"Turpentine VC" | Venture Capital and Investing
E13: How Benchmark Thinks About Venture in 2023
Episode guests
Podcast summary created with Snipd AI
Quick takeaways
- Platform teams exist to support general partners rather than leverage founders.
- Benchmark values a deep commitment to founders and offers support as a trusted partner.
- In the AI industry, distinct categories of development exist, including foundational models, vertical companies, and incumbents enhancing existing products with AI capabilities.
Deep dives
Benchmark's Minimalistic Approach and Core Beliefs
Benchmark operates differently from other firms and values a minimalistic approach on their website. Their core belief is that platform teams exist to support general partners rather than leverage founders.
Eras in Venture Capital and Benchmark's Internet Era
Benchmark is considered as an internet era firm founded in 1995. The firm's success in the internet era was attributed to its operational rigor and financial flexibility, allowing founders to have more freedom in their vision while focusing on growth.
The Importance of Deep Commitment to Founders
Benchmark emphasizes the joy and delight in partnering with founders. The firm believes in making a deep commitment to founders by working closely with them, being involved in recruitment, company building, and offering support as a trusted partner.
Benchmark's Growth and Prioritizing Depth over Breadth
Benchmark values depth of relationship with founders, focusing on select investments rather than chasing every deal. The firm prioritizes delivering value to the founders they work with and believes in the long-term success of companies over short-term growth.
The Three Categories in the AI World
In the AI world, there are three distinct categories of development. First, there is the work on foundational models, with organizations spending significant amounts of money to develop them. However, open-source alternatives have emerged that are almost as good and more cost-effective. Second, there are new vertical companies selling AI-powered solutions for tasks like medical transcription or paralegal work. While the durability of these companies is uncertain, they are solving real problems. Third, incumbents are enhancing their existing products with AI capabilities, potentially reshuffling the hierarchy of companies in the process.
Challenges and Opportunities in AI
The AI industry has its challenges and opportunities. Foundational AI models, while impressive, have yet to be monetized effectively. Some startups have excelled in the short term but face risks of losing their position quickly. The notion of data being a moat in AI is questionable, as proprietary data sets often have limited value compared to publicly available data. However, areas outside the traditional healthcare ecosystem, such as nurse marketplaces and medical device companies, present interesting opportunities for innovation and enduring value.
This week's episode of Turpentine VC features Benchmark GPs Sarah Tavel and Eric Vishria. We discuss ideas that are central to Benchmark's beliefs in firm-building, including why platform teams exist to help the general partners more so than founders themselves. If you’re looking to improve your sourcing, tracking, and due diligence, check out: https://synaptic.com/turpentine
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X / TWITTER:
@sarahtavel (Sarah)
@ericvishria (Eric)
@eriktorenberg (Erik)
@benchmark (Benchmark)
@TurpentineVC
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TIMESTAMPS:
(00:00) Episode Preview
(01:29) Benchmark in the history of venture capital
(05:08) The Benchmark DNA
(07:50) Learnings from Benchmark's expansion
(10:53) Sponsor: Synaptic
(11:55) The trade-offs of scaling
(13:00) How Benchmark thinks about macro
(15:08) Comparing the different Benchmark eras
(17:46) Partnership construction and combining skill sets and personalities
(29:38) On the investor and founder relationship
(33:58) Sponsor: Oracle
(39:10) How Benchmark remains one of the most relevant VC firms
(44:30) The right business model for venture scale
(48:24) the hallmark of a Benchmark company
(52:52) Learnings from consumer social
(1:08:43) What types of companies have enduring value or are truly defensible?
(1:15:09) On crypto
(1:23:47) Re-founding Benchmark
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