Eric Vishria: Where is the Value in AI - Chips, Models or Apps? | E1206

1. 0:00 – 1:00

   Intro

   1. EVEric Vishria0:00

      Foundational models are the fastest depreciating asset in human history. I don't believe NVIDIA's gonna be the only game in town on infrastructure layer. We have a major, major shift in AI, which is, could be bigger than any of these other shifts, um, maybe combined. It's simultaneously the most exciting and most disorienting time in my 25 years in technology. There's a lot of uncertainty, but we've been more active than we've been since 2010 and 2011.

   2. HSHarry Stebbings0:24

      Ready to go? Eric, I am so excited for this, man. We've been waiting like, so, I think it was like five or six years since our last one at least.

   3. EVEric Vishria0:43

      Wow. It's been a while.

   4. HSHarry Stebbings0:44

      So thank you so much for joining me today.

   5. EVEric Vishria0:46

      You look older, Harry.

   6. HSHarry Stebbings0:48

      I- it happens, dude.

   7. EVEric Vishria0:49

      (laughs)

   8. HSHarry Stebbings0:49

      It's- it's called Ben Show, Hey.

   9. EVEric Vishria0:50

      Well, I- I do too.

   10. HSHarry Stebbings0:52

       You know, the Botox isn't working. Um, but I was-

   11. EVEric Vishria0:55

       Dude.

   12. HSHarry Stebbings0:55

       ... I was just listening to you on a- another show, actually, not nearly as good as mine, by the way. Uh,

2. 1:00 – 12:48

   Reflecting on CEOship at RockMelt

   1. HSHarry Stebbings1:00

      but you (laughs) , you said that as a CEO you felt you fell short, and they didn't really go anywhere from there in that conversation. And I just wanted to un-

   2. EVEric Vishria1:11

      That was back in my startup.

   3. HSHarry Stebbings1:12

      Yeah. And I wanted to understand why, as a CEO, you think you fell short as specifically as possible.

   4. EVEric Vishria1:19

      You know, I- I'm trying to re- I'm trying to remember the interview, but w- what I would say, like, when I reflect on Rockmelt, which was- which is the startup I founded and was CEO of, my- my reflection is that we fell short, like far short of my hopes and dreams for the company. Like w- my expectation for the company and my hopes and what I- what- what I thought we could accomplish, we fell really, really far short of it. You know, and I think there's a few ways to think about it, and- and I think one of the reflections and it's been really useful now as a venture capitalist is, you know, good teams with an interesting idea, like even, i- i- it's not necessarily enough. The real lesson from it for me is like, hey, you can put it together a great team, and I think we did, um, you can have an interesting or provocative idea, we were rethinking the browser, um, and this is circa 2010, but I think we had some of the right ideas in there. We had, uh, some of the right, um, execution even, um, and a great team. But, you know, distribution for- for a browser, brutal. Um, and- and so it- it just didn't work. And i- but m- the big takeaway, the big lesson from that actually I think is just that, you know, startups are really hard and I think it makes you really empathetic, it makes me really empathetic as a venture capitalist now when I meet entrepreneurs and you kind of, you understand like, well, you know what? This stuff is really hard and there's a whole bunch of stuff you can do, and there's a whole bunch of stuff you can't.

   5. HSHarry Stebbings2:49

      But something is wrong there. If you think about that as an investor today, you're like, it's either wrong team, wrong market, wrong product, wrong time. Something is the inhibitor there.

   6. EVEric Vishria3:01

      Yeah, I think the question is whether it's deterministic or not. Like it- it's just like, is all of that knowable? Like we're- we're all taking calculated... Whether you're an entrepreneur or you're an investor, you're taking a calculated risk, right? Of- of- of certain probabilities. And- and so I- I just, I don't think it's deterministic. Um, like I don't think that if you- if you kind of like perfectly evaluate the team, the timing, the product, and everything at the beginning, you can actually determine with certainty whether it's gonna work or not. Um, a- and e- that's just like, that's part of it 'cause there's too many things that change along the way. And as those things change, the probability of potential outcomes changes a lot. And so like, I- y- you know, I think- I think that's the part of it that, you know, that's why startups are- are hard and fun.

   7. HSHarry Stebbings3:52

      Is there anything you would've done differently about your CEOship? Now you've worked with some of the best CEOs, the best founders.

   8. EVEric Vishria3:58

      Oh, a million... I- I'd do a million things differently. Like I- I, and I say this to- to the CEOs I work with now, um, I would nev... Like some of the big mistakes that I made were, well, one, definitely not thinking about distribution enough. That's always- that's always a big thing. Two, you really, th- there were a couple times where two people and specifically that I think about where like what they wanted in comp and what I was like willing to give were- were separate. Like they were just off and they were so far out of market in terms of what their ask was. And I- I think I would, I at least for one of 'em, I would've just broken all the rules and- and thrown it out, um, and- and hired them. Um, you know, those are- those are two examples. But I- I think those things, you know, you can get into real trouble if you kinda keep doing something like that. And so you kinda, it's- it- it's always a balance.

   9. HSHarry Stebbings4:55

      Can I ask, on one, in terms of the distribution element-

   10. EVEric Vishria4:57

       Yeah.

   11. HSHarry Stebbings4:58

       ... how do you dig into that as an investor state evaluating whether a founder has thought that through comprehensively enough for you to get comfortable on that?

   12. EVEric Vishria5:06

       I'm not looking for an answer or a right answer. What I'm really looking for and trying to figure out is, has the person thought about it deeply and is constantly learning or constantly applying and adding new mental models to their framework, um, to figure out what the right path is and they're navigating it? It isn't like, hey, I'm a boat captain and I'm looking and like this is where we're gonna go. You start going and then conditions change and you get more information and you have to kind of constantly change. And- and so what- what you're actually trying to evaluate isn't, they're not gonna have all the answers and that's okay. You can have theories and hypotheses and then evaluate and change as- as time goes on and you get more information. And I think that's really what you're looking for versus, oh, this is like, this is how it's gonna work. And th- that- that actually, that can be bad in its own way.

   13. HSHarry Stebbings6:02

       Speaking of, like, changing tides, being that kind of, uh, captain of the ship and moving with the tides, you then become an investor, very different role than being a CEO. And you said something that I very much agreed with before, but I loved it and I wanted to dig into why. You said, "Career investors, ah, they're all better. They're always better."

   14. EVEric Vishria6:21

       They're better investors.

   15. HSHarry Stebbings6:23

       I- I agree. Yeah.

   16. EVEric Vishria6:24

       Yeah.

   17. HSHarry Stebbings6:24

       Not people obviously. (laughs)

   18. EVEric Vishria6:26

       Yeah. Well, also not necessarily better board members, not necessarily better advisors, not necessarily better a bunch of things, but definitely better investors.

   19. HSHarry Stebbings6:34

       Why, why, why do you think they are better investors?

   20. EVEric Vishria6:36

       You know, like anything at the highest level, like it just, practice and reps matter and, and so if you're kind of, if you take somebody who's 15 years into their career as an example and they were an operator, um, at time, they may have seen, you know, if they, if they were a good operator, intelligent and, and whatever, they may have seen like three to five companies that they, they worked on and know them really deeply and know the ins and outs of them. If you're a career investor over 15 years, you will have seen 30 or 35 companies at some level of depth and hundreds and hundreds, thousands of, of, of pitches. And, and then, and of those pitches you'll be thinking about, "Well, like I saw this one and this is what it looked like then," and 15 years from now, like or 10 years later or five years later, like you've run this like very long-term, uh, longitudinal experiment and you have, you have data and mental models around that. And so I think that that's really helpful. It can, it can actually hold people back too, but, but I think that's really helpful for investors and so that's why I think that career investors tend to be really better investors.

