20VC Benchmark's Eric Vishria on Why Career VCs Have Advantages Most Under Appreciate, Why We Are In An Infrastructure Renaissance & What Makes The Best VC Partnership

Summary Notes


In a conversation with Harry Stebbings on the 20 minutes VC podcast, Eric Vishria, general partner at Benchmark, discusses his transition from an operator to a venture capitalist and the unique perspectives each brings to VC. He emphasizes the breadth of experience career VCs have with different business models and the deep operational insights of former operators. Vishria also shares the joy of Series A investing, the importance of being the entrepreneur's first call, and the challenges of high expectations and coverage in a small partnership like Benchmark. Furthermore, he predicts a cyclical swing back towards career VCs and highlights the current infrastructure renaissance in tech, suggesting it may lead to new consumer experiences. Lastly, Vishria touches on Benchmark's investment decision-making process, which involves advocacy, diligence, and voting, but not necessarily unanimity.

Summary Notes

Introduction to Eric Vishria and Benchmark

  • Eric Vishria is a General Partner at Benchmark, a leading VC fund.
  • Benchmark's portfolio includes Twitter, Uber, Snapchat, eBay, WeWork, Yelp, and other revolutionary companies.
  • Eric has led deals and sits on the board of Confluent, Amplitude, and Bug Snag.
  • Prior to VC, Eric was the founder and CEO of Rockmelt, later acquired by Yahoo.
  • He also held roles at HP as VP of Products and at Opsware as VP of Marketing.
  • Peter Fenton and Mitch Lasky from Benchmark facilitated the introduction for this episode.

"I'm thrilled to welcome Eric Vishria to the show. Eric is a general partner at Benchmark, one of the world's leading VC funds, with a portfolio including the likes of Twitter, Uber, Snapchat, eBay, WeWork, Yelp and many more revolutionary companies of the last decade."

This quote introduces Eric Vishria as a significant figure in the venture capital industry, highlighting his position at Benchmark and the influential companies they have invested in.

Eric Vishria's Career Path to VC

  • Eric worked as an operator for approximately 15 years before becoming an investor.
  • His career began at Loudcloud, a cloud company, which became Opsware and was bought by HP.
  • After HP, Eric started Rockmelt, a consumer browser company, which was acquired by Yahoo.
  • His experience spans enterprise and consumer sectors in both startups and large companies.

"Sure, I'm not sure that it's particularly interesting, but I had been working as an operator for 15 ish years before I became an investor."

Eric modestly introduces his extensive background as an operator before transitioning into venture capital.

Operator vs. Career VC Debate

  • The debate concerns the value of operators turning into VCs versus those who are career VCs.
  • Eric believes different models for venture capitalists can be successful, and backgrounds vary widely.
  • Despite being an operator, Eric feels the current market overly favors operators as VCs.
  • He provides concrete examples of why career investors might have distinct advantages.

"Different models work. I think one of the things that's really, if you look at the backgrounds of the successful venture capitalists, they vary tremendously."

Eric suggests that there is no single path to becoming a successful venture capitalist, as evidenced by the varied backgrounds in the field.

Business Model Exposure

  • Operators typically have in-depth experience with a few businesses, while career VCs may have broader exposure.
  • A career VC with 15 years of experience might see 25-30 businesses, providing a wide range of insights.
  • The breadth of business models and market dynamics that career VCs witness is a significant advantage.

"But the same if you take an investor who's been at it for 15 years, or venture capitalist has been for 15 years they would have seen say 25 or 30 businesses at relative depth, maybe not quite the same level, but at quite a significant level."

Eric explains that career VCs, due to their role, are likely to have been involved with more companies than operators, giving them a broader perspective on business and market trends.

Experience in Executive Recruitment

  • Operators might recruit a few VPs of Sales over their tenure, while VCs could interact with many more executives in a shorter period.
  • This frequent interaction with executives during the recruitment process gives career VCs an advantage in understanding what makes a successful executive.

"And so again, just if you take that, the number of execs that you're going to have exposure to in terms of the recruiting process and other things gives you a really great advantage as a career venture cap."

