Benchmark’s Chetan Puttagunta on the Past, Present, & Future of Software
Chetan Puttagunta is a General Partner at Benchmark.
We talk about investing in Manus, the AI company that went from zero to $100M ARR in eight months and was recently acquired by Meta.
We also talk through the full history of application software, from mainframes to client-server, to the internet to cloud, why each wave reduced the barrier to entry and created an explosion in the number of new software, why legacy SaaS companies are making the same mistake on-prem vendors made at the dawn of the cloud, why software companies should be making big AI acquisitions, and how public market investors are begging private AI companies to go public.
We also talk about what Benchmark actually looks for in founders, how they make decisions, and why his last two investments were consumer AI and crypto.
Thanks to Sam Ross and Everett Randle for helping brainstorm topics for this conversation.
Thanks you to Numeral and Flex for supporting this episode.
Try Numeral, the end-to-end platform for sales tax and compliance: https://www.numeral.com
Sign-up for Flex Elite with code TURNER, get $1,000: https://form.typeform.com/to/Rx9rTjFz
Timestamps:
(0:08) Inside the $2.5B Manus acquisition
(6:24) Manus' three main use cases
(11:08) Taking heat on Twitter
(15:10) Starting to tweet about software in 2018
(22:50) The history of application software
(29:15) Benchmark’s 25x Fund 7
(31:33) SaaS incumbents got too dominant by 2020
(31:48) Going all-in on AI software in 2022
(39:31) Benchmark didn’t invest in the big AI labs
(40:48) How cloud companies beat on-prem competitors
(44:33) Why AI companies will beat legacy cloud competitors
(50:04) Software incumbents should make big AI acquisitions
(57:35) Why incumbents have not bought more AI companies
(1:04:43) Public markets are starving for AI companies
(1:10:14) Inside Benchmark’s fund strategy
(1:14:14) Benchmark’s history of non-traditional VC rounds
(1:17:56) Is the 20% ownership model outdated?
(1:19:20) Chetan’s rebirth as a consumer investor
(1:22:39) What Benchmark looks for in founders
(1:25:01) AI coding and gross margins
Referenced
Benchmark: https://benchmark.com/
Eric Vishria’s podcast episode: https://www.youtube.com/watch?v=I-5IsqFgrZM
Workday S-1: https://www.sec.gov/Archives/edgar/data/1327811/000119312512375787/d385110ds1.htm
Innovator's Dilemma: https://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996
Try FOMO: https://apps.apple.com/us/app/fomo-never-miss-out/id6741115427
Follow Chetan
Twitter: https://x.com/chetanp
LinkedIn: https://www.linkedin.com/in/chetanputtagunta
Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak
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Chetan Puttagunta and Modest Proposal - Capital, Compute & AI Scaling - [Invest Like the Best, EP.400]
My guests today are Chetan Puttagunta and Modest Proposal. Chetan is a General Partner at venture firm Benchmark, while Modest Proposal is an anonymous guest who manages a large pool of capital in the public markets. Both are good friends and frequent guests on the show, but this is the first time they have appeared together. And the timing couldn’t be better - we might be witnessing a pivotal shift in AI development as leading labs hit scaling limits and transition from pre-training to test-time compute. Together, we explore how this change could democratize AI development while reshaping the investment landscape across both public and private markets. Please enjoy this discussion with Chetan Puttagunta and Modest Proposal.
My guests today For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Ramp. Ramp’s mission is to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. Ramp is the fastest growing FinTech company in history and it’s backed by more of my favorite past guests (at least 16 of them!) than probably any other company I’m aware of. It’s also notable that many best-in-class businesses use Ramp—companies like Airbnb, Anduril, and Shopify, as well as investors like Sequoia Capital and Vista Equity. They use Ramp to manage their spending, automate tedious financial processes, and reinvest saved dollars and hours into growth. At Colossus and Positive Sum, we use Ramp for exactly the same reason. Go to Ramp.com/invest to sign up for free and get a $250 welcome bonus.