   21. HSHarry Stebbings7:46

       Why are they not the best board members?

   22. EVEric Vishria7:48

       Um, for beg- well, going back to they haven't actually done these things at depth. They haven't done them themselves. Um, they often lack, uh, like empathy and understanding. I think they often think that things are more deterministic than, than I think they actually are, um, and so like all of those things I think actually really can get in the way. And I was t- talking to my partners yesterday about kind of, uh, we were talking about a board member and, you know, who, who's at a different firm who is on a couple boards with us and it's like the, the, the challenge with that career investor is they think like if a company has a plan and they miss the plan, that's because the company messed up. And if the company had a plan and they exceeded the plan, it's because the company did great and like, you know, or executed or management did great or management messed up. And it's just like, there's about 47 other ways that could go wrong. Like, the plan could just be gobbledy good from the beginning. It could be totally wrong and messed up. The- there could be external reasons for it. And like the whole job that we have is to try to figure out root cause on those things and help them figure out root cause on them and then like fix it and it isn't a... Like, you're not helping your three-year-old like fall or not fall or teach them a lesson. Like that isn't the job. And so, you know, it's, it's really... It's a, it's a bit of a different... It's a, it's quite a different actual mental model in terms of what the engagement with entrepreneur is.

   23. HSHarry Stebbings9:24

       My question to you is, you mentioned some amazing companies there that are often completely, uh, detached in terms of, uh, sector. There are very different companies there from Confluent to Contentful to Cerberus and I spoke to Bruce Dunlevie before the show and he said that bluntly your breadth of sector mastering is completely unparalleled as an investor, and he asked a great question, I thought, which was what is your learning process for entirely new categories and how do you break it down and learn so fast?

   24. EVEric Vishria9:58

       I'm not a sector specialist and nobody at Benchmark is. And I think the, the fundamental idea with Benchmark is there's a small group of people, a small group of partners who are all equal and, and right now it's five of us, but sometimes it's four, sometimes it's six, but it's basically four to six who cover technology. And the challenge with that, if you kind of think about it, is we can't be sector specialists because the, the sectors that have the most disruption and things are changing the fastest, like are changing. That part's constantly changing, so you have to be... As, as a, a group of investors, you have to be, you have to be moving. You have to be looking at new stuff because that's where the disruption's happening. And so, so then the question isn't so much I can't be a sector specialist, I can't be a, uh, a semiconductor specialist or I can't be, um, an open source specialist, and of course we each have preferences and things that we like and don't and lessons that we, you can apply, but like it, but it, but we're, but it's not a specialty model. And I think about this a lot and we should talk about it in the context of AI, but... So you can't have that. So then the question is, well, what can you evaluate on? And I think this is, this is it, this is it for me, which is you can say, "Hey, this is an extraordinary entrepreneur." That's a, that's a, that's an evaluation that, that you can try to, to make. There's a second thing which is this entrepreneur has a very interesting and unique insight. Like that's a really important thing for me. And, and then you can say like this market can sustain a big company. Like those are three things which I think even coming without sector specialists, without being a sector specialist, you can try to come to a, a belief or a probability distribution for each of those things. And I think if you have those things and then you add on top of all of it, you know, I have chemistry or want to work with this company or want to work on this mission or whatever, then, then I think you have like the, the basis for an investment. And I think one of the, the, the maybe contrarian things around that is if you... I, I, I think that a lot of venture capital in the SaaS era...... and certainly a lot of growth venture capital, um, got to be like a very spreadsheet-y, investor bankery type of, um, approach, which is like, it's kind of the model's figured out, we plug these things in, and we kind of know, and we figured it out that way. And I think that that doesn't work. Like, I think there was a period of time where it might have worked for a bit. Um, but I think it largely doesn't work. I think the AI stuff is gonna wipe out those, that breed of venture capitalists. It's gonna be really challenging because y- you, you really have to make these other kind of fundamental assessments.

   25. HSHarry Stebbings12:47

       Can I propose

3. 12:48 – 22:21

   The Impact of AI on Markets

   1. HSHarry Stebbings12:48

      an alternative to you there? Which is actually, those are generally vertical SaaS companies with deep data reserves, which will then be able to leverage foundation models that are relatively commoditized to build much better vertically specific apps-

   2. EVEric Vishria13:02

      Could, could be.

   3. HSHarry Stebbings13:02

      ... and become stronger.

   4. EVEric Vishria13:03

      Could be. That, that's possible. But I will tell you this. I, we were talking about a company yesterday, and it has every possibility that you just said, and the entrepreneur in that case is, you know, one of the challenges with these platform shifts is, um, you know, some form, it's some variant of the innovator's dilemma. It's not quite the innovator's dilemma as, as Christensen articulated it, um, but it's some form of the innovator's dilemma, which is like, you have to make the platform shift. And in order to make the platform shift for a company like what you're articulating, you have to kind of be willing to burn down the existing business in, at least in short order. And there's a whole bunch of entrepreneurs who don't do that. And so, like this, this is what I, I just go back to, if you have a learning entrepreneur who is constantly rethinking how they're navigating the ship, then that makes a really, really big difference in the probability of outcome as you're working through a platform shift.

   5. HSHarry Stebbings14:02

      I mean, uh, I've gotta take this one by one, 'cause otherwise I'm just gonna go all over the place. You said like the insight development. I agree and I love that. I actually ask it, um, Mike Maples always taught me to ask, like, "What is your insight development? How do you view the world in a way that others don't agree?"

   6. EVEric Vishria14:16

      Yeah.

   7. HSHarry Stebbings14:17

      I asked Pat Grady on the show, who says hi, by the way, uh, but I asked Pat Grady on the show, uh, and I said, "Do you have to be contrarian and right?" What if an em- a founder says, "I think that actually the world is moving to cloud, duh, and I'm gonna facilitate that much quicker." There's, there's not really an insight. Does that matter? Do you have to be contrarian and right in your insight?

   8. EVEric Vishria14:41

      You know, there, there are levels to it. Like yeah, it, you know, you can say like, "Hey, we're going to cloud and we're doing this." But normally there's an insight. I would say like if you look at most of the successful companies, there's an insight s-, like there can be an insight underneath that, right? Which is like, yeah, it's going to cloud and this is the right way to attack it. Or it's going to cloud and, um, you know, and the like core differentiation is gonna be like here, not here. Like normally there's an insight there. I think there's a couple cases, you know, and you really have to think about it. There's a couple cases where just like violent execution by a determined team in a hypercompetitive market where like nobody has an insight has worked.

   9. HSHarry Stebbings15:21

      But even there actually you could argue that say like in an Uber Lift case, which is exactly what I was thinking, the insight I think would be that broad is better than narrow in terms of market expansion, and being everywhere is more important than honing one.

   10. EVEric Vishria15:35

       Yeah, I mean-

   11. HSHarry Stebbings15:36

       There's always insights. Do you see what I mean?

   12. EVEric Vishria15:39

       Yeah, I mean, I think, I think you could say like that, you know, and that's a good case of violent, violent execution by a determined team. I think there's also a, and, and so I think there are insights there as you said. There's like little execution detail insights in, in your point. And, and so it's not like, it doesn't have to be some pie in the sky insight like that's like, "Oh my God, you know, like AGI is coming in Q3 of 2025." Like that's not the kind of insight that we're talking about. We're talking about like actual things that are nuances that help like the, build the company. And so yeah, they think they come at different levels. I would also say there, and you know, this is a difference, and I've been fortunate to work with Pat, um, on a board and, um, and, and work with the, the larger squad team on a number of companies, and you know, there is a difference also in stage, right? There are growth investors like early pat- his team are, are growth investors and we're early stage. And so like there's also like a, a, a stage difference in terms of how we evaluate things.