The quote emphasizes the advantage that career VCs have in executive recruitment due to their extensive exposure to various executives across different companies.

Advantages of Operators Turned VCs and Career Investors

  • Operators turned VCs are noted to have more empathy and insight into operational issues.
  • Career investors are seen to benefit from a broader network and exposure.
  • Top performing partnerships in venture capital often include a mix of both operators turned VCs and career investors.

"I think operators turned VCs tend to be more empathetic. They tend to obviously have more feedback and insight into operational issues as they should." "I think the top performing partnerships tend to have a mix of operators turned VCs and career investors."

The first quote emphasizes the empathetic nature and operational insight of operators turned VCs. The second quote suggests that successful VC partnerships usually combine the strengths of both operators turned VCs and career investors.

  • The pendulum of preference between operators turned VCs and career investors is expected to swing back towards career VCs.
  • These trends are cyclical and the exact timing of such shifts is uncertain.

"I think it'll probably swing back to the career VC over time. I think this stuff is cyclical."

This quote predicts a cyclical return to favoring career VCs in the venture capital industry over time.

Personal Takeaways from Operational Roles

  • Personal experience as a founder and CEO provides empathy with entrepreneurs and an advantage in board service and company building.
  • Understanding the entrepreneurial journey is crucial for a VC working with management teams.

"Having been a founder, having raised money, having been a CEO, gives me a good amount of empathy with the entrepreneur and the entrepreneurial journey."

The quote highlights the speaker's belief that firsthand experience as an entrepreneur fosters empathy and is beneficial for a VC in supporting other entrepreneurs.

Surprises About the Move into VC

  • Venture capital can seem easy from the outside, but achieving high levels of success requires significant effort and hustle.
  • The competitive nature of top investment opportunities necessitates active engagement rather than a passive approach.

"I think there's a perception that it seems easy and it may be that it's easy to skate by, but I think to do it at the highest levels is actually very challenging."

This quote dispels the misconception that VC work is easy, clarifying that success at the highest levels is challenging and demanding.

Adjustments from Operational to VC Work

  • Transitioning from an operational role to VC requires a shift from leading and guiding to adopting an impartial observer mentality.
  • Career investors focus on understanding the opportunity and the entrepreneur without projecting changes.

"I think one of the things that I've realized is, so operators tend to want to project that way... And what I've noticed is the career investors, they have an actual much more of an impartial observer mentality when they are talking to these companies and listening to the pitch."

The quote describes the necessary mindset adjustment for an operator turning VC, which involves moving from a directive approach to a more neutral, evaluative stance.

Focus of Venture Capital Funds

  • The speaker's fund, Benchmark, specifically focuses on early-stage investments, which they find most enjoyable and rewarding.
  • Early-stage investing is seen as a nexus where team, concept, and early data intersect, presenting unique challenges and enjoyment.

"Well, I'd say first and foremost, the A's are the most fun. So I think that we're very lucky in that we get to do the part that we love."

This quote explains the speaker's personal enjoyment of early-stage investing, which is the primary focus of their fund.

VC Interaction with Founders and Operators

  • Being the first call for an entrepreneur means being available to assist in various ways and being a trusted advisor.
  • VCs aim to be actively involved and supportive, aspiring to be the entrepreneur's primary contact for advice and discussion.

"We aim and aspire to be the entrepreneur's first call. That's a standard we hold ourselves to."

The quote emphasizes the speaker's goal for their VC firm to be the primary support system for entrepreneurs, indicating a hands-on and involved approach to venture capital.

The Role of a Venture Capitalist in Supporting Entrepreneurs

  • Venture capitalists play an integral role in supporting entrepreneurs beyond financial investment.
  • Being a trusted advisor and confidant for entrepreneurs is a rewarding aspect of venture capital.
  • Trust and rapport with entrepreneurs are earned, not given.

"Being able to be the person who gets that call or one of the people to get that call and be able to talk to the entrepreneur, that's what it's about."

This quote highlights the importance of venture capitalists being a go-to person for entrepreneurs during critical decisions, signifying a relationship built on trust and earned respect.

