The Twenty Minute VC (20VC) Episode Summary
Episode: Benchmark's Victor Lazarte on Why Portfolio Construction is BS | Why SaaS Spreadsheet Investing is Dead | Why China is a Stabilizing Force for the US | Three Traits All the Best Founders Have & The Lie All Big Tech Companies Have Been Telling
Release Date: April 14, 2025
Host: Harry Stebbings
Guest: Victor Lazarte, General Partner at Benchmark
1. Introduction
Harry Stebbings welcomes Victor Lazarte, a seasoned venture capitalist from Benchmark, renowned for leading deals with companies like Heygen and Maccor. With a rich background as both an angel investor (Brex) and a founder (Wildlife Studios), Victor brings a wealth of experience to the conversation.
2. Victor Lazarte’s Entrepreneurial Journey
Victor shares his path from bootstrapping a mobile gaming company in Brazil to scaling it to a $350 million revenue business with over 4 billion downloads. He recounts the challenges of raising funds in a nascent Brazilian venture capital scene and the lessons learned from early unsuccessful attempts.
Notable Quote:
“In the next three years, someone will start a company that is going to be worth a trillion dollars. So I think, on average, buying the winners today will work out.”
— Victor Lazarte [00:00]
3. Critique of Traditional Portfolio Construction
Victor argues that traditional portfolio construction in venture capital is flawed. He contends that focusing on buying winning companies is a more effective strategy, dismissing the conventional emphasis on diversification and risk management.
Key Points:
- Buying Winners: Emphasizes investing in companies with high growth potential rather than spreading investments thin.
- Market Timing: Advocates understanding current market drivers instead of attempting to predict the future.
4. The Evolution and Impact of AI
A significant portion of the discussion centers on AI’s transformative role in business and society. Victor debates the common narrative that AI merely augments human capabilities, asserting instead that AI is poised to replace many knowledge-based roles.
Key Points:
- AI as Replacement: Believes AI will fully replace certain jobs, contrary to opinions that it only augments.
- AI Companions: Envisions AI as digital friends that understand and assist individuals, potentially enhancing personal well-being.
- Mental Health: Addresses the mental health crisis, suggesting AI companions could provide the support lacking from human relationships.
Notable Quotes:
“AI is fully replacing people. But if models get a lot better, is your company worse or is your company better?”
— Victor Lazarte [00:00]
“There's a profound understanding of what's working. And there's the famous story that Jeff Bezos said, hey, I need to make a business on the Internet.”
— Victor Lazarte [07:01]
5. Societal Implications of AI and Economic Inequality
Victor delves into the broader societal impacts of AI, highlighting concerns about wealth concentration and the potential destabilization of democratic systems. He discusses how AI could exacerbate economic disparities by replacing labor with technology, leading to significant wealth accumulation among company owners and shareholders.
Key Points:
- Wealth Concentration: AI-driven efficiency could lead to wealth being concentrated in the hands of a few.
- Democracy and AI: Suggests that AI could empower the general populace with knowledge, potentially destabilizing current democratic structures.
- China vs. US in AI: Views China as a stabilizing force for the US amidst AI advancements, emphasizing the competitive dynamics between the two nations.
Notable Quotes:
“I think there's going to be a trillion dollar companies being done by very small teams. So that's a very destabilizing force.”
— Victor Lazarte [35:23]
“China is actually a very stabilizing force because I think the US right now has this external threat and the US cannot spend a lot of time with internal conflict.”
— Victor Lazarte [37:02]
6. Investment Strategies and Benchmark’s Approach
Victor outlines Benchmark’s investment philosophy, emphasizing active outbound efforts over relying on inbound deal flow. He highlights the importance of building deep relationships with founders and being a close, supportive board member.
Key Points:
- Active Outbound: Majority of investments come from proactive outreach rather than inbound inquiries.
- Board Membership: Values the role of board members as catalysts and amplifiers of founders' visions rather than mere overseers.
- Selective Investing: Benchmark makes fewer, more meaningful investments to ensure substantial support and partnership.
Notable Quotes:
“Most of the time, you're talking to really high quality people and you ask them like, hey, what has impressed you mostly?”
— Victor Lazarte [25:14]
“I love being a board member. I wish that was the job.”
— Victor Lazarte [24:44]
7. Role of Board Members in Modern Venture Capital
Victor discusses the shifting role of board members from governance to actively supporting and amplifying founders' ambitions. He argues that modern venture capital should focus more on maximizing upside potential rather than merely managing risks.
