Early Stage and Enterprise Investing (with Chetan Puttagunta, General Partner at Benchmark) 54:14

All right, LPs, we have a special treat today. We are fortunate to be joined by Chetan Putugunta, general partner at Benchmark. Chetan is a board member and led investments in Elastic, Sketch, Duffel, and you're going to have to help me with this one. Packaderm. Packaderm. He previously led investments and held board positions at Acquia, MuleSoft, MongoDB, and

and several others. It goes without saying he has a pretty unbelievable track record, especially in the enterprise, and he holds a BS in electrical engineering from Stanford University. Chetan, welcome to the show. Thank you so much for having me. As you both know, I'm a huge fan and I'm excited to talk with you guys. Yeah, good to have you on this side of the table. Exactly. It's great.

So we're going to break this episode into a few sections, the first of which we want to talk about benchmark. The Acquired Limited Partners are a pretty savvy group, and I'd say most of the audience is aware of the most publicized, high-level things that make benchmark truly unique. So there's five partners. There's no associates. It's an equal partnership where all the five share equally in the profits. It's a very

very disciplined firm with a fund size that, unlike many of their peers, has not grown dramatically over time. They primarily lead high conviction, Series A investments, and always take a board seat. As much ink has been spilled, there are some of the best returns in history from any venture firm that have come out of Benchmark in multiple eras. So Chetan, my question for you is, what are some of the things that are less talked about but totally integral to the firm's operations?

We're pretty open about this, which is that there is a respect to the craft of venture capital that I think is pretty under-talked about in the ecosystem, which is that

The overall exercise of partnering with founders to help them build and create something really meaningful, innovative, and enduring that lasts over a long period of time is an exercise that takes a lot of effort, time, and commitment. And so spending a lot of effort against the craft itself of company building is one that takes a lot of time, takes a lot of energy, and that commitment to that craft I think is...

Something that's very easy to talk about, but very, very hard to actually do in practice. It means being very disciplined about how you spend your time. It means very disciplined that you don't spend any time scaling the partnership or the firm. All your effort is focused on helping scale the companies you're partnering with. That's a totally different mindset than what I think is most prevalent in the ecosystem and what most people talk about.

And so every single function that you could think about that a founder wants to talk to you about is a one-to-one interaction that is about the firm helping the founder. And making that commitment is one that we take very, very seriously. And how about firm operations? So how does it work over the course of a week? When do you see your partners? How do you make decisions together? That sort of thing.

Look, we get together every Monday. We start at 10 a.m. And then we just have a really open-ended conversation. And some topics take a really long time. And some topics don't take that long.

The great thing is having a small group is that when you sit around the table, you can be very transparent with your partners. You're all equal. There's no CEO. There's nobody running the meeting. It's very collaborative. And you can be very open about what's going on in the portfolio. You can be open about the things that you're looking at that are particularly interesting. You can also be pretty open about things that aren't working well.

and saying, you know, I really need help here. I'm helping a company recruit a VP of sales. And that process is taking a really long time. We're having trouble creating top of the funnel. We're having trouble with the process, etc. Can we all huddle and figure out how to really help here? What are the things that we can do? And so that open-ended conversation allows you to go deeper than just

than what I had experienced before, frankly, which is, you know, if you have a lot of people around the table, as a result of that, you have a lot of topics that you need to cover, right?

And then you're constantly like, okay, well, we're running out of time and I've got 10 things to cover. So can we stop? Can we get to a quick conclusion? Can we table this? Can we take it offline? When's a good time to have a deeper dive on this? That's right. And so you're constantly pushing things off. Having lived on both sides of firms that also one operate one way and one the other. Yeah, totally, totally agree with that. So I get a bunch of follow-up questions. One, super tactical. I'm curious for our own use.

Do you guys use any tools to like, do you have like a Google doc of like an agenda for every like Monday meeting or do you just like everybody comes in and talks about what you want to talk about? I think this, this is surprised a lot of people. We are very old fashioned in that the human, the human conversation is our primary conveyance of, of doing things.

And, you know, we all sit around that one table. Everybody there is in person. Everybody's super engaged. And so as a result of that conversation,

you get to ask the questions you want to ask. You get to have the second, third derivative conversations in the open. You get to do it as a group so that you're not looping back and leaving somebody out and everybody's present. And so you're having actually fulfilled conversations. Topics actually reach a conclusion that way. So yeah,

Yeah, I mean the primary mechanism is sitting around a table and just talking. And that commitment is actually really hard for a venture firm to do. You have to carve out everybody's time for that long to do that. Exactly. One, carve out everybody's time. Two, if you're focused on deploying capital efficiently and you have a lot of capital to deploy, time becomes something that you have to scale up.