   13. HSHarry Stebbings16:35

       You said about markets being large enough to support massive companies. How do you think about market creation?

   14. EVEric Vishria16:41

       I think you have to say, and this goes back to the insight thing, which is like if this thing, whatever the product is, accomplished what it was supposed to and what the entrepreneur said it could do, like would there be market creation there, right? And so like, and, and just y- you mentioned Uber, like and, and Uber's a good example of this, where it's like, if you could actually th- and, and this was goes back to the whole like that professor, um, and the like taxi cab analysis that was done like in the early days of Uber where it was like, "Oh, the entire market's this big." And it's like, well, if you can imagine everybody has a smartphone in their pocket, and if you could actually request a ride instantly and pay for it easily with not ha- with shorter wait time and much more accuracy and much less cumbersome communication, like could a market be created? Yeah. And I think that was a, a huge part of, you know, Gurley and the rest of the Benchmark teams at that time, which predates me. Um, the, it, it was a huge part of their insight in, in terms of the investment thesis. And, and so like when you kind of think about a situation like that, you're like, "Okay, that's market create, that's a good example of market creation." And, and we have those all over. Like if you, we're like, I, I'll, I'll give you another one that's kind of like really interesting right now, which is AI medical scribes, right? And so you're like, you go to the doctor and you talk to your doctor and-... there's, and they have to do a bunch of notes and everything else. And so there's a bunch of these AI medical scribes. And you kind of, like, look at it, and you look at the proposition, and I've looked at now, I've met several of these companies over the years and we haven't invested in any. Um, but going back, I don't know, five years when I met the first one, it's like, if this exists and works, like, yeah, it's go- like, that's a better way. Like it's just, it is a better way. So there will be market created there, it's going to take away from the other, from the actual human scribe business and, like, but it will be a new, it, but it is a new market in a way. And, and like you can imagine, like it's not hard to imagine that exists, and we, we often say this when we're talking about companies which is like, if you fast-forward three years, is this a thing? Like is, is it a thing? And, and you know, it's a, it's like often a good sign when you're like, "Yeah, like that's a thing. Like it's gonna be a thing, like we've, we believe that."

   15. HSHarry Stebbings19:08

       I totally agree with you. But what on earth do you do in this, and we're just totally switching tacts at like AI companies, but in the sea of AI companies, we're like, we're both in 11X together, great, love Hassan-

   16. EVEric Vishria19:19

       Yeah.

   17. HSHarry Stebbings19:19

       ... fantastic. But there's a lot of other competitors to 11X. I'm with you, I've met five medical scribe companies.

   18. EVEric Vishria19:26

       Yeah.

   19. HSHarry Stebbings19:26

       I thought Nabla was the best, but there were like 20.

   20. EVEric Vishria19:30

       Yeah.

   21. HSHarry Stebbings19:31

       And I, I don't have a fricking clue who's gonna win. So how do you filter when everyone does the same, says the same?

   22. EVEric Vishria19:38

       I think this is where we go back to where, where we started, which is are, is, is there an insight that we believe? Like, do we have an extraordinary entrepreneur that you believe in? Do you have an insight, do you think they have an insight that is cogent? And I would say this, maybe this is more useful way to say it. The more competitive the market is, the higher the bar you have to hold on those two things, I think. And so like in a hyper-competitive market, you have to really believe in the entrepreneur and really believe in their, in th- in the like heart of the insight and their execution ability. Um, and in a, in a less competitive market, um, you can, like I think, it, it's just misery in life to work as a venture capitalist and serve on the board of, um, if you don't, like, really love the entrepreneur and, and really, like, love the area, so tha- that's a thing for me which is, I think about a lot when, when I'm kind of looking at a company is like, am I gonna be able to authentically help this entrepreneur close great talent? Like, am I gonna be able to talk to them and tell 'em why, like, this should be an amazing, uh, like this is an amazing person that I can tell somebody that, like, this should be their life's work. Like, and help convince them to join a company, right? Like that's interest by, which is a big part of what we do. And like, and so when you look at that, I ask myself that question. And if I, if my answer is like, "You know what, I think it's a cool business. It'll probably work, but I just don't understand how I can make that pitch," then I don't do it. Like that's my, that, like I just, I, I don't do it. Um, and so, um, and so like there's this balance there, but like I think that's a big important part of it, and the more competitive the market, the higher the bar has to be.

   23. HSHarry Stebbings21:25

       My worry is in a lot of these cases, the quality of product does not matter as much as the existing distribution moats that incumbents have.

   24. EVEric Vishria21:34

       Could be.

   25. HSHarry Stebbings21:34

       So like AI medical scribes, great example. Microsoft has such large enterprise

   26. EVEric Vishria21:39

       ... yeah, Nuance could just crush everybody, it's possible.

   27. HSHarry Stebbings21:41

       Just crush everyone. You're sw-

   28. EVEric Vishria21:42

       Yep.

   29. HSHarry Stebbings21:42

       ... and you're, you're a 10% better product. Agreed, better product, but they just crush everyone with bundled packaging.

   30. EVEric Vishria21:48

       Yep. Yeah. Yeah.
4. 22:21 – 25:13

   Does AI Enhance Revenue or Erode Margins for Companies?

   1. EVEric Vishria22:21

      that in for sure.

   2. HSHarry Stebbings22:22

      All right. Does AI allow companies to charge more price per seat and have better revenues? Or does it merely denigrate their margins because of the increased cost of implementing AI?

   3. EVEric Vishria22:36

      Oh, uh, I mean, the answer's for sure both. Like it, like and, and, and I would just, I would, I would maybe tweak your question, which is to say I don't know that it's gonna be like the price per seat model. But I, I'll give you a, a simple way to, to, to look at it. Let's take the, the AI coding area, right? We've seen like tremendous amount of capital go into AI coding and co-pilots and AI software engineers and whatever. So let's say your fully loaded IT or software person is 200 grand for, just for argument's sake. And if you think about that 200 grand, there is call it $10,000 for every one of these software engineers or IT people w- there's $10,000 of tool spend. In that I would put like Jira, um, which is Atlassian, GitHub, ServiceNow, you know, a computer whatever, development environment, Git, whatever. Like, so all that's, call it 10 grand a year roughly, right? On that 10 grand a year of spend, how many hundreds of billions of market cap has been created? Like 300, 400, 500, some, some big number of market cap has been created on $10,000 worth of spend for each of these, like, software engineers. So if the AI, if you can get AI good enough to eat much more of the, the $200,000 of value attributed to your software engineer IT person, it, it just follows that there's like 20X more value creation. And, and like there will be giant, giant outcomes. So in this way, like and this is, this is the challenge with it which is, it's simultaneously the most exciting and most disorienting time in my 25 years in technology-... because that is a really challenging situation where in some ways the prize is so big that you could very easily say you can justify really ridiculous prices b- on any fundamentals basis. You can justify really ridiculous investment, again, on any fundamentals basis, because it's like, well, the prize is so big. So like that's one, one part of it. And then the other part of it's like, wait a minute, we're a little ways away from like, from replacing the software engineer right now. We're, we're, we're like a bit away from that, and like we haven't actually captured that much market value yet. And really, no one's demonstrated anything close to that level quite yet, although the trajectory is like really quite good. And so, like that's the tension and challenge with it, um, and, you know, and this is the kind of thing that we have to like navigate through, um,

5. 25:13 – 30:36

   Analyzing Revenue Quality: Sugar High vs. Sustainable Revenue

   1. EVEric Vishria25:13

      every day.

