The Exchanges

Q ask, with traditional firms, when they bring in partners like Sam, they have a lot of structure around them, a lot of mentorship, they kind of sit with you in boards, and they kind of learn craft of venture beside you. Founder's firm is obviously a lot less structured than, like, traditional firms. How do you think about providing those same kind of positive educational guardrails to someone like Sam?

A Oh, he and Sam strategize all the time. Like, you know, I, again, I don't try and, I could never do what Sam does, right? So I don't try and, like, Tell them, oh, here's how you should do this, but we strategize about Angles that he could be playing in order to see, pick, and get into the best deals all the time. And those are some of our most fun conversations when we're just like strategizing about how to leverage his strengths, which he is the best in the world at understanding actual sales of high growth tech companies. And again, for founders listening, like they know this, right? He is a guy that you want to talk to because nobody knows this better than him. And he needs to then leverage that into seeing the best high growth You know, companies that can utilize his skills and then grow into other things from there. Remember, I'm a gamer, you know, true and true, right? Like I, I just focus on what are my strengths? What are my, you know, the, the current things that I have that nobody else has? How do I exploit those? How do I leverage those in a way that nobody else can catch up with? And that's what I talk about with Sam all the time too.

AI assessment note: “we strategize about how to leverage his strengths”

Q I just love that. What makes the best strategy dinners with top founders and what makes the strategy dinners?

A Where it's very clear what the, the, the moat is. It's very clear what the unique, you know, thing that this company has that nobody else has is. And then we can really talk about leveraging that into the next level and beyond. That's what I love. I love focus. I'm very open to, you know, and a lot of people can say this, but I don't think they're good at it. Like, I think at Founders Fund, we are simply just Really good at being open to the fact that there are multiple different strengths, moats, uniqueness, you know, things about people that other people can't see. A lot of, a lot of firms are looking for tracked founders, or like, you know, they have a good sense of what they're looking for. I'm like, I have no idea what I'm looking for. Surprise me with something that is truly unique, and I'm in, right? Regardless of what it is. Um, and so, I love that when you're dealing with a company, a founder and a company that know what their strengths are and are very honest about what their weaknesses are, and we can talk about leveraging the strengths of the company, um, into a much more dominant situation. That is strategy gaming one-on-one. Um, and that's what I love.

AI assessment note: “Where it's very clear what the, the, the moat is.”

Q For those that do, like, shell shock, you may as well leave. For those that do work, you've seen partners rise through the ranks very, very efficiently and well. Are there commonalities in what makes them rise through the ranks versus the shell shock but fall?

A Yeah. I mean, in this bit, again, the, the, the investors that are waiting around for pure, perfect information are not going to last. However, so therefore, and you know, there's all this debate. There's, I see a lot of chatter on the internet, like, oh, there's no, this whole concept of gut in investing is nonsense. I'm like, what are you talking about? Like, when do you ever have perfect information? Like, you can't just like analyze a business plan and know, oh, this is going to work. That's like total nonsense. Right. And so the, the, the, the team members that we have. Yeah. Take the punch in the gut from these companies and learn from it and do maybe make some refinements on your strategy, but unless you can keep leaning into your strengths, just leave. Right. If you're too shell-shocked to like leverage, you know, what made you special, then you're just not going to last in this business at all.

AI assessment note: “Take the punch in the gut from these companies and learn from it”

Q Can I ask, when you look back at 21 and 20, on reflection, do you think you deployed too fast?

A Um, yes. In 21, that said, like, You know, we had great, we had our best year ever in 20, 21, right? Just because we kind of got our, our strategy has always been to distribute shares slash capital right when we can in companies simply because we don't think we know the public markets better than anybody else. Um, what we do better than anybody else is private company investments. And so why would I do anything else? And so You know, you had to make decisions in 20, 21 on whether you had a bunch of companies go public, it was kind of a crazy year for venture capital, and you had to make a decision on whether you held Held those or distributed. And we've just always had a history of distributing these shares at lockup just because, you know, we, we, we don't know more about the private, about public company investing than anybody else. And so we tend to not hold those.