Benefits of Early-Stage Investment Focus

  • Focusing on early-stage investments (Series A and B) allows for a consistent way of thinking and decision-making.
  • Specialization in early-stage investments helps in avoiding the complexity of context switching between different investment stages.

"I think one of the advantages of the focus is you can actually have some kind of consistent way of thinking through these things and hopefully make better decisions as a result."

Eric Vishria emphasizes the advantage of specializing in early-stage investments, which provides a consistent framework for decision-making and potentially leads to better investment choices.

Vertical Specialization in Venture Capital

  • Vertical specialization has proven successful for some investors in areas like security and e-commerce.
  • Different investment models work for different venture capital firms; specialization may not fit all.
  • Some firms operate with a generalist approach, which works well for their model.

"Different models work."

Eric Vishria acknowledges that while vertical specialization can be effective for some, it is not a one-size-fits-all approach, and various models can be successful in venture capital.

Seed Investment and Series A Competition

  • Seed investments by firms that lead Series A rounds can create conflicts of interest.
  • There is a risk of negative signaling if a seed investor does not continue to invest in subsequent rounds.
  • Entrepreneurs need to consider the implications of accepting seed investments from firms that also lead Series A rounds.

"It cuts both ways, and I think it cuts both ways for the entrepreneurs, frankly, too."

Eric Vishria discusses the complexities and potential conflicts that arise when a venture capital firm invests in seed rounds and then faces decisions about investing in competitors or subsequent funding rounds.

Cross-Pollination in Venture Capital

  • Venture capital firms benefit from the diverse perspectives of partners with different specializations.
  • Partners with consumer expertise can provide valuable insights into enterprise investments and vice versa.
  • Cross-pollination of ideas between consumer and enterprise sectors can lead to informed investment decisions.

"I think you have a lot of that type of cross pollination which ends up being very productive and kind of doesn't fall into the clean lines of, hey, this person looks at consumer opportunities and this person looks at enterprise opportunities."

Eric Vishria illustrates how sharing insights across different sectors within a venture capital firm can enhance the evaluation process and contribute to successful investments.

Current State of the Consumer Environment

  • The consumer environment is not necessarily in a trough but may be experiencing an infrastructure renaissance.
  • Historical patterns suggest that infrastructure developments precede consumer technology breakthroughs.
  • The current focus on infrastructure, such as ML and cloud, may set the stage for future consumer innovations.

"I think we're in the midst of an infrastructure renaissance."

Eric Vishria offers a different perspective on the state of the consumer environment, suggesting that current developments in infrastructure could lead to a new wave of consumer technologies in the future.

Constantly Changing Business Landscape

  • The business environment, especially in tech, is dynamic with ever-shifting platforms and dynamics.
  • Staying alert for emerging trends is crucial in such a landscape.

things about this business, is it's constantly changing. The platforms are constantly changing, the dynamics are constantly changing, and you have to be always looking for the next thing.

This quote emphasizes the need for vigilance and adaptability in a business environment characterized by rapid and continual change.

Excitement for Future Platforms

  • Eric Vishria is not willing to share any specific theories on future platforms he is excited about.

I don't know that I have a theory that I'm willing to share.

Eric Vishria chooses to keep his predictions or expectations about future platforms private, suggesting strategic discretion.

Quick Fire Round Format

  • A quick fire round is proposed, with short statements followed by immediate responses, limited to 60 seconds each.

I'd love to finish with a quick firearound today. So I say a short statement and then you give me your immediate thoughts. About 60 seconds per one. How does that sound?

This quote sets the stage for a rapid-response segment of the conversation, intended to elicit succinct and spontaneous insights.

Favorite Book: "Endurance" by Alfred Lansing

  • "Endurance" is Eric Vishria's favorite book, detailing Shackleton's Antarctic expedition and its leadership lessons.
  • He draws parallels between the story's adventure and the entrepreneurial journey.

My favorite book is Endurance by Alfred Lansing, which is a story of Shackleton trying to cross the Antarctic and british explorer trying to cross the Antarctic in about 1912, 1913 and just an incredible journey. I think it's an amazing story of leadership adventure.