   2. HSHarry Stebbings25:13

      Those companies in that trajectory are scaling revenues faster than ever.

   3. EVEric Vishria25:18

      Yes. Yes.

   4. HSHarry Stebbings25:18

      I remember when it was like, "Oh my gosh-"

   5. EVEric Vishria25:20

      Yes.

   6. HSHarry Stebbings25:20

      "... they got to 10 million ARR in such a..." Now, it's, it's just completely different in terms of revenue-

   7. EVEric Vishria25:26

      Yes.

   8. HSHarry Stebbings25:26

      ... scaling.

   9. EVEric Vishria25:26

      Yeah.

   10. HSHarry Stebbings25:26

       How do you determine and think about analyzing revenue quality? And I've heard you said before, sugar high revenue versus sustainable revenue.

   11. EVEric Vishria25:35

       I, I was talking to a team that had gone like, uh, this last week, I was talking to a team that had gone like zero to 4 million, a four-person team, zero to 4 million in four months. Amazing. Like just am- amazing kind of revenue trajectory, but I put like almost no value on that, like going zero to 4 million. And, you know, and, and I think one of their, their things was like, "Well, like why are you not giving me credit for that?" And I was like, "Well, the, the thing that I take away from that is that whatever you're selling, and this is true for a lot of these AI companies, customers wanna buy." Like customers wanna buy it, and so, and I think part of it is just like the products to a lot of these customers, the products are magic. Like they feel like magic to the, to the, to the customer, and the c- so the customer and the ROI on that, on those products is just tremendous. And they know that they have to experiment with it, or they have to try it, or they wanna try it because they see so much potential value in it, and they, they feel it. So the demand side is like, is very clear and it's just pulling. And like I think that's probably the biggest thing that we can take away with these early stage companies and their traction, which is like, okay, there is demand. And then you have to kind of evaluate and figure out like, okay, do we think that, that whatever the product the company's building, the entrepreneur, I mean, go back to the same things, like has sustainable advantage over time? And, and like and that's a really, you know, that's a really difficult judgment right now, um, but I think it's like one of these things that we, we have to do. But I totally agree with you, the quickness of the scale i- is, is, is unlike, it's like three, four, five years of what SaaS company, like your traditional SaaS companies were doing, we're seeing in under a year. And we have a whole portfolio of companies that are, that are like this, like i- it's amazing.

   12. HSHarry Stebbings27:27

       But this is, I find it kind of paradoxical, 'cause you've got two questions-

   13. EVEric Vishria27:31

       It is.

   14. HSHarry Stebbings27:31

       ... here, which is the $600 billion AI question, thanks David Kahn, the CapEx spend is so much, and the revenues are trailing so far behind. And then you also have the, the speed of revenue scaling is faster than ever, oh my gosh-

   15. EVEric Vishria27:44

       Yeah.

   16. HSHarry Stebbings27:44

       ... you almost think they're gods.

   17. EVEric Vishria27:45

       I, I don't worry about the 600 billion thing. I, I, I, um-

   18. HSHarry Stebbings27:48

       D- do you think that's the right question to ask is really my-

   19. EVEric Vishria27:50

       No, I don't. I, I, I like it hasn't really, I, I just I think like I go back to my software engineer example, like the, the prize is so big, like a- the prize is like forget about AGI for a second, the prize is so big even without AGI, like the prize is so big. And so like, yeah, the, the revenue will materialize. There's a lot to figure out. I was talk- we, we had a dinner guest yesterday, and, um, a- and, you know, we, we, we do these dinners, um, as a partnership with the guests, um, on Mondays, and, um, and, you know, one of the kind of conversations around it was we were kind of unpacking is like if you think about search, so search w- we started first seeing the search, the first search engines call it's 1995 or so, um, is when you started to f- see the first search engines, and then Google Series A was 1998, um, I believe, and, you know, and like immediately was like a better search engine and a better trap and everything else. But what, what I think is lost in time is, is like Google didn't figure out the monetization, and of course they did it through an acquisition, they didn't actually figure it out themselves. Like th- they didn't figure out the monetization of search until like '01 I think, and so like, or late 2000. And so we had like five or six years of these search engines, which anybody at that time was using them every day, and like there were, there were crappy display ads all over them, and like all kinds of stuff that was just totally like people I, and them, I think sure they were like paid search engines like people tried to do all kinds of things to figure out the monetization model. And so I would just say like we, I don't k- know that we figured out the monetization model, but I think what we can say very clearly is there is like customers perceive a lot of these products, not all of them, but a lot of these products as magic, which they are basically magic, and, um, and, and like they want them. There's a bunch of monetization that needs to be figured out, but I, I, I kind of don't worry about it, like i- it's like we, we will figure it out, um, and, um, and so like that's the, that's just the delay. And so I feel like, you know, and, and the reason the parallel to search is, is interesting is because it's like, hey, there was a new technology that was really powerful, search, web search, and like it took a while to figure out monetization, and like we have a new technology LMs that are really, really powerful, and like it's, we gotta figure out monetization on them, and like it's not gonna be a $20 a month subscription, that's not like the, the right way.... um, and it's not gonna be just like bundled API ca-... Like, it's, there's gonna be much, much more, um, sophistication and interesting models

6. 30:36 – 39:43

   Value in the Stack: Compute vs. Models

   1. EVEric Vishria30:36

      than that.

   2. HSHarry Stebbings30:36

      How do you think about value in the stack? Y- when we think about where value in the stack is today, it's obviously in compute. Nvidia has seen that. Uh, it's also in models with OpenAI. Evert, you know, your partner, Sara, wrote that models are the fastest commoditizing technology ever, which is a great statement.

   3. EVEric Vishria30:54

      Yeah. Yeah.

   4. HSHarry Stebbings30:54

      Uh, I've used it a couple of times in shows.

   5. EVEric Vishria30:56

      Yeah.

   6. HSHarry Stebbings30:56

      How do you think about where value accrues in the stack and where you need to spend most time aligned to that?

   7. EVEric Vishria31:02

      Yeah. I think the, I think the, the, uh, the quote, uh, uh, uh, t- so just like, "The foundational models are the fastest depreciating asset in human history," which I, which I, uh, which I, I, I think has turned out to be largely true.

   8. HSHarry Stebbings31:15

      Does that mean there's still great value in OpenAI?

   9. EVEric Vishria31:18

      I think that's a good question that, that is, um, really interesting because if you think about OpenAI and Anthropic and, and Meta and Google, um, and, you know, and then there's a whole bunch of others coming, xAI and Mistral and, um, and so for SSI now. Um, s- you know, I think the foundational model war, like, benefits us all in a way. Like, it's just, it's really, really good for, for consumers and people around it because it's just like they're pushing the state of the art so much. Um, in terms of value accrual, like, y- you know, I think for Benchmark, like, we have a, we, we have no foundational model investments, uh, thus far anyway. Um, and so, you know, that could be very bad or very good, I don't know. Um, but we don't. And then two, we have a set of, like, infrastructure investments, which I think are, are really interesting. So, um, we have Cerebras, which is a semiconductor and systems company, um, for AI, that we invested in and led their, uh, co-led, uh, with Foundation, their series A in 2016. So we've been working on it for eight years, um, as an example. Um, we have, uh, companies like Fireworks, which are an inference service, and others kind of at that infrastructure software layer. And I think those, like, you know, again, they're growing very, very quickly, like in ou- astoundingly quickly, um, and doing really cool things. But at the same time, you kinda have to ask like, "Okay, what are the foundational models gonna do and how are they gonna move up the stack?" And so this is, again, where I go back to you need great entrepreneurs who are like constantly updating their mental models and re-navigating.

   10. HSHarry Stebbings32:56

       Do you not think we just see all the foundation model companies just get acquired by the big players? We've seen Character, Inflection, Adept.

