 It's so nice to see you I'm sure this is a big draw everyone knows benchmark this firm has done a lot in its near 30 or 30 year history And with a sort of famously very small team it is invested in some of the world's leading consumer brands and enterprise brands Uber Airbnb I'm sorry that Airbnb Uber Air table hacker one etc. etc. eBay and Again, what's sort of so interesting about benchmark is that it is sort of some would say stubbornly Maintained its Sort of feel and size over the years, which is really incredible and I wanted to start there Peter if you don't mind answering the question. I did see over the last couple of years. There were Sort of reports that benchmark was getting, you know, certainly feeling frustrated somewhat that Kind of bigger pocketed rivals were coming in and and competing more aggressively with companies that maybe benchmark would have liked to have funded I'm assuming that benchmark could raise as much money as it wanted It has consistently raised funds that are around four hundred and twenty five million dollars, you know fund after fund So I wanted to give you the chance to sort of address that Yeah, I like that you mentioned Airbnb because that's one of those On our long list of deep regrets the opportunity had presented itself to us and and typically, you know the Industry when I joined was well a series a investment you buy 20 to 25 percent of a company for a number today that sounds like a seed for you know, seven to ten million and You know, we missed the opportunity to Airbnb because we had a ownership threshold that it was impossible to achieve And I think we've sort of relaxed that as a constraint because it's not It's not a question of what can benchmark owned. It's of course, what's what's the company's potential? What can it be worth and our model at at five hundred million and not scaling it has come from the core belief We have of a small fund where a few we make a few commitments a year to be very deep partners to entrepreneurs doesn't scale and If if the relationship depth is a function of a few very big relationships then by keeping the funds small we've kind of forced that discipline of Really being selective but also accepting the fact that the industry can be you know giant below us and giant above us and Yet this basic contract we have of partnering with an entrepreneur for a decade is fully intact And some people choose that some people choose not to have a Relationship with a venture firm like ours and and we think that that's actually a very healthy thing there's diversity but but the idea of building a bigger fund I think would undermine that and I Joked the victors and one of the reasons of keeping it small is it forces us to earn our seat at the table versus buy our seat at the table and That comes out of references and the quality of work that we do with an entrepreneur as opposed to writing a bigger check and I'm sure also it makes it easier to Get returns see returns. I mean a lot of the funds that raised Big funds in recent years are now sort of you know struggling to either subsequently raise bigger funds or even the same size funds I also just wanted to ask it's hard enough to see all of you in Silicon Valley and four of your six general partners are here. That's a big showing I'm just wondering if you want to talk a little bit about why that is Victor. I think there's something really special about Finland and So I come from a gaming background so I built a company over 13 years in the mobile gaming space and and Finland is the capital of Mobile gaming right and I think what what's interesting is Why why a country like relatively small is able to produce things that are Much much bigger than they should and I think I think the thing that I think is interesting about benchmark is this intense curiosity To understand what's going on in different parts of the world So if I had to explain like why are four park for benchmark partners here the best way I can explain that is Slush is it's so interesting. It's like in the middle of the winter in Finland But it's so special. There's so many amazing things here And I think it's not there's no like business reason for us to be here It's much more like wow like this This is exceptional and like we want to we don't understand everything that is exception that is happening in the world Well, there's obviously a huge audience of founders who wants to understand what specifically Benchmark is looking to back right now. So Miles going in order here Maybe you can tell me a little bit about what makes up what makes the benchmark deal in 2023 Yeah, as Victor was saying obviously the epicenter of mobile gaming was actually having a Coffee yesterday with Ilka, you know the founder of Supercell and and Victor and I were chatting with him about what makes a great leader for one of his studios and and Curiosity and love of the game like love playing the games that you create what were the top two things that he mentioned And it's funny because it resonates a lot with I think what we look for when we spend time with founders Curiosity really a strong learning mindset You know, we we often talk about it as learn it all's not know it all's and and then passion authenticity right as the other version of the love of the game it really is It will be the founders Sort of the pinnacle of their potential life's work and and and a really motivated mission and that will drive so much That that flows from that a lot of the learning to and so I think those are some of the character traits We really look for and outside of that You know, we don't have there's no rule rule book if you listen into our Conversations when we're when we're dreaming internally, you know after we've had the fortune of sitting with a with a founder The conversation is as much as anything. How do we navigate that dream with them? How do we look into that future? What can go right? Not what are any not what are any issues and To the thing that doesn't scale It doesn't scale because we think about joining the team And and and that manifests as a board role in all cases But it's really about joining that team and and imagining recruiting tens hundreds of people's directly over the course of a journey for that and so When we sit down with someone and can peek into the future with them That's what's get us excited, but there's no no rule book. No no no set criteria But that's sort