And unfortunately, there's only a limited amount of time. Oh, man. Don Valentine used to talk, I don't think we said this on the episode, but he had this saying in the research that I think pervades Sequoia to this day of return on time. It's all about return on time. Right. And it's hard to make a space for like, we take all day, everyone's time. Yeah, that's right. And so this goes back to why $425 million funds in today's world of venture capital, a fairly long fund cycle, right?

And a very measured pace of investment. Two follow-up questions on how you guys operate. Mondays makes total sense. Tuesday through Sunday. And ask us, we're thinking about this at wave two for us. How much are the board members interfacing with portfolio companies when issues come up versus the firm? Because you guys have a lot of firepower across the five of you and a lot of different skill sets and opinions. How often are you drawing on your partners for...

Constantly. We're on a group text and we're constantly talking to each other. Blue bubbles or green bubbles? I will say that we are very open to lots of devices. And folks like to switch between devices constantly. So that's an extension of the Monday conversation. And

There are things that come up during the week and we're constantly on that. And then somebody will raise their hand and say, I can help with that. And then two people will go off and go handle that. No matter where anybody is Tuesday through Sunday, we're all interconnected. We all know that we're all committed to helping each other. Aligning incentives is a very powerful thing. And if everybody is an equal owner of the firm...

That means you're an equal owner of every portfolio company. Exactly. And every portfolio company success is equally important to everybody. Yeah.

And a lot of people say that. By the way, there's this thing called Slack you guys should consider. Okay, second follow-up question. You know, Benchmark over the years, there are four original founders. You guys have, you know, we'll talk much more about this on a future episode someday, but you guys have fluctuated basically between like four and six partners over time. Like what's the right number to make this work? You know, I don't know. I've been there for a year and a half and...

This works really great. Yeah. Because, I mean, to your point, you get too big, then it's like, all right, everybody's looking at their watches, somebody's droning on. But if you're too small, like the right balance of resources, you know? I got to know my partner, Peter, from the board of Elastic over a number of years and ended up joining because of that relationship. And so I don't know that three, four years ago...

That would have been like obvious for, you know, either side. You're just opportunistically open to it all the time.

Being the firm that you are, you have the opportunity to invest in so many of the best Series A opportunities. You do very few investments each year. So how do you decide? What are your decision-making criteria when it's not like you're hurting for deal flow, you have 20 fantastic opportunities in any given month? So how's that go? So because we're investing in the early stage...

You're not relying on, frankly, data to make investments. Which is interesting, right? Because I feel like there are a lot of firms that do Series A or think they do Series A that actually these days operate quite differently from that. But yeah, it's really interesting to hear you guys feel the opposite. Right. Peter's articulated this before, and so I'm just going to completely copy it. He says that one of the things you have to look at is you have to look at the company's rising adoption curve.

And you have to look at the declining risk curve. And there's that moment very early on where that bright light of momentum and engagement of whatever the product is

has essentially given you enough conviction that this is an investment that could be really amazing and enduring. And where that line or where that balance is, I guess this is a cliche, but I guess that's the art. And that's where collaborative partnership, where everybody openly talks about that,

And is constantly saying, are we actually seeing anything meaningful here? Is this something that could, that has the ability to go for a long time? And that's the orientation, right? Is the orientation around having a judgment around how far something can go and how long can something endure for, right?

And that's ultimately how you create equity value. And that's ultimately how we can create great returns for our investors. Do you use the phrase product market fit? And is that something that you think about as a decision making criteria? So product market fit, you know, Andy Ratcliffe has been talking about product market fit for a long time. Did he define it or was it C blank?

I can't remember. Andy probably gets credit for popularizing the phrase at the very least. You know, we invest across both consumer and enterprise technology. And as someone that spent a lot of time in the enterprise software world, I will tell you that product market fit is quite nebulous. And it's quite nebulous for a long time.