Key Points:
- From Oversight to Amplification: Board members should help founders navigate growth and access critical knowledge.
- Fiduciary Duty: Balances fiduciary responsibilities with supporting founders’ visions to drive company success.
- Commitment to Founders: Emphasizes unwavering support for founders, even during challenging phases.
Notable Quotes:
“The role of a board member is to maximize what the founder wants to do.”
— Victor Lazarte [52:38]
“I’m here to enable this guy, and even when I disagree with him, I’m just going to help him do what he wants to do.”
— Victor Lazarte [53:28]
8. Future of Education and Career Advice
Victor advises the next generation to pursue computer science, highlighting its pivotal role in the AI-driven future. He draws parallels to past technological shifts, emphasizing the enduring value of foundational knowledge.
Key Points:
- Study Computer Science: Essential for understanding and leveraging AI transformations.
- Transferable Skills: Logical thinking and problem-solving are crucial as AI automates routine tasks.
- Adaptability: Encourages adaptability and continuous learning to thrive in a tech-centric landscape.
Notable Quotes:
“I think go study computer science... it’s the transformation right now. It’s technology transformation, it’s an AI transformation.”
— Victor Lazarte [44:52]
9. Predictions and Future Outlook
Victor shares bold predictions about the rapid adoption of AI and its integration into daily routines. He foresees a future where AI-driven apps dictate daily actions to enhance personal happiness and productivity.
Key Points:
- Rapid AI Adoption: AI will integrate seamlessly into everyday activities, often without conscious awareness.
- AI as Decision Makers: Apps will guide decisions, fostering routines that benefit users’ long-term goals.
- Trust in AI: Increased trust in AI judgment will lead to significant lifestyle and behavioral changes.
Notable Quotes:
“Pretty soon we're going to have an app and we're just going to wake up and do whatever the app tells us to do.”
— Victor Lazarte [60:20]
10. Quickfire Round Insights
In a rapid-fire segment, Victor shares personal preferences and succinct insights, offering a glimpse into his personality and investment ethos.
Key Highlights:
- Favorite Stock to Hold: Duolingo, for its potential in AI-driven education.
- Investment Preferences: Prefers funds like Green Oaks and values mentorship and conviction in partners.
Notable Quotes:
“I believe that pretty soon we're going to have an app and we're just going to wake up and do whatever the app tells us to do.”
— Victor Lazarte [60:20]
11. Conclusion and Final Thoughts
Victor envisions himself playing a pivotal role in future AI-driven companies, contributing as an early board member and co-founder. He underscores the transformative potential of AI in solving humanity's grand challenges, from education to security.
Notable Quote:
“I want to look back and say, hey, AI is going to solve so many of humanity's biggest problems from education to security.”
— Victor Lazarte [63:09]
Notable Quotes with Timestamps
-
On Buying Winners:
“In the next three years, someone will start a company that is going to be worth a trillion dollars... buying the winners today will work out.”
— Victor Lazarte [00:00] -
On AI Replacing Jobs:
“AI is fully replacing people... it’s fully replacing people.”
— Victor Lazarte [00:00] -
On Social Media and Relationships:
“I first started interacting with my wife... maybe our relationship wouldn't have happened because of Instagram.”
— Victor Lazarte [14:21] -
On AI and Happiness:
“The biggest predictor of your happiness is the quality and depth of your relationships... AI is able to help you shape.”
— Victor Lazarte [12:05] -
On Investment Philosophy:
“Are you worse or is your company better? If your company is worse, then it's going to be very hard to touch it.”
— Victor Lazarte [26:55]
Key Takeaways
- Investment Strategy: Focus on investing in high-potential winners rather than adhering to traditional portfolio diversification.
- AI’s Dual Impact: While AI can significantly enhance productivity and create new opportunities, it also poses risks related to job displacement and economic inequality.
- Role of VCs: Modern venture capitalists should act as active partners, deeply involved in founders’ journeys to maximize company success.
- Future Predictions: AI will rapidly integrate into daily life, potentially reshaping how individuals make decisions and interact with technology.
- Education Advice: Pursuing computer science is crucial for thriving in an AI-dominated future, providing foundational skills and adaptability.
Conclusion
This episode offers a deep dive into Victor Lazarte's perspectives on venture capital, AI's transformative role, and the evolving landscape of investment strategies. His insights challenge traditional notions, advocating for a forward-thinking approach that embraces technological advancements while addressing their societal implications.