of the emotional feeling that that comes in and animates if I could add like I think you know so so much so often when you ask that question to a VC you get some flavor of a similar answer if I were to think about like what might be a Little different in the way that we approach that answering that question There's this idea that oftentimes you see like an ambitious founder and they direct their gaze at this big market And you know they'll say something like if we just get 1% of this market will build a billion dollar business And we're really looking for the founders that have that ambition But they direct it more like a laser beam to an opportunity that they can really excel at and It's you know and nail that value proposition from there with that customer Expand from there into the bigger market But it's usually one where there's a lot of dynamic change happening And that's that's more often than not the recipe that were were focused on and just in terms of a recipe I mean you all have many years of experience Either you know running companies or or investing in them. Are there any patterns that you've Established in terms of like whether or not you feel comfortable investing in you know a two-person team And or red flags that you are sort of wary of Miles constantly looking for the exception. You know any any attempt at a rule Always finds a way to be broken so And I'll add you know, I think we were looking recently at the The investments that we've made so far this year And you would know the stat better than I do some some large percentage of those investments We're actually at incorporation of the company and so more often than not it is actually two people who see an opportunity and And we're we're getting there before they've even left their last job to start that company and and so We're you know, we really focus on being Ideally that first board member the first partner to a founder when they are embarking on this on this journey and There's a large large percentage of time where that's first money to people and an idea. That's great Well, you know, I wanted to ask about that actually it's very interesting to me that lately in You know the Bay Area There's been a lot of talk about board seats and whether they matter and how effective Investors can really be if they're sitting on the board of a note Kosala famous investor who's been saying lately It's not a good idea to be on the board I talked to Dick Costolo the former CEO of Twitter recently. He said the same thing He was like oh VCs are really not getting you know great information in the board room I wonder what you make of that. Yeah We feel I would say almost existentially committed to the role we play is best manifest through serving on a board and It's an interesting hack the venture business, which is the you know, we codify our relationship typically with money But then we join the board governance structure and the person that Takes our money. We have power over like in theory and governance structures on boards You can hire and fire the CEO. That's the biggest job of the board and You know in my view The really great businesses are built with boards that have a partnership with the CEO that have a gaze to the horizon of what's possible that's bigger than any one person and I think that the integrity of that structure has been tested throughout the entirety of our C-Corp business model And we moved into crypto we got rid of boards and we so who needs boards who needs company building and all that stuff and you know It created interesting Token value, but I don't think it built equity value And so the idea of a board is carrying the Intentionality of the business to be serving a purpose greater than anyone person and the director is playing a role as A partner to the CEO whose entire existence is to make that CEO successful at least like that's the way We conceive of it until there if there is it to point in time But that's not possible either the CEO raises their hand or the board is faced with that really awful decision of saying This is not working But but I think you know we're gonna move my senses are moving through a period of time where the idea of governance We just went through it at open AI It percolates up to the top of people's consciousness and we can see what happens when the governance structures are misaligned And I have a personal view that my partnership with a great CEO Is deeply enhanced by knowing that I'm carrying the fiduciary responsibilities that they carry with them close to their heart And that if I'm not serving on the board, I can be effective, but it's not the same You know we all learned from Bill Campbell who was a great mentor to many to start his benchmark work with arguably he was one of the you know silent founders of benchmark and He got to the point where And I think dick has echoed this it's it wasn't effective for him to serve on the board Because he was trying to be a coach to the CEO and he's like as soon as I'm in the boardroom I'm in the governance structure It gets confused by that But he was on the board at Apple. He was at the board of Intuit He was in the you know wasn't on the board of Google and he was super effective there So I think you ultimately as a CEO look for a partner that can have deep context that can be with you shoulder to shoulder Through the decade-long journey our board role codifies that and I think CEOs that select that have built the biggest companies on earth You know you mentioned opening. I I think something else interesting happening there that Also ties back to something that we've seen in recent years that sort of dispenses with traditional norms And I wonder if it's the new new or it's something that's going to change back is founders and employees Cashing out somewhat early selling their their stakes to secondary buyers. So open AI. It's really interesting to me We're talking about a lot of money. This company is its valuation is sword to the heights I you know might be the fastest-growing company in terms of valuation ever and I think some of the employees are selling their shares Which is great for them, but of course they do wonder if it's early on so I wonder Including for the founders in the audience for wondering is this acceptable And at what point what are your thoughts as a firm on founders and employees catching out relatively early in that process? so we asked what does