumbent vitality amid scaling peers.
Additional Notes
Episode metadata:
Benchmark Part II: The Dinner (Season 11, Episode 5)
Duration: 1:58:58
Release Date: October 17, 2022.
Related episodes:
Benchmark Part I (Season 11, Episode 4, 9/27/2022);
Early Stage and Enterprise Investing (with Chetan Puttagunta, LP Show, 11/11/2019);
VC Fundamentals: Consumer Investing Master Class with Benchmark GP Sarah Tavel (LP Show, 7/6/2020).