   11. EVEric Vishria33:03

       I don't think all the foundational model companies will get acquired by the big players.

   12. HSHarry Stebbings33:06

       If you are not, how can you f- how can you fund survival?

   13. EVEric Vishria33:10

       Y- well, I, I think this is a question, right? And, um, th- and they're gonna do it. But I think there's a set of people who certainly believe in the size of the prize. And so they've continued to be able to raise, you know, um, really tremendous amounts of capital, um, to train bigger and bigger models. Just to put it in perspective, like $100 billion, even for the, the oil state companies of technology, you know, doing a $100 billion acquisition is, is unprecedented.

   14. HSHarry Stebbings33:40

       Completely unprecedented.

   15. EVEric Vishria33:41

       Yeah, totally. T-

   16. HSHarry Stebbings33:43

       Has that ever happened before?

   17. EVEric Vishria33:44

       No, I don't think so.

   18. HSHarry Stebbings33:45

       But doing a 30 billion's not, and you only need to acquire the lic pref.

   19. EVEric Vishria33:49

       Yes. I mean, I think, well, I think there's two things, which is like if... $30 billion acquisitions are not unprecedented, and maybe you could say, like, in this world, you know, therefore 100 also is not like that big of a stretch. Like, that isn't that huge a multiple. But, um, but it, but it does feel like a big number to me.

   20. HSHarry Stebbings34:08

       It would also never get through antitrust.

   21. EVEric Vishria34:10

       Well, I think the antitrust thing is a big, is a big question.

   22. HSHarry Stebbings34:13

       Does AI today, do AI rounds break the Benchmark model? And I don't, I mean that slightly deliberately provocatively. But your fund sizes are very disciplined. You are hailed as the boutique provider of venture.

   23. EVEric Vishria34:26

       Mm-hmm.

   24. HSHarry Stebbings34:26

       Very tailored, very artisan. But these rounds are often... You mentioned some of the, you know, software creation AI companies. These rounds are like 50 million starting price.

   25. EVEric Vishria34:36

       I don't think so for two reasons. One is, um, you know, through, through 30 years of performance, I think we have unprecedented flexibility in what we do. And so if we wanna write a $50 million check, we can write a $50 million check, and we have, um, in cases. And so, like, and if we wanna write $150 million check, we can write $150 million check. If we deploy a fund in 18 months or a year, like, it's fine. It, it just... I, I think we have like, we can do whatever we want. So, uh, like, don't... The fund thing is almost like irrelevant artifact of history and accounting. Um, and so I don't, I don't worry about it there. So that, that's one part of it.

   26. HSHarry Stebbings35:16

       Does it not just-

   27. EVEric Vishria35:16

       And-

   28. HSHarry Stebbings35:16

       ... impact your decision-making, though? I totally get you. Of course you could. Like, every LP wants to be in Benchmark. It's the one fund that every LP is like, "Oh, I want Benchmark qu-" I totally get it. Of course they do. But if you have a 500 fund, yeah, you're just not as likely to write a 50 or a $75 million check.

   29. EVEric Vishria35:32

       You know, I think one of the things that we maybe think about almost not at all is almost never think about like fund cycle or fund timing or anything else. And we almost never think about or talk about portfolio construction, um, or anything else. Like we... It just doesn't... It's not... It does not come up. And so it is literally... It, it, it's a, it's really interesting 'cause when I talk to other venture capitalists, they're like, "Well, how do you think about the portfolio construction? How do you think about check diversity in company..." And just like, we never ever talk about it. And so it isn't a thing. Um, it, uh, like genuinely isn't a thing. And, you know, and again, as I said, like, that's a bunch of inherited goodness and flexibility. Um, but I, I think there's this amazing Munger quote and he said, "You know what? Finding good investment ideas is hard enough. Finding great companies is hard enough."... like, "Let's not over-constrain it," basically. And, like, that was the gist of what he said, it was just, like, "Let's not over-constrain it. Let's not add a bunch of things to it." So I, what I say back is, like, in our, in the Benchmark view and approach, what we are looking for is these exceptional opportunities, led by these exceptional people, that can turn into something extraordinary if things work. And, like, that combination is hard enough, and it-it's, like, hard enough to find.

   30. HSHarry Stebbings36:59

       Do you not think it helps provide a lens of focus to narrow your examination of where to spend time?
7. 39:43 – 48:54

   Are We Overestimating AI's Impact in the Short Term?

   1. EVEric Vishria39:43

   2. HSHarry Stebbings39:43

      To what extent with AI do you think we are overestimating what we can do in one year, and we're all getting ahead of our skis, and-

   3. EVEric Vishria39:49

      You know, one of, one of the beauties of this-

   4. HSHarry Stebbings39:50

      ... and underestimating?

   5. EVEric Vishria39:51

      ... one, one of the beauties of this, in our model, like I think about, if I go back to 2010 and 2011 for a second, you know, in that time, timeline, that's when Snapchat, Uber, Twitter, maybe 2009 too, Instagram, um, like, that's when we did the Series A's in, like, Instagram, Snapchat, um, Uber, and whatever, a weird round in Twitter, which was a g- a, a, a round, a rule-breaking round, by the way. Like, at that time, it was crazy. Uh, the round, the round that Peter led in Twitter at that time was, like, technically a Series C or Series D. It was, like, at, like, 200 pre-, 'cause it, the company had its history, right? With, with Odeo and everything else. And so, it was, it was a rule-breaking round. It was a good example of exactly what we were talking about earlier, which is like, yeah, you kind of have your, like, norms, and then e- every once in a while, you just have to be like, "Throw it all out and just do it." And, like, and, and, and that was a good example. But if you think about that, like, that body of work, which is, which was obviously, um, tremendous in terms of returns perspective, and, and, like, fast forward to today, and you're looking at the game on the field here, and, you know, we have to kind of ask ourselves, like, "Hey, are there extraordinary opportunities and extraordinary companies getting built here?" And if so, like, you, you, you just gotta do it.

   6. HSHarry Stebbings41:16

      You just gotta do it. Play the game on the field. I heard you say once, when it came to Cerebras, that Peter's role as your partner was to help enhance your instincts.

   7. EVEric Vishria41:29

      Yeah. He d- he did.

   8. HSHarry Stebbings41:32

      Uh, he's amazing. I have such a man crush on Peter. I haven't told him yet, so it's lucky that this is

   9. NANarrator41:36

      (laughs)

   10. EVEric Vishria41:37

       (laughs)

   11. HSHarry Stebbings41:37

       ... an interview with us. Uh, but, uh, m- my question to you there is, is that not dangerous? Should a partner not be the counterbalance, not the Duracell battery to your energy?