And in fact, even after you go public, you're having conversations around product market fit. And that's in the enterprise, ladies and gentlemen. Yeah, that's right. And that's because as a company grows, you're constantly introducing new products, new modules, and new offerings. So the product market fit question, I don't find to be a conclusive one that says, okay, I definitively have product market fit. Because one of the assumptions...

when you are 100% confident you have a product market fit, is that you're assuming that the market itself is constant, which we all know is not true. That's a really good point. I think that in computing, I study computing history a lot, and I think if you look at computing in the 70s and 80s, and maybe even in the early 90s,

The computing cycles were much longer. And so you could have said, networking is going to be a thing, so I'm going to sell switches, I have product market fit, and therefore I have an entire computing cycle that I can take advantage of. Today the computing cycles are much shorter. I would push back even on that though. Cisco wasn't thinking about the internet when Cisco got started, but it was the internet that made Cisco. That's right. That's fair. And

So the computing cycles are much shorter. And so today's product market fit might be tomorrow's outdated solution. You know, like if you just, there's so many examples in the enterprise of whether it be, you know, some storage paradigm that was really interesting for six months and then, you

Six months after that, it was like, well, there's a much more efficient way to do it. Yeah, all you know for sure is that you will be outdated at some point and you just don't know when that is. Right. And so you're constantly evaluating like what is the plasticity, the elasticity of this company, which is a funny thing to say because I'm on the board of Elastic. You know, how can this company and the software...

really bend to serve the market needs. And a lot of people talk about platforms. And the reason that platforms become really important is that if you have a platform, you can adopt to the changing market demands very quickly. And so when you're looking at the very, very early stages of

at the series a, or oftentimes it's two people and a PowerPoint presentation. Um, oftentimes it's a very first institutional investment that's ever been taken. Sometimes it's the first capital ever raised. You're making these judgments, you're making these decisions. And, and,

I can pretend that there's some checklist, some magical checklist that you can go through. Yeah, when the spreadsheet totals the number, that's when you wire the money, right? That's right. You're playing like bingo and you're like, okay, five in a row, we're good.

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So Chetan, I know that something that is really defining of you as a human and as an investor is your open-mindedness and your flexibility. Can you talk a little bit about how that shows up in your work and why you think that's important? So you'll find that a lot of folks in the venture ecosystem are very thematically driven.

They'll say, you know, I've identified X trend or Y trend and I'm looking for startups in that space. You'll also see a lot of folks put out requests for startups, for example. Famously. Yeah.

I'm personally not at all thematic driven. I believe in global macro trends. For example, that enterprise software is going to go through a dramatic shift for a long time. We're in the very, very early innings of that shift. I believe the cloud is only in the very early innings of what it actually means when you serve everything through a browser. And we've

only really scratched the surface on understanding how to redefine the entire stack for the cloud. I think open source is a movement that is incredibly enabling for creators and builders and software developers. That's a trend that's here to persist. So these are trends that I'm really interested in and I really like investigating.

But if you take a step back and then ask, okay, well, those trends are great. What's your themes or what do you want to invest in? And I'll shrug. I'll say, I don't know. And I would say that the main thing is I'm open to be surprised. If you look at historically the ways that I've been incredibly fortunate to find and interact with the entrepreneurs that I've been lucky to invest in, the source of those opportunities has been

almost random. And so just being completely open to new ideas and completely being open to being surprised is how I approach the business. Because ultimately the entrepreneurs and the creators are the ones identifying the problems because they're living in it day to day. And from where I sit, it's really, really hard for me to get that same feel of the opportunity set.

And what you might imagine as being a small TAM today, somebody could have the insight that actually it's a TAM that is about to grow 50% year on year. Or there's a big adjacent market. That's right. Yeah.

I'm curious, given that, how do you manage your conversation with an entrepreneur? You're sitting down meeting an entrepreneur for the first time. You're approaching it open-mindedly. How does that conversation go? I think it's just a conversation. Ultimately, some people like to frame that with slides. Some people just want to have a conversation. Some people want to whiteboard.

Some people have a lot of questions about, you know, what did you see here? How did this work? How did that go well? How did that go poorly? And so ultimately it's just a conversation. And at that time you're trying to understand what is the problem that, that the entrepreneur is trying to solve. But at the end of the day, I think when you're investing at the very early stages, you're also trying to find a partnership between the investor and the founder to

that will enable the investment to create value and the company to become really long-standing and enduring. And so it's a lot of just conversation. I think it goes back to like that very, I keep saying old school mainly because it's gotten so out of fashion, which is that idea that you just have a lot of conversation. You talk through all of this and you try to come to a mutual understanding of what

What is it that you're trying to build? Well, it's interesting. It really gets back to your guys' philosophy on time. If you're time constrained, you're going to sit down as an investor with an entrepreneur and you're going to be like, tell me how big the market is. And you're like, okay, does it meet my threshold? If so, continue. If no, end the meeting. A completely different approach is just approach it as a conversation and be open-minded. Yeah, that's right. And

you know, the way this, you know, the way I found you guys has been replied to one of my tweets. Then that conversation went into a DM and then here we are. Right. And it's just like continuously just being completely open-minded about where those opportunities might come from. And, you know, I find that innovation is also really, really spreading all over the world. And one

One of the things that, you know, Elastic, which is a company that I've been associated with for quite some time, started in Amsterdam, though it's headquartered in Mountain View today. I'm associated with another company called Sketch, which is 100% globally remote and distributed where they don't have an office. You know, everybody works from home. The CEO lives in The Hague in the Netherlands. The co-founder lives in Porto, Portugal. Okay.