AI assessment note: “Um, yes. In 21”

Q For those that do, like, shell shock, you may as well leave. For those that do work, you've seen partners rise through the ranks very, very efficiently and well. Are there commonalities in what makes them rise through the ranks versus the shell shock but fall?

A Yeah. I mean, in this bit, again, the, the, the investors that are waiting around for pure, perfect information are not going to last. However, so therefore, and you know, there's all this debate. There's, I see a lot of chatter on the internet, like, oh, there's no, this whole concept of gut in investing is nonsense. I'm like, what are you talking about? Like, when do you ever have perfect information? Like, you can't just like analyze a business plan and know, oh, this is going to work. That's like total nonsense. Right. And so the, the, the, the team members that we have. Yeah. Take the punch in the gut from these companies and learn from it and do maybe make some refinements on your strategy, but unless you can keep leaning into your strengths, just leave. Right. If you're too shell-shocked to like leverage, you know, what made you special, then you're just not going to last in this business at all.

AI assessment note: “take the punch in the gut from these companies and learn from it”

Q Did becoming a father impact your mindset investing or how so?

A In, well, two things, right? I used to be able to do this job with, you know, every night I was having dinner with a different founder or, you know, I was, you know, doing stuff at odd hours and doing all kinds of stuff. Right. And now post having two kids, that's just a lot harder. So I guess there's, there's the mindset and then there's the physical and, you know, I'm with my kids for dinner every night. Right. Like, and so it's harder and harder to do, uh, strategy dinners, uh, with, with, with, with founders. Um, and in terms of a mindset of knowing that I need to get better at certain things that I'm not good at, well, you need to do that with your kids, right? Because, you know, you don't want to, there's lots of things you can outsource in life, but child raising is not something you want to entirely outsource, right? Like, you need, you want to spend time with your kids, and I do, and so I suck at a lot of those things, and needing to get better at those things is, is hard for somebody who's always put skill points into things they were already good at.

AI assessment note: “now post having two kids, that's just a lot harder.”

Q ask, with traditional firms, when they bring in partners like Sam, they have a lot of structure around them, a lot of mentorship, they kind of sit with you in boards, and they kind of learn craft of venture beside you. Founder's firm is obviously a lot less structured than, like, traditional firms. How do you think about providing those same kind of positive educational guardrails to someone like Sam?

A Oh, he and Sam strategize all the time. Like, you know, I, again, I don't try and, I could never do what Sam does, right? So I don't try and, like, Tell them, oh, here's how you should do this, but we strategize about Angles that he could be playing in order to see, pick, and get into the best deals all the time. And those are some of our most fun conversations when we're just like strategizing about how to leverage his strengths, which he is the best in the world at understanding actual sales of high growth tech companies. And again, for founders listening, like they know this, right? He is a guy that you want to talk to because nobody knows this better than him. And he needs to then leverage that into seeing the best high growth You know, companies that can utilize his skills and then grow into other things from there. Remember, I'm a gamer, you know, true and true, right? Like I, I just focus on what are my strengths? What are my, you know, the, the current things that I have that nobody else has? How do I exploit those? How do I leverage those in a way that nobody else can catch up with? And that's what I talk about with Sam all the time too.

AI assessment note: “I don't try and, like, Tell them, oh, here's how you should do this”

Q It's refreshing. Uh, can I ask what was your most successful investment ever, Brian, today?

A Oh, I don't know. I mean, we, we, you know, we've had a, we've had a bunch of these things, um, in terms of like the returns, tons of stuff. Stencentrics, Affirm, you know, Airbnb, we'll see you without, you know, Stripe. I mean, we, we, we, we, we've had, we've had a lot, I mean, and then there's SpaceX, right? And I, I'm not going to talk about like me personal, but from a founder's fund perspective, we've had a, we've been fortunate to have a lot of successful investments. And again, just as part of our, just the We don't have hubris about knowing the public markets better than anybody else with the fact that we were able to distribute. You know, end of 2021, when a lot of people kind of held was worked out in our favor this time.