   12. EVEric Vishria41:47

       Well, I think both are true. My partners have o- over my 10 years at Benchmark, they have kept me out of countless companies that-

   13. HSHarry Stebbings41:58

       (laughs)

   14. EVEric Vishria41:59

       ... that, like, they, they, they, it, it, it's amazing. You asked a sector question earlier when we were talking about it is, like, there's, I, I spend a lot of time trying to, like, understand chemistry, um, my chemistry with an entrepreneur and, and try to figure out, like, am I gonna love working with this person? Do I believe this person's a learning machine? Um, you know, and, or not. So I, I spend a lot of time on that. I spend a lot of time trying to believe, like, do I think the insight is cogent or not cogent? Um, like, the insight that they have, and, like, does that, does it hold together? And, and I spend a lot less time on, like, the sector specifics because I just feel like I, I, like...... if I'm an F on a sector, like if with best effort I can get to a D plus, like that's not good enough, like and so I'd just rather like not. And I actually think this is, uh, this is maybe contrarian and total aside, but like I think this is why the memo writing culture at a lot of firms gets you in trouble, because you put a lot of information, y- y- you basically are, are, i- it encourages putting a lot of information that is like third and fourth order stuff into document as if that is impacting your investment decision, where like most of these investments, there's really like one or two questions that really matter, and like all energy should go to those, and everything else is kind of like unknowable, non-deterministic or irrelevant. So what Peter did, you know, in the case of Cerebras was, and I remember it really distinctly, I met the company first on a Wednesday, and I was like, "Why am I, why am I meeting a semiconductor company? Like this is so, so stupid. Like I, I shouldn't be doing this. Like we, we, we don't make semiconductor investments." This is maybe February, March 2016. I came out of the meeting and was like, "Wow." And so like the team was amazing, and then the insight was, was really keen and really sharp, and it's now totally accepted, but at the time it was like so, it was so sharp and so contrarian, or so not contr- contrarian's not the right word actually. What it was is unique and novel, like that's what it was. It, it was unique and novel. And so I came out and I was like this is interesting. We met again, so we called in, um, I, I called in a bunch of, uh, partners to meet on Thursday, and so a whole bunch of us, including some of the founders, including Bruce, um, wh- who you mentioned earlier, like he came in 'cause like, you know, like what do I know about semiconductors? Almost nothing. Um, well r- really probably nothing. And so like we call in Colin Bruce, who had actually done semiconductor investments, and like and discussion, so that was on Thursday, um, you know, I, I spent time one-on-one with Andrew on Friday. I talked... Bill and I had lunch with Andrew on Sunday. Um, I'm talking to Peter about it on Sunday night, and he's like, he, he's just totally discouraging me from doing the investment. He's like, "This goes against everything I've learned in, you know, in the industry, like this type..." Like he just like totally discouraged me. He hasn't met the company yet, he's just, like just based on my articulation of it. Monday, so I bring the company in, and I, you know, and my pl- peer was like, I was like, "Just have an open mind on it. Just have an open mind on, on like looking at it." He's like, "Of course." And so comes in on Monday, and, um, in, in our San Francisco office. Andrew pitches, and he had a, he had a term sheet, um, already, and so we were, we were running obviously, and, um, and he pitches, and at the end of the pitch, we're like debriefing, and you know, and we have, we have a system where like we talk, and then like you can ca- like the sponsoring partner basically can call for a vote or not. And, um, and Peter said like, "Call for the vote." He told me, he was like, "Call for the vote." And he pushed me, so he, he like pushed me to call for the vote, and, and to, to like push it over the line, after spending like literally 16 hours before, you know, trying to talk me out of it. And so like the answer is th- so yes my partners have kept me out of a lot of stuff, but what he was doing in that moment is he had updated his own evaluation of the opportunity and the idea, and was like, "Yeah, it makes sense. And also, Erik clearly really wants to do it and sees something here." And so like, you know, I'm 18 months into being a venture capitalist, and to have one of the greats of all time 16 hours before telling me, like, "This goes against everything," like, "Don't do it," like blah blah blah. And you know, and so I think that, that encouragement of like, hey there you saw something there, and, and then like the rest of the group saw it, and was like, "Yeah, there's something there." And like and so, I go back and think about that a lot, um, because each of us in a good partnership, each of us brings our own points of view, and our own biases and baggage, um, but our own insights as well, and so you got to put all of that together, and, and if you do that well, that's like, that's these partnerships at its best. And I've seen that, um, and I've, I've been lucky to see that at Benchmark a whole bunch of times.

   15. HSHarry Stebbings47:21

       In the deals where your partners have saved you, as you mentioned many times, what did they see that you did not see most often? If they'll-

   16. EVEric Vishria47:30

       Oh I'll, I'll give you a great example where Sara saved me. We were looking at a company and she's like, "Erik," and this goes back to your sector thing, it's just, it's like a perfect example that ties this thing together is like, she's like, "Erik, I'm telling you, you're used to looking at software companies. At this company, like gross margin, and like these unit economics, like really, really matter, and they suck. And there isn't a path to get better, and the entrepreneur is not engaged on the topic." And so it, it was just like a great insight, because like for us, you know, as your kind of traditional software in- investor in like doing things, it, it really doesn't matter. Like it's just like all of these things end up, you know, your SaaS companies are gonna end up in like between 75% and 83% growth mark. Like they're just gonna end up there, like it's fine, it works itself out. And so like, a company that starts there, like, you know, way less than them, it's just like whatever, and you'll, you'll fix that. And, um, but you know, I think it was like a great insight that like kept me out of it, 'cause there were a l- a ton of things that I loved about the entrepreneur.... um, and it, and it was really, like, a compelling individual. But I think her point on the nature of the business and the fit between the entrepreneur and the nature of that business in pre- specific, just was, was spot on. And so Sarah

8. 48:54 – 51:14

   Does a $3M Gross Margin Matter in the Long Run?

   1. EVEric Vishria48:54

      saved my bacon.

   2. HSHarry Stebbings48:54

      So I was talking to my, my partner the other day, who comes out of DST, uh, and so he's, like, trained on, like, gross margin and, like, real numbers guy.

   3. EVEric Vishria49:04

      Yeah.

   4. HSHarry Stebbings49:04

      And he's like, "Oh, the gross margin of three million in ARR, and oh..." And I'm like-

   5. EVEric Vishria49:10

      Irrelevant.

   6. HSHarry Stebbings49:10

      ... "Dude, no one gives a fuck."

   7. EVEric Vishria49:11

      Yeah.

   8. HSHarry Stebbings49:11

      "No one gives a fuck. It's three million in ARR."

   9. EVEric Vishria49:14

      Irrelevant.

   10. HSHarry Stebbings49:15

       "Gross margin in 10 years, I want no idea what it'll be like."

   11. EVEric Vishria49:18

       Yeah, true.

   12. HSHarry Stebbings49:18

       "And even then, if it's, if it's still a shit gross margin and it's go-go times, we can still get a great multiple. And if it's amazing and shit times, the IPO market..." There's so many fucking variables. I don't have a clue. It doesn't matter.

   13. EVEric Vishria49:31

       I, I, I totally agree. I, I, I think this goes back to the spreadsheet conversation. And why I think spreadsheet investors are gonna get wiped out or have a really hard time in this, in this era. Um, and I think SaaS was such a boon and gift to the investor bankery, like, uh, spreadsheet, spreadsheet investors, um, because it was, you know, you plug your stuff in and you figure it out, at, at scale, right? At, at the early stage, though, like I, I totally agree with you. Like people come in and they have like a, a million and a half and they're like talking about their net dollar retention or whatever, just like, "Come on."

   14. HSHarry Stebbings50:03

       It's like, who gives the fuck?

   15. EVEric Vishria50:04

       Like, yeah, it just-

   16. HSHarry Stebbings50:04

       It does- it doesn't matter.

   17. EVEric Vishria50:05

       It doesn't matter. It's... A- and none of that stuff in not a single company, I think I, I have now seen, um, I've worked on five companies that have gone from zero to more than, more than 200, um, in revenue. And, um, and like in not a single case did the economics at the very early stage, like, extrapolate all the way. Like it's just, it's, it's just not a thing. Not e- not even, not even the economics from at, when they were at 30 or 40 or 50 extrapolated to 200. Like it just, it isn't how it works. There's so much change that happens at these companies. And so, like, it just, uh, false precision around that is just dumb. Like y- and I think you can say, like let's take, let me take the flip side of it, which is, there are things that you can see at those stages which would tell you that this thing is like going into a wall or is gonna have to undergo a major transformation or like, like I think there are problems that you can see. But I think that the, the positives are not, are not really knowable that way.

