Yesterday in Helsinki, I had the opportunity to interview four of Benchmark’s six general partners, a renowned Silicon Valley firm with a nearly 30-year history, known for successful bets on companies like Uber and Dropbox. Benchmark is distinctive for its practice of compensating each general partner equally and consistently raising funds of similar sizes over the years, resisting the trend of significant expansion.
Our conversation took place at Slush, a prominent annual event for the European startup ecosystem, prompting me to inquire about Benchmark’s significant presence there, considering the challenge of gathering the entire team in Silicon Valley. Victor Lazarte, a recent addition to Benchmark as a gaming company entrepreneur, confessed that the firm’s attendance had “no business reason” other than a genuine interest in exploring extraordinary opportunities and, of course, appreciating the beauty of Helsinki.
During our discussion, Lazarte openly addressed the surge in valuations, citing his own company, Wildlife Studios. Despite minimal progress between funding rounds, the company experienced a rapid increase in valuation from $1.3 billion to $3 billion within a year. Lazarte acknowledged the mistake of accepting too much capital at a high valuation too quickly.
The conversation delved into the peculiar coexistence of a general economic downturn and a boom in AI investing. The Benchmark team expressed skepticism about the future success of closed large language model (LLM) companies, emphasizing their commitment to open source and the belief that developers in that space would drive profound innovations.
Benchmark partners Miles Grimshaw and Peter Fenton shared insights on the evolving landscape of AI, foreseeing a drastic shift in our perception of current software usage. They urged startups to be more creative and ambitious than simply emulating existing models, cautioning against becoming the next Microsoft or replicating products like Copilot.
Fenton candidly discussed Benchmark’s regrets, highlighting a missed opportunity with Airbnb due to ownership constraints during its early fundraising. The team emphasized their continued focus on nascent teams, often investing at the incorporation stage, with partner Sarah Tavel underlining their role as the first board member and first money for many startups.
Addressing the ongoing debate about the significance of board seats in Silicon Valley, Fenton argued that, as a fiduciary, taking a board seat is crucial for effective governance. The conversation concluded with Lazarte reflecting on the challenges of startup valuations, advising founders against pursuing unnatural valuations that could divert focus from the core purpose of building a company.