The quote describes why "Endurance" is impactful to Eric Vishria, highlighting the themes of leadership and adventure that resonate with his experience in entrepreneurship.

Challenging Aspects at Benchmark

  • High expectations and the pressure to perform at Benchmark are significant.
  • Limited partnership size poses a challenge in covering the vast number of opportunities.

One of the things about being on part of a firm like this is the expectations are obviously amazing and are incredibly high. And so you wake up every morning and you want to be the absolute best and compete at the highest level.

This quote conveys the intensity of the expectations at Benchmark and the personal commitment to excellence that Eric Vishria feels.

You're constantly struggling with coverage, like how do you see all the opportunities that are out there?

The challenge of a small team trying to monitor and evaluate numerous investment opportunities is highlighted here.

Desired Changes in VC and Startups

  • Eric Vishria advocates for an environment that rewards operational discipline and execution.
  • He supports a return to capital constraints to foster better business practices.

I like to see us go back to an environment that rewards operational discipline and execution and this more capital constraint and I think that'd be good for all of us.

The quote reflects Eric Vishria's belief that limitations can lead to excellence and that the venture capital and startup ecosystem would benefit from such an approach.

Investment Decision-Making at Benchmark

  • Benchmark's investment process involves advocacy and voting, with one partner championing an opportunity.
  • All partners engage in due diligence, and votes indicate the strength of their conviction.
  • Unanimous voting is not required, and historically, some of the highest returns came from split votes.

Is one of advocacy and voting. So basically, there is an advocate. So one of the five of us falls in love with something is probably the best way to describe it.

This quote explains the process of how investment decisions are made at Benchmark, emphasizing the role of a lead advocate among the partners.

No, it does not have to be unanimous. There is a legend here, which I actually don't know how true or not true it is, that the highest returners, the highest returning investments, like eBay, eBay and Ariba and Red Hat, and some of these others from the late 90s, were split votes.

The quote reveals that unanimity is not a requirement for investment decisions at Benchmark and references a company legend regarding the success of investments with split votes.

Most Recent Investment: Contentful

  • Contentful, a content management system via API, is Eric Vishria's most recent investment.
  • The founders' compelling nature and the company's ability to secure a U.S. customer base from Berlin impressed him.

The most recent one that's announced was contentful, and that's a content management system via API.

Here, Eric Vishria shares his latest investment, Contentful, highlighting its product focus.

You don't see companies closing, major us corporations, six figure deals on the phone from Berlin.

The quote underscores the unique achievement of Contentful in acquiring significant U.S. customers remotely, which contributed to Eric Vishria's decision to invest.

Closing Remarks

  • Eric Vishria expresses gratitude for being on the show.
  • Harry Stebbings promotes Eric Vishria's Twitter and the behind-the-scenes content on Snapchat.

I'm such an honor to be here. Thank you.

Eric Vishria conveys his appreciation for the opportunity to participate in the podcast.

And you can find out more about his incredible journey on Twitter at Eric Vishria.

Harry Stebbings directs listeners to Eric Vishria's Twitter for further insights into his journey.

Infrastructure and Support for Startups

  • First Republic Bank is recommended for early-stage startups needing infrastructure and support.
  • Benefits include a network of VC firms, a dedicated contact point, and networking opportunities.
  • Clients of First Republic include notable companies like Instacart, eshares, and Wish.

if you're an early stage startup, the right infrastructure and support systems are critical, and that's where First Republic is so good.

This quote from Harry Stebbings advocates for First Republic Bank as a valuable resource for startups in need of financial infrastructure and support.

Data Integration Platform: Segment

  • Segment is a data integration platform that collects and routes customer data to various tools and destinations.
  • Over 200 sources and destinations are available on Segment, serving companies like Atlassian, New Relic, and Creighton Barrel.

Segment really is the last integration you will ever do. And that's why the world's best companies use segment to drive growth and revenue.

Harry Stebbings endorses Segment as a comprehensive data integration solution used by leading companies to enhance their growth and revenue.

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