9. 51:14 – 55:42

   Balancing Time Across Sourcing, Diligence, and Servicing

   1. EVEric Vishria51:14

   2. HSHarry Stebbings51:14

      Can I ask you, in terms of like how you spend your time, I spoke to Victor on your team, and he said, "Eric is so unlike most other VCs. He spends like 70% of his time with his portfolio."

   3. EVEric Vishria51:25

      Yeah, at least. Um-

   4. HSHarry Stebbings51:27

      I would love to understand how you think about the makeup of your time between sourcing, picking, and doing diligence and doing references and, and then servicing, helping portfolio. What does that look like?

   5. EVEric Vishria51:39

      I'm probably, at this point, I'm probably 80 or 85% on working on, on the portfolio. I mean, I, it, it's a lot. Um, and, um, yeah, and, and part of that's because whatever I'm on 12 or 13 boards, uh, I can't, can't remember. But a huge part of it is, is that, that is our model, like that is the Benchmark model in the sense, the Benchmark model is a, a concentrated portfolio of like very high conviction commitments. Like we're making commitments to entrepreneurs and, and it's a very, it's like it's very high concentration and very high conviction. And so like that, that is the nature of our model and I think that is-

   6. HSHarry Stebbings52:20

      Are you on too many boards? 12, 13 is nuts.

   7. EVEric Vishria52:24

      Um, it is a lot, um, but I, I, I think they're all at different stages. So it, it isn't as nuts as you, is, it kind of seems on the surface, 'cause like four or five of them are, are really young companies, right, that are, that are in their very early days. And like you said, I spend 80, 85% of my time on them. So it's not like I'm, you know, if I spent 60% of my time looking for new companies, then of course you wouldn't be able to spend that much time on your portfolio.

   8. HSHarry Stebbings52:51

      Final one for you. You said about call the vote. What does the vote look like?

   9. EVEric Vishria52:57

      Our vote system, which is somewhat irrelevant, but it's a way to kind of quantify people's feedback. So a company comes in, we all talk about it, you know, at this point in time, most of the time, like there's only five of us, right? So, um, at this point in time, you know, we would have chatted about the company and at least two or three partners would have met typically. And so you're, there, there's a decent amount of institutional knowledge about the company. And then, um, and then at the end, we, you kind of quantify, um, your feedback. And so it's a way for partners to quantify their feedback to others. And so our voting system is, you vote one to ten, you can't vote five. Six and above is yes, four and below is no. And it's kind of strength of conviction, right? If you, if you get a bunch of tens, amazing. That, that, I've never seen that happen. Um, and then, um, you know, if you get a four, like, this partner's telling you they didn't really like it, but it's not, whatever. If you get a two, your partner's telling you they're really discouraging you from doing it.

   10. HSHarry Stebbings54:03

       Have you ever got a one?

   11. EVEric Vishria54:04

       I don't know if you're gonna, if your next question is, what happens if you don't have the vote and you still want to do it? I have no idea. I don't know what happens.

   12. HSHarry Stebbings54:10

       Does that not go against being non-consensus, like seeing the beauty which others don't? Like-

   13. EVEric Vishria54:18

       Not necessarily. You know, I think there, there's-

   14. HSHarry Stebbings54:21

       Because you-

   15. EVEric Vishria54:22

       ... five of them. There's five of us.

   16. HSHarry Stebbings54:23

       You have to get a quorum. So you need to get three out of the five.

   17. EVEric Vishria54:26

       Um, I don't know that you have to get three out of the five. Like I said, I, I don't know what happens. This, this is, it's a very, Benchmark is a very high trust, like high confidence in each other model and structure, right? It's, and so-

   18. HSHarry Stebbings54:39

       So is it always five-zero?

   19. EVEric Vishria54:41

       No, I'm, I'm just saying nobody knows what the votes are except the sponsoring partner. If a partner wants to do something...... I think they could do it. You're getting feedback from your partners who you trust.

   20. HSHarry Stebbings54:53

       Why do the voter tool?

   21. EVEric Vishria54:56

       Um, it's, I think it is actually useful to quantify things. You get all this, you get all of this feedback, right? And anybody who votes a six on an investment does it apologetically. Like, if they, they have to be truly conflicting. It's, there's nothing strategic. That's managing politics. That's not managing making the best investment decisions.

   22. HSHarry Stebbings55:14

       Do you not think it's about, like, being all in, or like, "Hell no"?

   23. EVEric Vishria55:19

       Well, I think the sponsor, your, your sponsoring partner, or the, the kind of advocate, um, probably needs to be that. Um, but your other partners who are looking at it and trying to help you make a decision, I don't know that they have to be that way. They, they, you know, they have less information necessarily, and so they're gonna have, they, having their strength of conviction doesn't need to

10. 55:42 – 1:00:07

    Takeaways from Working with Bill Gurley, Peter Fenton & Matt Cohler

    1. EVEric Vishria55:42

       match yours.

    2. HSHarry Stebbings55:43

       Okay, we're gonna do two types of quickfire. One's a short quickfire, one's a slightly longer one.

    3. EVEric Vishria55:47

       All right, all right.

    4. HSHarry Stebbings55:47

       Quickfire on people, you've got one takeaway from working with Gurley, Fantin, and Matt Cohler.

    5. EVEric Vishria55:54

       Oh.

    6. HSHarry Stebbings55:54

       Okay, I just chose them because they're my favorites. Uh, sorry. (laughs) Uh, but and like historical as well.

    7. EVEric Vishria56:00

       Yeah.

    8. HSHarry Stebbings56:01

       Uh, so I thought I could do that. So, what was the biggest takeaway from working with Gurley?

    9. EVEric Vishria56:06

       Even great companies can be overvalued. But I think one of the things that, you know, that, that Bill is really good at is, is like thinking about fundamentals, right? He, he, he came from public market investing way, way, way back when, um, at the beginning of his career. He has that mindset, that analytical mindset. And so, you know, he can kind of, he, he thinks through that and says like, "Hey, on a fundamentals basis, like, you will trade sometime under, uh, 30 times free cash flow." And so like, that's a thing, right? Like, we're all, you and I were talking about like, what's the ARR number or the revenue and all this stuff. And so like, but like ultimately, you know, you, you talked about the four areas, um, which is sourcing, picking, winning, helping build, right? There's a really important fifth stage that nobody talks about, and not every venture capitalist gets to, which is exiting. Ultimately, we, our job is to return money back to our investment partners, right? And, um, and so when you kind of like think through that, you do have to ultimately, hopefully, everyone gets to a place where they're thinking about this, like, fifth step. Not everyone does. And in that place, you do have to kinda think about, um, these fundamentals. And so occasionally you have an amazing company, um, that you really believe in, um, but it can be overvalued too.

    10. HSHarry Stebbings57:32

        Love that. Um, okay, Fantin, what's the takeaway from Peter?

    11. EVEric Vishria57:36

        The insights around people, it's, it's very hard to put it into a, a lesson. But the insights around people and motivations, um, that Peter have, has, are unparalleled. And that, that is, his superpower is around people. Um, and y- I've described this before, but like, Peter and Bill, one of the things that's amazing about the two of them is they are very, they're very, very different style investors. Like, almost diametrically opposite in a bunch of ways. And obviously they have a lot of common ground, which is how their partnership was so effective for so long. You know, Peter is very much like people first. Bill is very much, I would say, like, market first. Um, and like, and that's, it's just a different, it's a different mental model in looking at these things.

    12. HSHarry Stebbings58:25

        I remember Peter once told me, "Price is a mental trap."

    13. EVEric Vishria58:28

        It is a mental trap.

