The Benchmark Way: Five Partners Who Make Other VC Firms Look Outgunned And Overstaffed

The first topic of conversation at one of Silicon Valley’s most exclusive dinners is usually the table. Made of a deep brown walnut, the table isn’t oval or square but a distinctive asymmetrical rounded triangle inspired by the French designer Jean-Marie Massaud. It’s been custom-built for its hosts, Benchmark Capital, which uses it for partnership lunches and semi-secret weekly dinners with select members of the Valley’s brain trust. The events are exclusive salons that tackle everything from the future of mobile computing to the features that drive Twitter’s success. “The table’s dimensions make it perfect for seven people to all speak together,” says Bill Gurley, the firm’s longest-serving active partner.

Giving everyone not just a voice but an equal voice is Benchmark’s stock-in-trade. Unlike most of its rivals Benchmark is deliberately egalitarian. There are no junior or senior partners, only partners, and no one plays a CEO-like role. The firm’s winnings—2.5% in management fees and 30% of the profits— are divided equally.

Egalitarianism isn’t the only Benchmark trait that bucks the latest VC trends. At a time when buzzy firms like Andreessen Horowitz or Google Ventures lard up their payrolls with marketers, PR handlers, recruiters and in-house designers, Benchmark is decidedly minimalist. There’s only a small staff to support the five partners. Its website is a spartan, static page with exactly one hyperlink, which directs visitors to the Twitter feeds of its portfolio companies. While Benchmark has an office in the Valley, many of the decisions are made at its San Francisco office, in a renovated building above the historic Warfield theater. And the firm has eschewed the temptation to raise ever larger funds, keeping its own below $500 million. “We’re more of a jazz band than a marching band,” says partner Peter Fenton (No. 2 on Midas List). “When you restrict yourself in size, there’s nowhere to hide.”

Benchmark’s approach may be contrarian, but it has worked beautifully. Over the 20 years of its existence the partnership has backed many of the biggest names of the Internet era, such as Dropbox, eBay, Instagram, Yelp and Zillow. The last few years have proven especially lucrative. A $32 million bet on Twitter is now worth $2.2 billion. A $21 million investment in Snapchat, led by Mitch Lasky (No. 70 on the list), is held at $2 billion. Benchmark’s reward for being one of the first VCs to back Uber is an estimated $7 billion stake in the car-hailing behemoth. On a single day in December, Fenton celebrated IPOs for two portfolio companies: New Relic and Hortonworks.

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