AI assessment note: “I'm not going to talk about like me personal, but from a founder's fund perspective”

Q Can I ask, have you ever thought there was a moat, and actually you overemphasized it, thought it was stronger than it was, and it didn't pan out the way you thought it was?

A Yeah, yeah, yeah. You know, like, you're not going for, this is such a generic thing to say, but you're not going for, like, Having all, you know, no way in venture, especially when you do these like massive bets, are you going to have every single one of these be right? Nor do you need that, right? You're, you're trying to maximize your upside. You're not trying to minimize your downside. This is why I've never understood these like, oh, we're going to do a round with three X participating preferred and around with a whole bunch of structure. I mean, like I get that from a, if I'm a debt guy or I'm a bank guy, like, yeah, that's exactly what you want. If I'm a, Upside venture guides. Like that's just totally irrelevant. Like what do I care if I like get two X my money back in a downside scenario? It's like the same thing as going at zero. And so I just maximize only for, for, for upside. And so of course I'm going to be wrong. Um, I'm wrong all the time. It's, you know, I've always said this is what I say to founders too, right? There's never somebody who needs perfect information before making a decision is going to be terrible at this job. Um, You do, you never have perfect information, um, in this job ever. If you need it in order to do a deal, don't do this job. And so because of that, you're going to be wrong. So all you can really do is follow your gut, whether you're me…

AI assessment note: “And so of course I'm going to be wrong. Um, I'm wrong all the time.”

Q No, I totally agree. I think it's all very founder-dependent. Speaking of kind of founder-dependency, you've seen Palmer over many years in different cycles. Like, how's Palmer, as a leader, how do you think he's developed?

A So, there's the stuff that you read about Palmer, and it's just like, again, the media just wants to attack, attack, attack, and they're gonna do what they're gonna do. But once you actually know him, and know both what a good person he is, as well as how genuine, transparent, and smart he is, people want to work for For a guy like that and work with a guy like that. Again, people that don't just take mainstream media as the word of God, right? Like, but people who actually take the time to get to know somebody, you want to work with a guy like that. So how I've seen Palmer evolve, it's like, he's just, you know, leaning more into more into his strengths, which is he is a truly good person, a ridiculously brilliant person and a generous person. And so the more people see that and the more engineers see that and product people see that the more they want to work with the guy.

AI assessment note: “So how I've seen Palmer evolve, it's like, he's just, you know, leaning more”

Q It's refreshing. Uh, can I ask what was your most successful investment ever, Brian, today?

A Oh, I don't know. I mean, we, we, you know, we've had a, we've had a bunch of these things, um, in terms of like the returns, tons of stuff. Stencentrics, Affirm, you know, Airbnb, we'll see you without, you know, Stripe. I mean, we, we, we, we, we've had, we've had a lot, I mean, and then there's SpaceX, right? And I, I'm not going to talk about like me personal, but from a founder's fund perspective, we've had a, we've been fortunate to have a lot of successful investments. And again, just as part of our, just the We don't have hubris about knowing the public markets better than anybody else with the fact that we were able to distribute. You know, end of 2021, when a lot of people kind of held was worked out in our favor this time.

AI assessment note: “we've been fortunate to have a lot of successful investments.”

Q Can I ask, have you ever thought there was a moat, and actually you overemphasized it, thought it was stronger than it was, and it didn't pan out the way you thought it was?

A Yeah, yeah, yeah. You know, like, you're not going for, this is such a generic thing to say, but you're not going for, like, Having all, you know, no way in venture, especially when you do these like massive bets, are you going to have every single one of these be right? Nor do you need that, right? You're, you're trying to maximize your upside. You're not trying to minimize your downside. This is why I've never understood these like, oh, we're going to do a round with three X participating preferred and around with a whole bunch of structure. I mean, like I get that from a, if I'm a debt guy or I'm a bank guy, like, yeah, that's exactly what you want. If I'm a, Upside venture guides. Like that's just totally irrelevant. Like what do I care if I like get two X my money back in a downside scenario? It's like the same thing as going at zero. And so I just maximize only for, for, for upside. And so of course I'm going to be wrong. Um, I'm wrong all the time. It's, you know, I've always said this is what I say to founders too, right? There's never somebody who needs perfect information before making a decision is going to be terrible at this job. Um, You do, you never have perfect information, um, in this job ever. If you need it in order to do a deal, don't do this job. And so because of that, you're going to be wrong. So all you can really do is follow your gut, whether you're me…

AI assessment note: “You're, you're trying to maximize your upside. You're not trying to minimize your downside.”