    14. HSHarry Stebbings58:29

        And that, and he-

    15. EVEric Vishria58:29

        Well, there, there's a, there's a, he, he told me a version of that on one of the first investments I looked at at Benchmark in 2014, summer of 2014. You know, uh, the discussion was like, "Well, could you do it at 40 or 60 or whatever?" It's like some, some price. And I was like, "Well, I could do it at 40 and not at 60." And he's like, "Nope." (laughs) "Nope, that doesn't work. No, you can't, you can't, can't do that." Um, which I thought was like, and it, it's, it, it's totally like I, and I've said this now subsequently to, to new partners who've joined in, in my own way, where like, yeah, that's not, you can't, not allowed to make that, uh, that claim.

    16. HSHarry Stebbings59:09

        I remember also when I was debating whether I should get more operating experience before becoming an investor. He said, "Do you wanna be an investor?" And I said, "Yeah." He's like, "Then invest."

    17. EVEric Vishria59:18

        "Then be an investor," yeah, totally.

    18. HSHarry Stebbings59:19

        Yeah. Final one, Cohler. What have you learned from Matt?

    19. EVEric Vishria59:24

        Um, you know the thing that is ama- Matt is the best at, um, this like insight point that we've been talking about. He's the best at understanding the insight and the depth of an entrepreneur's insight. And that is Matt's superpower, is just like understanding the depth of the insight. Is the insight bullshit? Is it authentic? Is it really deep? And he is, he's Six Sigma on that. And he also, I, I, I mean, there's a lot of amazing things you can say about him. Matt says very little, um, and it is always insightful.

11. 1:00:07 – 1:08:22

    Quick-Fire Round

    1. EVEric Vishria1:00:07

    2. HSHarry Stebbings1:00:07

       Uh, the normal quickfire. What do you believe that most around you disbelieve, Erik?

    3. EVEric Vishria1:00:11

       I, I don't think that NVIDIA is going to be the only game in town. I don't believe NVIDIA's gonna be the only game in town on an infrastructure layer. Like I just, and I think the entire setup right now is an assumption that if AI is real and here to stay and there's real ROI, then NVIDIA just continues to run at this level. And I, I, I don't believe that.

    4. HSHarry Stebbings1:00:40

       Ooh. Uh, you say th- that's a good one. Credit to you, Erik. That's fantastic. (laughs)

    5. EVEric Vishria1:00:46

       I, I, I, I just, yeah, I don't believe that.

    6. HSHarry Stebbings1:00:48

       Which venture investor outside of Benchmark do you most respect?

    7. EVEric Vishria1:00:52

       ... there's so, so many. Um-

    8. HSHarry Stebbings1:00:55

       Good. You've got one.

    9. EVEric Vishria1:00:56

       (laughs) I've got one.

    10. HSHarry Stebbings1:00:59

        (laughs)

    11. EVEric Vishria1:00:59

        Um, well, you know what? I, who I have to say? I'd have to say Getz, and, Jim Getz. And, um, and the reason I- I would say Jim Getz, um, is, well, one, Jim is the one who first told me I should get into venture. And so I'm eternally grateful to him for that. Um, he said that to me in '08. Um, and so, um, it took me six years to figure out that he was right. But I, but I, I'm super grateful for him for that. Um, but two, you know, we talked about this. Like, there, there's almost nobody who has, um, who's had wins in consumer land at the scale of like WhatsApp, and wins in enterprise land. And he's done it over and over. Um, and so to have like Palo Alto Networks and WhatsApp is just in- insane. And obviously, he's had many, many other wins. And so, um, he, he's been a spectacular, uh, spectacular investor and, and I'm eternally grateful to him.

    12. HSHarry Stebbings1:02:02

        Why did you not join Sequoia?

    13. EVEric Vishria1:02:04

        I, I, just like at that time ... So at, in '08, uh, when I talked to them, um, I really had it in my head that I wanted to be a founder. And I'm super glad I did. I had certain conversations, but came up with the idea for RockMelt. And so, Tim Howes and I, who's my co-founder, pursued RockMelt. And then five years later, you know, RockMelt went through our ups and downs. We were bought by Yahoo in 2013. And then, um, you know, a year later I joined Benchmark.

    14. HSHarry Stebbings1:02:35

        And you didn't go back to them?

    15. EVEric Vishria1:02:37

        I did not. Different time. I think, you know, Sequoia, like a lot of firms, hires people quite early in their careers and like grows their own. You know?

    16. HSHarry Stebbings1:02:48

        Are you, are you ready for my hardest one?

    17. EVEric Vishria1:02:50

        Okay.

    18. HSHarry Stebbings1:02:51

        This is off schedule. This is like for true pros.

    19. EVEric Vishria1:02:53

        All right. All right.

    20. HSHarry Stebbings1:02:54

        But this has been so good. Okay. The hardest things in life or the heaviest things in life are not iron or gold, but unmade decisions. What unmade decision do you have that weighs on you most?

    21. EVEric Vishria1:03:08

        I don't know. I can think of several little things that I would have done, but I don't know. We had early acquisition interest in RockMelt. And I think that, that, that was probably something that I should have like leaned into more in retrospect. So, like that's- that's an example. And that would have been a very different, like ... But in the scheme of things, like looking back now, it's 2024, would it changed anything? Probably not. It would've been fine. Like I, uh, we would have sold the company two years earlier or whatever, and maybe would have made more. And you know, th- this is the whole, um, what's that children's story about the, the horse rider and the soldier and the conscription? Have you heard the sol- the story?

    22. HSHarry Stebbings1:03:54

        (laughs) No.

    23. EVEric Vishria1:03:56

        Uh, it's a, it's a really amazing story. So like, the- the- the summary of it is, is like there's a, it's like ancient China and there's a, there's a draft. And so, um, uh, the, the first part of it is, there's a family in rural China and they get a horse. And, uh, this kid finds a horse. And the villagers were like, "Oh my God, he's so lucky. He's so lucky. He's so lucky." And the wise man is, is like, "We'll see." And the kid's riding the horse and breaks his leg. And then the villagers are like, "Oh my God, he's so unlucky. He's so unlucky. He's so unlucky." And the wise man is like, "We'll see." And then there's a draft, a military draft. And the draft people come to this rural village, and they draft everyone except the kid with the broken leg, 'cause he has a broken leg. And the villagers were like, "We're so lucky. He's so lucky." And you know, and the wise man's like, "We'll see." And so it just, it's a great a- a- and so I s- I say that 'cause it, and it relates, it relates to my RockMelt experience and kind of where we started, which, which is founding and building companies really, really hard. And you have to have a lot of, um, determination in order to do it. And you go on these ups and downs, and I certainly did. And, um, and ultimately, we didn't realize the potential of what we wanted. But, you know, did it work out or did it not? And in the, in the fullness of time, I'm like, I couldn't be happier where I'm at. And thankfully, those team members, they're at great places and great companies. A whole bunch of them work inside of the portfolio that I work on, which I'm super grateful for. And, um, and so, you know, we'll see.

    24. HSHarry Stebbings1:05:46

        Reminds me of the businessman and the fisherman. I don't know if you've heard that one.

    25. EVEric Vishria1:05:49

        I haven't heard it. No.

    26. HSHarry Stebbings1:05:50

        Oh my God.

    27. EVEric Vishria1:05:51

        Oh, uh, yeah.

    28. HSHarry Stebbings1:05:52

        I can-

    29. EVEric Vishria1:05:52

        Yeah. I- I- I have heard of this one. The, where it's just like, "Well, what would you do with all that money?" "Well, I'd retire in a small fishing village." Yeah. Totally.

    30. HSHarry Stebbings1:05:58

        Yeah.

Episode duration: 1:08:32