Insight
Fenton: Late-stage investing dilutes venture fund return multiples
“If we start, all we're doing, we're investing more money in late stages. We're lowering our returns. That's all we're doing because our commitment is fixed. It's not like we're going to be more committed. So we're, you could say we're getting more cash on cash…”
Prediction Open · timeframe Oct 2052
Fenton: Benchmark probably won't be around in 30 years
“Benchmark probably isn't going to be around in 30 years.”
Assertion Partly supported
Fenton: Docker's valuation plummeted from $1.5B to zero, stranding Benchmark
“So last time I did an all hands meeting at Docker was three years ago, and there were 60 employees that, that we'd spun out of the prior company, and the valuation was zero. So we'd gone from over a 1,000,000,004, 1,000,005 to zero, and I was working with some…”
Insight
Fenton: A VC's true customer is the founder's purpose, not the founder
“Our customer isn't, it's not the founder. We say it is, but it's really the purpose of the founder, and it turns out that purpose, if that's the customer, One of us may be deviating from that, and we can keep each other accountable, and that happens internally…”
Insight
Fenton: Every 2–3 years a $100B company is founded regardless of cycles
“We have faith that every year, some number above zero companies will be founded that are going to be worth more than ten billion dollars, and then about every two or three years, a company's going to be found out it's going to be worth more than a hundred bill…”
Disclosure
Fenton: Benchmark GPs pay standard LP fees and carry on personal commitments
“As an LP. And that's, well, that's crazy. And this is-... But for this, for the super majority of my investment in benchmark, I'm paying limited partner rates and management fees.”
Insight
Fenton: A venture firm's quality is measured by how good its failures are
“One benchmark, no pun intended, I guess, one measure of quality for the firm will be how good our failures are. Webvan was a really good failure.”
Insight
Fenton: Well-executed bad ideas are dangerous because investors keep funding them
“It turns out that a bad idea well executed is a problem because then you give it more money. Or a good idea, poorly executed, well, that hurts because you think, oh, I mean, we can think of companies like Friendster and think, oh, but the bad idea of poorly ex…”
Disclosure
Fenton: Benchmark took equity in Tinder without investing cash
“There have been examples and we're, we don't, there's some awkwardness to talking about it publicly. One of the ones is probably a good example is Tinder. And, you know, Barry Diller said, what do you want? And it's like, well, we want equity in Tinder.”
Opinion
Fenton: AI and crypto lack Big Tech incumbency barriers, unlike AR/VR
“I think that somewhere between AI, crypto, and
Not AR VR, sorry for the future AR VR.
But I think those areas don't have the incumbency of some of the traditional, you know, network effect giant trillion dollar market cap companies.”
Disclosure
Fenton: Benchmark will not expand to eight partners or launch a growth fund
“Now that doesn't mean we're going to have eight partners
And a growth fund.
And then there's some hard lines where you just say, but this is, you know, getting closer to people who are embody our values, but at a different stage in their career, that's okay wi…”
Insight
Fenton: Company culture is permanently set by its first few employees
“The founding two or three employees set the culture. And it doesn't change unless there's some catastrophic event where it has to get reborn, but good luck with Elon at Twitter. You know, that culture was set in motion, and its root system goes so deep.”
Assertion Not checkable as stated
Fenton: Every partner who has left Benchmark fired themselves
“In the case of everyone who's left this firm, and I've never seen this in the history of investing, you study all these firms, every single partner fired themselves”
Assertion Not checkable as stated
Fenton: Benchmark's largest LP commits $25M to $30M per fund
“They're like, 25, thirty million. I could get it wrong. I'd probably piss one of them off if listen to this.”
Assertion Not checkable as stated
Fenton: Benchmark committed to his last two deals in under a day
“And the last two or three investments I've made were an example of the following, which is that there's, there was an angel in the ecosystem who saw a deal going down and they said, you know, you probably should talk to benchmark. And when they did, we committ…”
Insight
Fenton: Secondary selling sharply focuses founders on securing the highest price
“One of the things I found is when there's secondary selling, it does tend to clarify people's interest in price. It's one thing if you're just selling this, you know, equity on the cap table, but when you're selling your own shares, you start to get really foc…”
Insight
Fenton: Venture firms are ultimately just a collection of habits
“Firms are full of strategies that aren't coupled to reality. And if you look at a venture firm, eventually it's just a collection of habits.”
Insight
Fenton: Rectangular tables embed power hierarchies; round tables atomize groups
“The problem with the table is that you either have a rectangular structure, which carries power structure embedded in it or you have a circular table which atomizes the group.”
Insight
Fenton: Investors who lack time for the next meeting should stop practicing
“When I don't have enough time to take that next marginal meeting, I shouldn't be practicing.”
Disclosure
Fenton: He proposed cutting Benchmark's fund size in half
“I'm the person that the last discussion of, like, we were going to do it the same size fund. I'm like, why don't we cut it in half? And people thought, well, then people, others will say we're becoming irrelevant.”
Disclosure
Fenton: Benchmark partners book most of their own meetings
“We book most of our own meetings. Like I, you know, we do this to ourselves because we're not below anything or above anything.”
Peter Fenton