Q Who's the best board member you've sat on a board with, and why?

A Usually the best board members, board members, not, not necessarily investors, right, but the best board members are ones who, Really know the, the sector that the company is, and know people in that sector really well, such that they can easily connect, um, said company with other people that might be relevant to them, right? Like, that's not the same as the best strategizer, right? These people could be very stale on strategy, but they're, they're the best, the board, best board members. You do want board members who are good at Governance, Rolodex, financials, right? That's not me. Um, and so, you know, the best board members I've seen are ones where it's like, they're just so good at that specific for that specific company, you know, that And I don't, so I don't think there's any investor per se, right? I think that the best board members are like the specific ones, the outside ones that you find that really are truly door openers for your company.

AI assessment note: “the best board members are ones who, Really know the, the sector”

Q talking about actually a really challenged time for Benchmark, and I can't remember when it was exactly. I was just kind of like, in my head and from the outside, Founders Fund has just been this continuous progression of success. I'm sure internally there are moments when there's like a year or two where it's actually harder. Can you take me to one of those years or two, and why?

A Well, I don't know. I mean, I think one of the reasons that we're successful is Is that we, You know, as a firm, we have no dogmas, or we try and have no dogma, or we have try and have no, oh, this is how you do it. I think, honestly, I think we are just better at adapt or die than other people. Like, we're better at realizing that even the things we say, said last year, or the things, honestly, that I'm saying on this show, they might be total bullshit, right? Like, you have to change it, right? Um, if, if the world changes, you change, and we're really, really, really, Really good at not having specific set views that are set in stone here, which is why, you know, one of the things I think we've done really, really well is our hiring. We've been able to Focus our hiring on people that come in that have a unique, truly unique angle, or moat, if you will, that makes them, you know, specifically special, whether it's in the sourcing, picking, connections, getting in, anything, right? If it's a unique strategy that is differentiated from the current partners that are here, we are interested in hiring that person, and that's really paid off. Like our focus on not hiring clones, our focus on not hiring just people who are generically good, our focus on just hiring people who have unique, you know, strategies and strengths that can pay off is what we've been really good at. You know…

AI assessment note: “Well, I don't know. I mean, I think one of the reasons that we're successful”

Q talking about actually a really challenged time for Benchmark, and I can't remember when it was exactly. I was just kind of like, in my head and from the outside, Founders Fund has just been this continuous progression of success. I'm sure internally there are moments when there's like a year or two where it's actually harder. Can you take me to one of those years or two, and why?

A Well, I don't know. I mean, I think one of the reasons that we're successful is Is that we, You know, as a firm, we have no dogmas, or we try and have no dogma, or we have try and have no, oh, this is how you do it. I think, honestly, I think we are just better at adapt or die than other people. Like, we're better at realizing that even the things we say, said last year, or the things, honestly, that I'm saying on this show, they might be total bullshit, right? Like, you have to change it, right? Um, if, if the world changes, you change, and we're really, really, really, Really good at not having specific set views that are set in stone here, which is why, you know, one of the things I think we've done really, really well is our hiring. We've been able to Focus our hiring on people that come in that have a unique, truly unique angle, or moat, if you will, that makes them, you know, specifically special, whether it's in the sourcing, picking, connections, getting in, anything, right? If it's a unique strategy that is differentiated from the current partners that are here, we are interested in hiring that person, and that's really paid off. Like our focus on not hiring clones, our focus on not hiring just people who are generically good, our focus on just hiring people who have unique, you know, strategies and strengths that can pay off is what we've been really good at. You know…

AI assessment note: “I think one of the reasons that we're successful is Is that we”