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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Follow us on Twitter: @patrick_oshag | @JoinColossus
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
Show Notes:
(00:00:00) Welcome to Invest Like the Best
(00:05:30) Introduction to LLM Scaling Challenges
(00:07:25) Synthetic Data and Test Time Compute
(00:08:53) Implications of Test Time Compute
(00:11:19) Public Tech Companies and AI Investments
(00:16:58) Small Teams and Open Source Models
(00:29:02) Strategic Positioning of Major AI Players
(00:35:49) AGI and Future Prospects
(00:46:50) AI Application Layer and Investment Opportunities
(00:54:18) The Paradigm Shift in AI Reasoning
(00:55:34) Investing in AI-Powered Solutions
(00:58:46) Economic Impacts of AI Advancements
(01:00:19) The Future of AI and Model Stability
(01:02:52) Private Market Valuations and Compute Costs
(01:05:05) Infrastructure and Utilization in AI
(01:12:50) The Role of Hyperscalers and GPUs
(01:18:02) The Evolution of AI Applications
(01:27:56) Philosophical Questions on AGI and ASI
(01:34:31) The Importance of Innovation Hubs
Chetan Puttagunta and Jeremiah Lowin – Open Source Crash Course - [Invest Like the Best, EP.188]
My guests this week are Jeremiah Lowin and Chetan Puttagunta. Jeremiah is the founder of Prefect.io, an open-source software company where my family and I are investors, and Chetan is a partner at Benchmark Capital. Both are past guests and good friends. I asked them on to help the audience understand the open source software business model. I’ve been fascinated with this model in which companies give a huge chunk of their work and value away for free to a community of developers, and then make money by building additional tools, functionality, and services on top of their free and open platform. While this may strike you as a wonky discussion on a niche software topic, I think it is valuable for everyone because the ideas can be applied to more than just code. I view much of my own activity as open-sourcing investment research and knowledge. It is also important because much of the world’s technology is built on top of open source projects. I hope you learn something new about this emerging category. Please enjoy.
This episode of Invest Like The Best is sponsored by Canalyst. Canalyst is the leading destination for public company data and analysis.
If you’re a professional equity investor and haven’t talked to Canalyst recently, you should give them a shout. Learn more and try Canalyst for yourself at canalyst.com/Patrick.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
(2:40) – (First question) – Originator business in open source software; Redhat
(5:51) – Why open source is valuable in building a business
(7:40) – Examples of the benefits of open source projects
(10:27) – Open source business models that produce the best results
(17:04) – Defensibility of open source companies
(25:02) – Mentoring younger founders on using open-source
(30:54) – The benefits of launching open-source
(36:41) – Building a digital community
(41:31) – Lessons from Open Source that can be applied to other businesses
(50:04) – The opportunity sets available in the open source space
(53:33) – Future of open source
(56:31) – Tobi Lutke Podcast Episode
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club and new email newsletter called “Inside the Episode” at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Bill Gurley and Chetan Puttagunta – An Update on Consumer & Enterprise Venture Capital - [Invest Like the Best, EP.162]
My guests today are Bill Gurley and Chetan Puttagunta, both partners at benchmark capital. We review the early stage investing world in the face of coronavirus in a very timely conversation, which is one that will remain valuable once this crisis is done. We discuss enterprise and consumer, funding and growth, and the entrepreneurial spirit in the face of a crisis. Please enjoy.
This episode is brought to by Koyfin.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
1:44 – (First question) – Landscape for venture capital ecosystem
6:47 – The experience in 2009 and the entrepreneurs that tend to rise to the top
8:24 – The relationship between early stage companies and public investors
10:45 – How this crisis impacts enterprise businesses vs the broader corporate sector
14:46 – Advice for early stage companies in a period like this
18:23 – What Chetan was doing during the last downturn and what he learned during it
20:27 – Early stage vs late stage companies in this environment
22:57 – On the Road to Recap
23:00 – Benefits of being small in a period like this
25:22 – How portfolio companies are responding and pivoting during this period
29:33 – Best practices for remote companies
31:39 – Themes that stand out during this period
34:51 – Closing thoughts
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on Twitter at @patrick_oshag
Chetan Puttagunta – Go Slow to Go Fast: Software Building and Investing - [Invest Like the Best, EP.156]
My guest this week is a good friend and a business mentor of mine. Chetan Puttagunta is a general partner at Benchmark Capital and has a remarkable track record of investing in early-stage software businesses, including several like Mulesoft, MongoDB, and Elastic that went on to be public companies.
Chetan has been my key guide for understanding the world of enterprise software as we at O’Shaughnessy Asset Management have built an investing platform called Canvas. His advice has been critical to our early success. In this episode, we explore the history of software and software investing, and go into the details on how to build and grow new software businesses. We discuss product, sales and marketing, recruiting, scaling, and everything in between.
