20VC: Benchmark's Victor Lazarte on Why Portfolio Construction is BS| Why SaaS Spreadsheet Investing is Dead | Why China is a Stabilising Force for the US | Three Traits All the Best Founders Have & The Lie All Big Tech Companies Have Been Telling
🎯 Summary
20VC Podcast Summary: Benchmark’s Victor Lazarte on Investing, AI, and Founder Traits
This 67-minute episode of 20VC features Harry Stebings in conversation with Victor Lazarte, General Partner at Benchmark, drawing on his unique background as a successful bootstrapped founder (Wildlife Studios), early investor (Brex), and current VC. The discussion spans critiques of current investment practices, the explosive potential of AI agents, and the essential traits of top-tier founders.
1. Focus Area
The discussion centers on Venture Capital Strategy and Market Dynamics, with a heavy emphasis on the Artificial Intelligence (AI) revolution as the dominant technological shift. Secondary themes include founder psychology, portfolio construction philosophy, and the changing landscape of consumer technology (moving beyond traditional social media).
2. Key Technical Insights
- LLM Adoption as a Market Signal: The massive, directional growth in LLM inference (estimated at 100x flops in two years) is presented not as a future prediction, but as a clear, observable present phenomenon, making this “the best time in over a decade to start a company.”
- The Agent Interface Shift: The conversation posits that the next major UI shift is moving from websites and mobile apps to AI Agents. These agents will allow customers to interact with businesses as if speaking to a knowledgeable person, creating massive disruption opportunities for incumbents who fail to adapt.
- Adjacent Innovation: Great opportunities often lie adjacent to what is currently working (e.g., Facebook followed Friendster). Investors should deeply understand current successful LLM applications (like ChatGPT, Character AI) to build the next generation of tools around them.
3. Business/Investment Angle
- Portfolio Construction is “BS”: Lazarte dismisses rigid portfolio construction models, arguing that the current environment is so volatile and opportunity-rich that buying winners today is the most pragmatic approach, predicting a trillion-dollar company will emerge in the next three years.
- The Death of Spreadsheet Investing: The era of relying on predictable SaaS metrics and spreadsheet modeling is over due to rapid technological change. Investment decisions must be based on profound market shifts (like the AI wave) rather than incremental growth projections.
- The Search for Happiness vs. Wealth: A provocative discussion suggests that while technology drives productivity (wealth), the biggest predictor of happiness is deep relationships. Lazarte argues that advanced AI companions/friends, filling the void left by declining traditional community structures (including religion), represent a massive, untapped consumer opportunity.
4. Notable Companies/People
- Benchmark: Victor Lazarte’s firm, known for backing category-defining companies.
- Brex (Pedro Franceschi & Henrique Dubugras): Mentioned as a prime example of founders Lazarte deeply trusts, stemming from a shared history of overcoming investor exploitation.
- Wildlife Studios: Lazarte’s bootstrapped gaming success in Latin America, providing his foundational operating experience.
- Mercore: A recent Benchmark investment that achieved $100M ARR in 11 months, highlighting exceptional founder execution.
- Character AI: Cited as a current working model in the LLM space, but predicted to be the “Friendster” of the Agent era—a precursor to something much larger.
- Yuri Milner: Mentioned as the source of the tactical advice to deeply analyze a founder’s entire daily schedule to understand their intrinsic motivations.
5. Future Implications
The industry is heading toward a world where AI agents become the primary interface for commerce and personal interaction, fundamentally reshaping incumbent businesses. Furthermore, the conversation suggests a significant shift in consumer technology toward deeply personalized, relational AI companions that address fundamental human needs for understanding and connection, potentially replacing aspects previously served by traditional community or religion.
6. Target Audience
This episode is highly valuable for Venture Capitalists, Technology Investors, and Startup Founders operating in the AI space. It provides strategic frameworks for evaluating market timing, assessing founder quality beyond standard metrics, and understanding the disruptive potential of the agent paradigm shift.
🏢 Companies Mentioned
💬 Key Insights
"And it turns out that it's more important to maximize the upside than it is to manage your losses, right? So in a way, this changes the role of a board member."
"We're going to have an app and we're going to wake up and you're going to look at your app and you're going to read what it says and you're just going to do it. The app will tell us like, go do this, you're not going to understand, but you're just going to do it. And you're going to do it and it turns out that you're going to be happier after you do this thing."
"I think we either have UBI or it's the end of democracy. Talk to me about that. Imagine this society where there's a lot of abundance, a lot of wealth, but the majority of the people are not accessing that wealth."
"I just worry inherently about, is like the increasing chasm between rich and poor and the inequality that comes as a result."
"What percentage of knowledge work as we know today will exist in 10 years? If you define knowledge work as work you do behind a computer, I think it's probably like 1%."
"Even if there are 5,000 people in that company worth a trillion dollars, it could replace a trillion dollars of spend from labor. Do you share my concern? And is that just an average full progression."