And the COO lives in Oakland, California. And so...

You know, they're either Dutch, Portuguese, or Silicon Valley based. So you pick. I mean, Sketch as a corporation is incorporated in the Netherlands. I see. So it's a Dutch corporation. So I guess you could call it a Dutch company, but there is no geography that's like dominant in terms of where people sit. And that's frankly one of their strengths is because they've been built from day one that way.

So anyway, going back to it full circle is just, is being just completely open-minded. This is the way I approach the day-to-day, which is, I find extremely rewarding because having the opportunity to be surprised is really spectacular.

So, there's this interesting tension that I've discovered in my work in early stage investing. And, you know, what you do is kind of one step later, but still so early in the life of a company. We're often working in emerging markets, brand new technology or brand new technology.

societal trend in the world that is happening. So you got to be open to being surprised because whatever your previous misconceptions were or perceptions of the world were, they're not congruent with this emerging scene, whatever that scene is. So how do you go about getting smart once you do get surprised by this new information? For me personally, I completely assume that I'm never going to know as much as the entrepreneur. And I think that just...

To have that depth of knowledge requires so much familiarity with the industry that comes with time that if you're trying to make a decision over a period of a couple weeks, you're never going to catch up. So if you are under the assumption that you're never going to have the depth of the knowledge of the founder, then you're just trying to find enough data points to validate their hypothesis.

of understanding what the problem is. And so that's where, again, trying to build a really big personal network of really great people in all sorts of sectors so that you can just get on the phone with them and ask is important. And this also helps when you're focused as a firm on consumer and enterprise technology.

Calling in and validating problem points. Yeah, you have a lot of history to draw on. And then that is actually an asset that compounds because as you invest, for example, for developers, you then invest in a lot of companies that deal with a lot of developers and then you get to meet a lot of developers and the next time somebody pitches you a developer-focused technology, you can call a lot of people and say, hey, is this a problem that would be interesting if it was solved for you? Is that valuable? Yeah.

Does it carry enough pain that if it was solved, there's economic value for you?

And so that's a compounding asset that's probably underrated in the ecosystem of as you like really build a deep network, the cycle of understanding problems shortens rapidly. Right. So it's building a close knit group of domain experts around a certain sort of maybe customer set without actually

too obsessed with being overly thematic and having your own theses in how to solve certain problems. Yeah, I would say that the domain expert is loose, right? The domain expertise is a loose construct. It's people that are

broadly dispersed in the world that tend to see a lot of problems. And so the network is really, really broad that you can then call on depending on the problem set. And so if you're dealing with, if you're looking at something that's like sales software, you want to be able to call the people that are selling today, not the people that were selling 10 years ago. And so as you look at maybe marketing software, you're looking at a new...

you know, CICD pipeline. Like you want to be talking to the people that are in it today. Yeah. Yeah. And, and those practitioners have insight into problems. That's really valuable. Yeah. That's such a good point. I mean, like a big mistake that VCs can make in diligence is,

that I've made that I've seen be made is you call people that are not the early adopters in a market or not on the bleeding edge and like, ah, never used that. And then you wake up five years later and they're using it, you know? Right. And if you talk to a database, a MySQL database expert in 2012 about MongoDB, they would say, why would I ever use this?

MySQL solves all of my needs. But if you talk to a developer that was rapidly trying to prototype consumer applications, for example, they would then tell you that MongoDB, despite its flaws in 2012, because it was an early database and it's way more mature now, obviously. Classically, it takes a decade to build a good piece of database software. Yeah, exactly. And now it's older than a decade, so it's great. Now it's a toddler. Yeah.

And so if you talk to the people that were like really using it, they would always talk about the time it took them to get it into production or into prototype. They'd always say like,

Whenever I tried to build this on a traditional relational database, I'd have to really think about the schema. I'd have to really plan this out. And then I'd really be thinking about the database for a long time. And then I'd put something out and it wouldn't even work. So that was wasted energy. Whereas with this... Let's me be a cowboy. Exactly. I remember doing this, building the initial version of Reply Yes in 2018.