benchmark look in the company and a lot of it comes down to the founder and There's a specific type of founder that we like to to work with and there's no like Criteria that we can describe but if there was one this there's one thing is like, okay What's the purpose? What is what is this person trying to optimize for and the founders that we admire the most our founders that? They see it an important industry that could be better and they want to make that industry better, right? And if you're working with founders like that typically They're not they're not there to sell a bunch of second there is very early on so on this specific question like hey Are is the firm pro selling secondary is the firm again selling secondary? Like the firm doesn't have an opinion on that But the firm does have an opinion on the types of founders that we want to partner with and we want to partner with the founders that Care first and foremost about building something that is amazing, right? So Throughout a journey if the company is generating a lot of value and and at some point it's a natural thing for the founder to have some liquidity, but always the purpose of like transforming an industry has to come first I Also wanted to ask about valuations really quickly Victor your company is very interesting So you co-founded this company with your brother that's been very successful while wildlife studios So benchmark had led a round in your company 2019 60 million dollars at a 1.3 billion dollar valuation And the next year Vulcan came in Paul Allen's management company and led a hundred twenty million dollar investment at a three billion dollar valuation I'm not questioning that valuation But it was interesting because so many companies were seeing these huge valuation leaps And I'm again wondering as a firm how you think about that how you counsel your startups Obviously, it's good as an early-stage investor if somebody's marking up your deals But it does in some cases cut off options for founders in terms of their exits and what's gonna happen in subsequent rounds. So Yeah, I think that You know 2021 and like beginning of 2022 we saw we definitely saw this location in the market and So soon when I partnered with benchmarking and Peter joined my board there was just this intense desire of working together and I really wanted to work with Peter because I felt that he was someone that could transform like help me transform the company and I was looking out that he wanted to work with me, right? And then just being transparent We were in a in a period where there's a lot of Capital chasing deals and then there's this effect that like after benchmark investing in the company like everyone's to invest in the company So like the second round that we raised We really had made like no progress But just so many people were interested and I think we're we're we were a company from Brazil and like we're trying to move to Silicon Valley And we're also a very low profile, but like all the Senate all like Benchmark invested and and there's all these people coming in and then I made the decision of okay There's there's this funds that that one invested up at twice the valuation when like really like not that much progress was was made and And I made the decision of okay like with more money, perhaps we can do more But in retrospect, I think that like myself and a lot of the founders and this period like 2029 222 Made the mistake of like raising too much capital and the problem with that I don't think that the problem is when you raise too much for capital at a high valuation like Exit paths are closed you I don't think that's the problem. I think the problem is You start going in unnatural directions You start deploying more capital than what is natural to that business, right? And then like you grow your team and bigger teams lots of times like they don't produce more like in fact They produce less and when once you do that you have to go through the painful process of Like reducing the team so so what I think is the best founders they're not like trying to maximize for like Like unnatural valuations and trying to raise too much money because that does distract from from the car Purpose of like building the company. I think that the general advice we give at the moment is really to manage by like performance and progress not managed by valuation, right? And so The not not not make that some goal that has to be achieved You know in some sense kudos to to CEOs who managed to raise low-dilution capital In many ways, but if you get if you get addicted to that drug and navigate based on that versus navigate based on customer need And and product journeys and and the core of the business Your gaze is veered in the wrong direction I'm Victor. I just wanted to thank you for being candid about not having done that much in the year In between because I think six months or six months. I don't want to put you on the spot I just thought it was interesting. I know the company was older So it wasn't like it was a an overnight success so to speak But I think a lot of founders are trained to say no, it's yeah, we did it, you know We deserve that evaluation. You know, I wanted to ask to we are in the middle of this great reset I saw really interesting Peter Wagner quote where he said something like we've never been in the middle of a boom and a Down time at the same time the boom being related it to AI But but of course things are very different than they were back in 2020 when you raised that second round So I'm wondering right now for the founders again in the audience What does it take to get to a series a especially I keep hearing about the hurdle having risen I'm seeing a lot of seed stage companies getting funded again. So maybe Sarah if you could talk a little bit about What you think it means right now to the land a series a You know a lot of people talk about the bar being higher now I think when you look at like a regression over Historical norms we went through a period when you know when there was just a lot of exuberance and market 2021 kind of some tale of 2022 where there was a feeling that gravity didn't exist at the same Fundamentals of business building Weren't there you had companies that would raise, you know around three months later And you know three acts of price three months later two acts of price like it was this time where There was this, you know