Please enjoy this great conversation with one of my favorite business and investing thinkers.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
1:34 – (First Question) – How Chetan found MongoDB and decided to invest in it
8:01 – The evolution of databases in the growth of technology
16:19 – Market penetration of this space and what investors should be thinking about
21:46 – Advice how companies can build software effectively
25:12 – Tactics to effectively implement empathy led product building
30:33 – Companies asking users what to build vs telling users what they want
34:26 – The need for the right capital, and patient capital in particular
37:55 – Creating the perfect customer experience
44:37 – Common reasons they don’t invest in a company
48:48 – Lessons on scaling, especially in sales and marketing
52:47 – Best recruiting pipeline strategies
59:56 – Pitfalls of unit economic traps
1:00:23 – The Dangerous Seduction of the Lifetime Value (LTV) Formula
1:01:34– The Hierarchy of Engagement
1:02:18 – What has changed for Chetan in his time working with the team at Benchmark
1:06:009 – Later stage life cycle business considerations and Amazon’s AWS
1:13:29 – The business model of open-source software
1:15:54 – Being default open
1:17:53 – Kindest thing anyone has done for Chetan
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on Twitter at @patrick_oshag
Star Wars: The Rise of Skywalker (with Chetan Puttagunta, General Partner at Benchmark)
Let's face it, Acquired borders on Star Wars fan podcast anyway. So we dipped our toe in the water of making it official, with our review of Star Wars: The Rise of Skywalker.
We are joined by fellow Star Wars nerd and repeat special guest, Chetan Puttagunta, General Partner at Benchmark. In this episode, we *nearly* avoid any business analysis or speculation on the technology, media, or enterprise ecosystems, with only a brief revisit to the question: "Was it worth it for Disney to buy Lucasfilm?"
Did we love it, hate it, or want to bury it like the prequels? Tune in! There are definitely spoilers, so be warned!
Sponsors:
Sierra: https://bit.ly/acquiredsierra
Early Stage and Enterprise Investing (with Chetan Puttagunta, General Partner at Benchmark)
We are joined by Chetan Puttagunta, General Partner on Benchmark, talking his investment philosophies, enterprise technology trends, and the uniqueness of Benchmark. How is this firm with only five partners and no associates so repeatably successful? Chetan shares the story of his very first investment, MongoDB, and lessons learned from his other investments and board positions in Elastic, Sketch, Duffel, Mulesoft, and many others.
Chetan also helps us understand how he balances staying open-minded enough to let founders shape his vision of the future (and not the other way around), while staying educated on areas where he thinks the future is bright.
“The product/market fit question, I don’t find to be a conclusive one…because one of the assumptions is that you’re assuming the market itself is constant, which we all know is not true. Today’s product/market fit might be tomorrow’s outdated solution.” – Chetan Puttagunta, @chetanp
Sponsors:
Sierra: https://bit.ly/acquiredsierra
Be sure to follow the Acquired Podcast:
Acquired.fm
@AcquiredFM
20VC: Benchmark's Chetan Puttagunta on The One Question To Ask When Analysing Market Size, How To Compete in Today's War for Talent & Why We Have Seen An Over-Rotation In Running Businesses Based on Metrics
Chetan Puttagunta is a General Partner @ Benchmark, one of the most successful funds of the last decade with a portfolio including the likes of Uber, Twitter, Dropbox, WeWork, Snapchat, StitchFix, eBay and many many more. As for Chetan, at Benchmark he has led deals in the likes of Duffel, Sketch and Pachyderm. Before Benchmark, Chetan was a General Partner @ NEA where he led investments in Elastic, MongoDB and Mulesoft to name a few.
In Today's Episode You Will Learn:
1.) How Chetan made his way into the wonderful world of venture, came to invest in Mulesoft and Elastic and how that led to becoming a GP with Benchmark today?
2.) How does Chetan feel about the push to run businesses based on metrics and benchmarks relative to other companies? What are the metrics they should hone in on? What are the metrics they should disregard? How does Chetan advise his portfolio on the right way to view competition? What is core to analysing competition effectively?
3.) How does Chetan assess the "war for talent" in terms of startup recruiting today? How do the very best CEOs recruit the best talent to their team? Who has done this best from Chetan's portfolio that comes to mind? How much weight does Chetan place on references? What should one watch out for with references?