2014 i think it was and like it was my first experience using mongo i had a mysql background and i had a sort of gray beard developer friend on my team who was like whoa this has like lots of problems and i'm constantly and i'm like look how fast let's move right so it's like i mean that exact tension on our team and so somebody would say like well charting is done really poorly and the the reply to that is like look if you're worrying about charting

Your application is probably working. That's a yacht problem. Yeah, exactly. Get to the point where you're having sharding issues and you're dealing with different set of problems. And that was how ultimately...

MongoDB helped monetize, right? Is that they made the creation super simple and then they started selling tooling and software and cloud services that enabled you to run MongoDB super easily. Those magical experiences don't often come up

if you are only talking to those that are super deep in something and that are so well-versed that they're not open to new things. Or if you're pursuing a theme. You're not going to find the magic button. If you look at somebody that was an expert in database technology, for example, they would have their preferences. If you were talking to an expert, if you talk to somebody where the problem itself is solved...

they're not going to necessarily give you signal that they're open to new ideas. And so this is a classic example of you always want to be understanding the signal from the earliest developers that are adopting this new technology, especially if you're going to go invest against developer tools and developer platforms.

So as a result of that, you have to keep that network really broad. And you have to understand who's working on really interesting problems. And frankly, like when somebody solves a problem and gets to a point where they're not experimenting with new technology, that's when they...

aren't necessarily a reliable source for diligence. Stop getting calls. Yeah. I think, uh, I think your partner built a great post about this years ago about, uh, you and you guys have been, Frank, I have this thing about being a learn it all, not a know it all, you know, the minute you're a know it all, you're done. Right. It's tough. And if you just think about elastic search in the early days, uh,

If you were a search expert, you would look at Elasticsearch and you would just say, like, I don't need this. The problem's solved. And then, like, you could push somebody on, like, well, what if you didn't know all this? Yeah, what about all the companies that don't have a search expert that might want to do, like, large search? That's right.

And you would just get like a blank stare like, I don't know why you would have that problem. Those are crap companies, you know? Right, exactly. It's like, well, you are a crap company at one point in time. And the exercise of building an enduring enterprise software company is really hard. And to get adoption at scale is really, really difficult. And you have to solve a hard enough pain point that lets you ride a innovation cycle for 10 to 15 years to build real equity value. Yeah.

And doing that means that you're necessarily addressing a lot of people's problems that don't know they don't have that problem today. And it's a problem that they may be dealing with in a very manual way that introducing software enables agility and creativity that is extremely valuable.

I want to jump forward to our future section here on enterprise investing. So of the companies that you've invested in that have IPO'd, we've got MongoDB, which you shared with us before the episode, first investment ever, which not a bad way to kick it all off. MuleSoft, Elastic,

Acquia has exited to private equity and currently with Packet Arm, Sketch, and Duffel. So there's definitely a developer-focused theme here. There's definitely an enterprise software theme here. You're investing at Series A. And even in some of these ones where you invested later, they still weren't doing huge revenues at the time that you invested. So what does give you the confidence to invest there?

that you can see that it's part of that 10-year trend that you mentioned where the thing that they're doing that is sort of a toy or sort of a crappier version now is actually going to be the way that it works in the future. Yeah, I think one of the things that you have to constantly attribute this to is a lot of luck. These interactions of how you meet these entrepreneurs, like I said before, seem kind of random.

And so there is so much luck involved in,

in every step of the way that I think if you don't acknowledge that, it leads you down a really odd reasoning path. - Massively overfitting the data to, yeah. - That's right. And ultimately, part of the luck that all of these companies had was they attracted incredible people as managers, as individual contributors, as executives that grew the company

in such a disciplined way that they created really enduring companies. If you look at what MuleSoft did, they took a really long time to get to 10 million of revenue. And then once they were growing, they were hyper cash efficient. Before they were acquired by Salesforce for 6.5 billion,

They burned $4 million to go from a little under $200 million of revenue to a little under $300 million of revenue. Whoa. Yeah. And that level of cash efficiency doesn't happen unless you have really great people running the company. What are the levers there? Like, yes, that's incredible that they only burned $4 million of capital to do that. So how'd that happen? Yeah.

One, from the early days, you're extraordinarily product-focused. And so unless the product gets easily pulled, it's really hard to do something like that. And when you sell enterprise software...