incredible orientation towards scaling a company as opposed to as Miles was saying the Orientation towards the customer and now that you know, we are back Into a place where we all realize that actually the work of building a company is Is really hard, you know, and you have to have an incredible orientation towards the customer You have to have an incredible orientation towards the fundamentals of the business that you're building It's not just about the kind of the vanity metrics I think a lot of people got lost in which was growing this top-line numbers, but it's ultimately You know, are you doing it in a way where you're also building? Economic value for the the company that you're building, you know, ultimately the kind of old-fashioned look of like, you know These businesses ultimately the the ones and they're in the kind of greatest expression of their Financial success are ones that generate profit and cash flow And so you kind of pull that forward, you know, you pull the future that future that kind of in the quest for building enduring value into that present and it's a founder who is focused on the product that they're building for a customer that has the need and is willing to you know More often than not in the business use case give you money for that and and so that has that has actually always been What this, you know, what that quest of a founder is about which is that fulfilling that need and And so I don't think the bar has actually changed at for from our perspective and it is still What we've always looked for that that founder that we've all spoken to that is on a mission That sees the future that other people don't see and is, you know, assembling the team to make it happen Well, I'm gonna have one thing which is that, you know We talk about the bar of the industry and you can aggregate and say collectively has that bar gone up or down But I think broadly the industry I've been in it for 25 years has the feeling the excitement the anticipation that they'll be a company founded in the next 12 months and I really have deep convictions about this that Will transcend the market value of an Amazon or a Facebook meta Meaning the disruption of AI is the precondition from which a probably 20 year old founder Or in their 20s founder will create a company that we're gonna recognize it when we see it and and so It's the asymmetry of you can only lose a dollar in a bad investment you can get near infinite on a good investment that the industry is excited about and You know, I think that that the sense of where is that relative to the historical trends It feels like the beginning of the internet relative to the possibilities and I'm excited for your industry to wreck a lot of capital Trying to find that because we will find it and that's exciting It's an interesting Phrasing wrecking a lot of capital because I talked to you miles back in June and I thought it was really interesting Obviously the hottest companies right now the most valuable and seemingly the most promising are these large language model companies like open AI Anthropic and you'd sort of suggested that benchmark doesn't see it that way that you think that value is actually going to go in the opposite Direction while the applications on top of these large language models are really the place that you want to be Yeah, I would say from a company formation perspective. It is an unbelievably Exciting time like more exciting than many of the last few years In that you have Victor and I were chatting like You can talk to your computer now in a way like you could say that and you don't sound silly I think if we look back at ourselves in a few years, maybe even a year Well, we'll feel like we were primates kind of mashing rocks together to make fire with the way we like use software You know imagine in two years what you'll say of using Salesforce It'll be weird probably that you have to click all these buttons and navigate around and it didn't do more for you And so user expectations of what's possible. I think are Ratcheting up and you've got tectonic forces at play for Imaginative creative founders to take advantage of I Think that the question becomes sort of the startup opportunity versus an incumbent opportunity and I think You know counsel one has given to founders. You can never say where you should go really like that's that's not what we do We don't say where you should go that that's someone's dream But I think that the place is to maybe avoid the traps I think one of them is don't be Microsoft, you know, don't be the co-pilot game That that's what they're doing. It serves their business well It serves their product environment very well be be more creative and ambitious and just a co-pilot And the other thing I think is don't learn the lessons of crypto right crypto was a lesson of build it and they will come and was a lesson of Just sort of if you have this infrastructure like it'll just do that and I think there's an opportunity here for end user experiences connectivity to to needs and Imagining that possibility of really lived experiences in the hands of users or businesses is a really special and powerful thing on this new Computing, but I'll come out because he's not saying it. We didn't invest in any large language models and I think that And maybe this is unique to benchmark, but our view is the capital intensive we've been in some Newberg we all took uber's here today capital intensive businesses and venture back companies have historically not been great Partners and I think our faith is that open source Will end up having a profound effect on the ecosystem and we are you know all in the way you know soldiers in the army of Tear down anything that's getting capital intensive and overbuilt and then propagate a developer driven world and these Experiences in AI are gonna be built by developers or imagining stuff that no one can fathom at a large language model because they're Serving a difference kind of platform horizontal needs. So yeah, I mean we haven't we hope they do well We love the innovation, but we I'm particularly drawn the idea that there's an open source founder probably in the audience That's going to surpass almost everything that you can do with capital Guys I have about a thousand more questions, and I see we're getting booted off the stage here But thank you so much for taking the time and thank you everybody Thank you. Thank you