Benchmark partner Chetan Puttagunta linked cheaper software development to founders pursuing more of an opportunity and separately said he expects companies backed by the same venture firm to enter one another’s markets more often.
Puttagunta said founders are ambitious about how much of an opportunity they can pursue as development costs fall. He also described a difference between investing in two companies that compete from the outset and a conflict that develops when a portfolio company later moves into another’s market.
Benchmark partner Eric Vishria said the firm protects information founders share and gives exclusivity the most weight when it first invests. A startup’s later change in strategy can still bring it into competition with another company backed by the firm. Benchmark’s relationships with founders can last 10 to 15 years and often begin when companies are young.
Peter Fenton, another Benchmark partner, described investors as ranging from hands-on backers who act much like co-founders to public-market investors who hold competing companies without shaping their operations. He said Benchmark is closer to the hands-on end and uses transparency to manage conflicts. Founders, Fenton said, should be informed when a conflict emerges and should not be left feeling disadvantaged.
A dispute involving Factory and Cognition illustrates similar tensions. Factory announced in late September it would remove board observer and adviser Chris Degnan, citing alleged misconduct related to Cognition, its direct competitor. The company’s CEO alleged Degnan had spoken about a possible Cognition role while he could still see Factory board discussions. Degnan said his resignation had come earlier and rejected the claim that he passed on confidential material. Degnan subsequently took the chief revenue officer position at Cognition. Khosla Ventures backs both startups.