One of the things that is a constant assumption is that sales cycles can be long. Decisions can be lumpy. So like, you know, they were a real enterprise software that we're selling to really big financial services firms, technology firms. You're selling API integration software. They were in the real stuff. Yeah. Like they were really in it deep. And,

And so it's the amount of discipline you need to create processes around product, sales, marketing, and finance. And those four pillars of your company working in sync as it moves opportunity to opportunity is a level of discipline and execution that

That is really spectacular, right? It is like amongst the very best of companies ever to have that kind of discipline. Profit funded growth at that rate. Yeah. I mean, it's crazy. And so when you do that, ultimately you have to step back and you just have to acknowledge the excellence of the people that did it, right? Like there was no magical piece of software. Right.

that enabled them to do that. There was no magical, you know, sales forecasting tool that they used to do that. There was no like, there was no, there was no mysterious thing, right? And you could go interview all of them and they'll all tell you like, we just had really smart, motivated people that came to work every day and worked really hard and knew what their job was. And we, we spent a lot of time understanding what our customers wanted. We understand, we like spent a lot of time understanding how to build what they wanted and,

And we went and sold it. And whenever a customer signed up, we made sure they were really successful. A large part of investing is such a people business. It's a lot about collaborating with the people. Well, a big part of your job investing early, too, is helping build that company and that team. I remember what your partner Eric said to me once, that at least half of his job is recruiting. Not just recruiting, but helping...

build those teams, you know, and that is recruiting, but that's also closing, helping lend credibility to the founders to close those candidates, you know, and evaluating and knowing, you know, from a broad history and data set of experience, like who's going to be great and who's not. 100%. Like it's one where if you look at the repeated successes, ultimately what enabled that to happen is

Is the people. You're absolutely right. Part of what we spend a lot of time with our founders is helping them recruit. And the faster you can help them get those people, the faster the company is going to succeed, the more they're going to succeed, and the more that success is going to come back. Warren Buffett often talks about compounding interest as being the greatest invention in capitalism. The compounding effects are all around us.

And investing in those compounding effects early days and spending a lot of time thinking about what parts of your organizations can then compound and you're going to get return on invested capital is an exercise that I think you can do start doing it the earliest days. And, you know, we spoke about return on time. That's a very similar construct.

All right, Chetan. This may violate your I'm not a thematically driven investor comment earlier, but if you were building an enterprise company today, where would you start? And potentially what, you don't have to give me a specific idea, but at least how would you evaluate if you were onto something, if you were on an interesting trend, that sort of thing? Well, I think part of the reason that I get to be a venture capitalist is

Is that I simply could not start something. Like, I just couldn't. And you have been an indie developer in the past, right? Yeah, that's right. You've built iPhone apps. Yeah, that's right. That didn't work. They were complete garbage. You know, I am not an entrepreneur, period. Having the sense of that limitation really enables me to understand...

what it takes and what has, has enabled people to be really great entrepreneurs. I think that's a skillset and a mindset that requires an effort and a commitment that, that is not suited for everybody. Frankly, those that, that want to create and develop really come up with unique insights. And so if you're building an enterprise company today, I would say that part of what works is finding that unique insight and

And that can come from personal experience, that can come from just learning. You often see people that just enter an industry that don't have any experience in that industry kind of see the mental way that something is working and question the fundamental assumptions of that. And say, why is it working this way? Fresh eyes. Right, that this should work better. I'll give you an example of a company that we invested in called Duffel, which is building API infrastructure for

for the travel article. If you look at the founders of Duffel, they started exploring travel because to them, like they wanted to build experiences in travel. And then they started understanding how you're supposed to get airline inventory and how you're supposed to book tickets and all that stuff. And they just like, once they figured it all out, they like put it all down and like wrote it all out and like looked at how the economic values were

all go around and like they literally trace the money of like how does it... Follow the money. Exactly. Like how does a plane ticket get booked? And when a customer books a plane ticket, like how does the money actually flow? And then they took a step back and they said, this is nuts. This doesn't make any sense at all. This is outrageous. And then, you know, they started having conversations with the airlines directly and said like,

You are the supplier in that you are ultimately providing a service for customers because you're getting them from point A to point B. And then you're using all these different channels to distribute your tickets to

And then ultimately, you know, you then don't get to own the customer relationship because your customer is booking a ticket, you know, all the way over here. Totally. And like at some point they're going to get on your plane and you know nothing about them. And you're the person with the thing that is a plane that can get them somewhere. You've way more leverage over that value chain than you think you do. It's unbelievable that you don't ever capture anything. That's right. And the reaction is that...

Airlines are fundamentally airlines. They operate airplanes, which are incredible modern marvels that take a lot to operate. And they have pilots and they have maintenance and all this stuff. And technology and software enablement is...