4.) With the rise of remote, does Chetan believe that a startup even has to have an office in SF today? How does Chetan think about the "tribal knowledge" that remains within the valley? What does Chetan advise his companies that are not in the valley and contemplating it? What works? What does not?
5.) How does Chetan think about market size today when considering new opportunities? Where does Chetan think most managers go wrong when assessing TAM? How does Chetan think about time allocation across the portfolio? What have been his biggest lessons on managing his time effectively as an investor and board member?
Items Mentioned In Today's Show:
Chetan's Fave Book: Shoe Dog: A Memoir by the Creator of NIKE
Chetan's Most Recent Investment: Duffel
As always you can follow Harry, The Twenty Minute VC and Chetan on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
SaaStr 211: The Ultimate Guide To SaaS Pricing From Investors @ Benchmark, Matrix, Upfront Ventures & Operators @ Figma, Snyk and Kustomer
In Today's Episode We Discuss:
David Skok: General Partner @ Matrix Partners: Why does David believe that all good products have at least one variable pricing axis? How can founders determine which variable they should choose for their product? What are the pros and cons?
Chetan Puttagunta: General Partner @ Benchmark: Why does Chetan believe we have seen a strong decline in the per seat pricing model? What are the major drawbacks of it? What are we seeing replace it? What has Chetan seen work well amongst his portfolio?
Mark Suster: General Partner @ Upfront Ventures: What were Mark's two biggest lessons on pricing from seeing the hyper-growth of Salesforce first hand? WHat does Mark advise founders when it comes to price anchoring and discounting? How does Mark view the sale of professional services with this in mind?
Amanda Kleha: Chief Customer Officer @ Figma: What were Amanda's biggest learnings from running the Zendesk pricing playbook? What does Amanda mean when she says that successful pricing is broke up into 3 separate product features?
Brad Birnbaum: Founder & CEO @ Kustomer:Why does Brad push back on the common suggestion of a "no man's land in SaaS pricing"? Why is innovation in pricing actually detrimental to sales in most cases?
Guy Podjarney, Founder & CEO @ Snyk: How does Guy think about having a large enough base to test pricing strategies? How does Guy think about the balance between freemium and paid? Does one have to come first?
Read the full transcript on our blog.
If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:
Jason Lemkin
Harry Stebbings
SaaStr
SaaStr 171: How To Figure Out Your Pricing Strategy: The Diminishing Role of The Per Seat Model, Why Open Source Is The Only Way To Get In Front of Today's Developers & Why Capital Efficiency Is Always Key with Chetan Puttagunta, General Partner @ NEA
Chetan Puttagunta is a General Partner @ NEA, one of the world's largest venture capital firms in the world with over $3Bn in their latest fund and a portfolio including the likes of Mulesoft, Jet.com, Uber, Houzz and many more incredible companies. As for Chetan, Chetan focuses on enterprise software and has made investments in MuleSoft, MongoDB, Elastic, Heap, just to name a few. Due to his phenomenal track record, Chetan has been named to GrowthCap's Top 40 under 40 Growth Investors, Forbes 30 under 30 All-Star Alumni List, and Forbes' 30 under 30 in Venture Capital.
In Today's Episode You Will Learn:
How Chetan made his from the world of leveraged buyouts to the world of enterprise VC investing with NEA?
Why does Chetan have such conviction with regards to open source companies today? Why does he feel the big question of "Can open source product multi-billion dollar companies" has been proven"?
How does Chetan think about the underlying business models of open source when comparing the likes of Red Hat with 85% gross margin to Hortonworks at negative gross margins? What does Chetan believe is a healthy ratio between professional services vs closed premium features? Does Chetan believe this is the end for per seat pricing in SaaS?
How does Chetan approach market sizing today when evaluating potential enterprise opportunities? Why does Chetan believe there is a mental trap in the VC requirement for large markets? How can founders present the niche market they are attacking, in an exciting enough way to satiate the investor appetite for large market?
Chatan has said before, "if you have conviction and vision, you should not be afraid to raise capital and go big". Does every founder not have conviction and vision in the early days? How does Chetan determine when truly is the right time to pour fuel on the fire and raise that mega war chest?
60 Second SaaStr?
A moment in Chetan's life that has changed the way he thinks about the world?
Fave SaaS reading material?
What does Chetan know now that he wishes he had known at the beginning?
Read the full transcript on our blog.
If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:
Jason Lemkin
Harry Stebbings
SaaStr
Chetan Puttagunta