It's on the list, but it's not really low. Can we think of this as sort of like there was a world where you could make an SMS-based application before Twilio, but Twilio really enabled it? Or similar to Stripe. They live in the world of Authorize.net right now, and this is the Stripe of the industry. Yeah, that's right. And you just look at the rapid adoption by airlines of Duffel for a startup that...

is so young. They've already signed up 18 airlines live and they've got a huge list of other airlines that they've already agreed to integrate with. Just shows you that somebody from outside the industry can look at this and say, this doesn't make sense. And then you go have that conversation. You're just like, Hey, this doesn't make sense. Right?

And people are like, you know what? I never actually thought about that. Like, you're right. This doesn't make any sense. And so I would say that because, and this is going back to macro trends of cloud, of enterprise infrastructure, of enabling creators and developers, those are trends that are here to stay. And everything...

Everything around you can operate better because when things operate better, you unleash human creativity and you then expand the addressable opportunity for the entire global population.

It is about expanding that pie that then creates innovation, that then it creates mobility, that creates opportunity for everybody, that has such positive global impact that I think you just continue to invest along that. And so that's hugely motivating for me, which is that you get to participate in that opportunity creation. And when you push that sort of frontier out,

And you're enabling creativity and you're enabling people to just experience every day better. And so if you're trying to start a company today, there's tons of opportunity around you.

And just finding something that you're passionate about, finding something that motivates you to spend a lot of time. And remember, the successful journeys take 10, 15, 20 years. And if they're really successful, that's something that you do for a lifetime. And so working on problems that you could imagine yourself spending a lifetime on, that's pretty spectacular.

Leverage on fiddling.

I can spend all Saturday morning tweaking six pixels on the acquired website and then looking at it and feeling like... True story. Thank you to Ben for doing that. Because I'm not going to do that. But I know that as someone that really gets into a flow state in being able to express myself, as silly as the acquired website is, that the notion of building tools and platforms...

to enable people to turn that into something more than themselves. Like I couldn't build a great website without Webflow. I couldn't build a great photography driven website, probably without Unsplash. And so these tools that like make it possible for you to turn an idea in your head into something more real, more quickly, uh,

Leverage on fiddling. Like I think that's, that's, that's a, and it's a theme that's here to stay. Right. And if you, and you know, a couple more examples, if you want to create a great application, starting in sketch is like something that over a million paying users of sketch do every single day. Right. Is that they, they open up sketch to start. If you look at what the company has been able to create is it is the Genesis point of

for some of the best products in the world that have ever been created in software is that the genesis of that is somebody opening up Sketch and starting there. Well, this trend is even bigger than that. I mean, it's Shopify, it's Square, it's Stripe. It's like all of these. It is. Just remove barriers and gatekeepers to letting people do stuff. Yeah. And if you think about the positive opportunity that it creates for people around the world...

you then are able to create economic value in ways that are really amazing. And you guys did a great episode on Shopify and you look at how many merchants they've enabled simply with what they've built. Despite what that dumb activist investor thinks. Yeah.

I forget what his name was. He was like, this is fraud because there's no way that there are that many merchants in the world that they're claiming. I think it's really a company that there are so many opportunities to create in the world today that entrepreneurs are going to come up with approaches that

That are going to be impossible for the three of us to predict. Yeah. Right? And... That was part of the idea behind Glow. Right? Like, people, let them sit in a room and talk. Yeah, that's right. And that comes back to it, right? And it's ultimately that human connection of working with people that enables you to find incredible opportunities. And...

you know, sprinkling a lot of luck and it works. I was going to ask you what drives you and, you know, what motivates you. And I think we've, we've done a nice job of talking through that. So in rounding out the chaffing the human section, what's something that you want to get better at and, and what are you focused on improving right now?

There are lots of materials and books that I want to read. You know, I read a lot and I'd like to keep reading a lot. And one of the things that there is an infinite supply of, frankly, is really interesting ideas and really interesting frameworks. I also think that we've entered a really interesting time in technology where there's more sharing of ideas in terms of like what's working and what's not.

I think Twitter is an incredible platform where people are openly sharing ideas about, you know, I've tried this in enterprise software. I've tried this in developer tooling and what you guys are doing in the, it was podcasts and the number of podcasts that,

that are basically becoming vertical specific and like super specialized. And so... I feel like Acquired in a lot of ways sort of disrupted to the extent we have traditional media tech reporting with like... Well, we're niche here. We're for like people who actually do it. Acquired is going to get disrupted by like six different podcasts that are like, we're like Acquired, but for developer tools companies. That's right. That's right. And...

Knowledge is going in the way of like you can go a thousand miles deep really quickly and

And as a result of that, it's just open for learning. And one of the things that I am, you know, super fascinated by is this, is this concept of like learning in public that a lot of people are doing. And you guys get, you guys do that on a podcast, right? You learn in public through your acquired podcast. And I think that's a, that's a trend that's here to stay. And, and,

finding a way to tap into that based on what you're interested in is super important. And I think I personally really, really believe that it's important for me and it's important for my job to continue to be a learner and to have that context to be really, really context rich in the topics that I'm interested in. And at the same time, the challenge that comes with trying to learn it all is that you start forming your own opinions and

And the challenge with forming too strong of an opinion is that you'll start definitively saying, that will work, that will not work. And then that, again, goes back to this idea of like, well, you have to be really open-minded to being surprised. Well, there are two problems with it. One, the coefficient of luck is so much higher than like anybody is willing to admit. Two, it closes your mind. That's right. And so...

So you have to do this delicate balance of learning a lot without forming opinions.

And I think you can constantly get better at that. And that's something that you can just work on all the time. Unrelated to what you said, but I'm curious, follow-up question to bring it back to the beginning a little bit. You have a couple two-sport athletes on your team at Benchmark. I don't really know of any other firms or places where, you know, like Peter invested in Twitter and Elastic, right? Like, you know, people do consumer, people do enterprise. Like, that's pretty unique. Yeah.

It's well, Peter is unique. Bill is unique. Sarah is unique. Eric is unique. When you're just open minded and open minded to ideas, you you then expand up and down the opportunity set and

Look, Eric invested in Cerebrus, which is our first, it's a chip company. Yeah. I don't think we've invested in semiconductors in like a long time. Yeah, I haven't seen like a startup funding announcement feature a picture of a silicone wafer in a long time. Right, exactly. It's a wafer scale. It's like a throwback jersey. Yeah, right. It's a wafer scale computer chip that is unbelievable. It's incredible technology. Yeah.

And the workloads that it's going to enable is amazing. If you think about Eric's background, he was started at an enterprise software company. Then he did a consumer company in Rockmount. And then as a venture investor, he's done anything from infrastructure software to application software to semiconductor. That's a super varied span of investments. And I think you can only do that, frankly, if you're just open for business. And if you...

If you drive to saying, I am definitely going to invest in theme that addresses industry sector Y, then you're constantly trying to just find something that fits your bias. Yeah, 100%. And so when you're a small firm with a small fund, I'm not sure that that's a viable strategy to be that close-minded. Yeah.

All right. One final question. Chathan, what should we improve here on Acquired? Yeah. You know, you guys have a deep catalog of content now. I think over 100 episodes. Yeah.

as a subscriber and as a listener, I personally would really enjoy you revisiting your early episodes and doing an update. And, you know, one, doing an update on your analysis of those case studies. Which was often poor. You know, and you all are now...

case studies with a much more sophisticated lens than what you started with. That's a compliment. I think that is a compliment. Thank you.

This has definitely been our learning in the open. I think one of the reasons we have it, it's such a great, thank you for the push to do it, and we will. One of the reasons we have it is it's painful. It's painful for us to go back and listen to those. Well, if you're committed to learning in public, you have to admit your mistakes. And this is one person's opinion, which is that I would really, really enjoy you revisiting those case studies and then applying, one, today's...

against those case studies and then re-evaluating the

you know, how that turned out. And then two, like that motion is something that is going to continuously be valuable because as you know, technology is cyclical. And so things that look great today may not look great in three to five years. And so having that motion of constantly reevaluating and updating is going to be a huge learning motion that I think as a listener, I'll benefit from. So I hope you all do that. All right, David, we have our orders. No,

Well, now we don't have to argue as much about what are we going to cover next. We can just go back to the catalog. Yeah, you have over 100 data points that you can reinvest in. All right, Chetan, where can listeners find you on the internet? The primary place is Twitter. I'm at ChetanP, C-H-E-T-A-N-P. And you'll find lots of things I find interesting about enterprise software on my Twitter feed.

And I've been learning in the open from you. And I think that MuleSoft number that you threw out was something that you sort of had tweeted last week. But you've had this great string recently of talking about companies who are reinventing themselves or quietly going through a renaissance. I think tons we can learn from you there. Thank you. I appreciate that.

All right. Well, thank you so much, LPs. Feel free. We have a teaser in the main feed for this episode where you can get some of the highlights. So feel free to share that with anyone that you think would enjoy it. Awesome. We will see you next time. Talk to you next time.