The Peel with Turner Novak

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(1:17:56) Is the 20% ownership model outdated?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

Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/

Jake Stauch is the Co-founder and CEO of Serval. Serval automates IT with AI.

We talk taking on incumbents with an AI-native product, why IT departments haven’t had much automation historically, the 12+ month journey of landing their first customer, and how teams can increase talent density as they scale.

Try Numeral, the end-to-end platform for sales tax and compliance: [https://www.numeral.com⁠](https://www.numeral.xn--com-xw0a/)

Sign-up for Flex Elite with code TURNER, get $1,000: https://form.typeform.com/to/Rx9rTjFz

Timestamps:
(0:14) AI-native employee support
(5:15) How an early work trial almost ended the entire company
(9:05) Why IT hasn’t had much automation
(13:09) Vibe coding for IT professionals
(15:31) Competing against publicly traded incumbents
(23:32) Having less than three months of runway for seven years building his first hardware consumer health startup
(33:15) Lessons from five years at Verkada
(39:11) The single question that led birthed the idea for Serval
(44:19) Navigating 12+ months of zero revenue
(52:05) Knowing when not to pivot
(55:15) Finally landing the first three customers
(58:07) Getting pre-empted for a Series A
(1:01:04) Getting a Series B term sheet the next day
(1:05:54) How to structure design partnerships that convert
(1:08:48) Building a mirror instead of system of record
(1:13:49) Make the implementation part of the product
(1:15:24) How to increase talent density as you scale
(1:21:32) Why every new hire should help you recruit

Referenced
Try Serval: https://www.serval.com/
Careers at Serval: https://www.serval.com/careers
Episode with Filip @ Verkada: https://www.youtube.com/watch?v=fXI3GdicIHw

Follow Jake
Twitter: https://x.com/jakeserval
LinkedIn: https://www.linkedin.com/in/jakestauch

Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak

Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/

Gary Tan is the President and CEO of Y Combinator.

YC is the startup accelerator behind companies like Airbnb, Stripe, Coinbase, Reddit, Twitch, and thousands more. According to Garry, they’ve invested in 20% of all startups worth $5B or more started since 2012.

Gary has lived every side of the YC ecosystem. He went through YC as a founder, later became a partner, started Initialized Capital where he backed companies like Coinbase and Instacart, and then returned to lead YC.

We walk through the different “eras” of YC, from the early Paul Graham and Jessica Livingston days in Cambridge, to scaling in San Francisco, to today’s push back toward in person community and what Gary calls “founder mode” for the organization itself.

We also talk about why the Bay Area still matters so much for startups, what’s happening with California taxes and policy, and why Gary has gotten more involved in local politics to keep it the best place for founders to build companies.

Then we go deep on the parts of startups people don’t talk about enough. Co-founder conflict, rage quitting, therapy and coaching, and why companies inevitably take on the personality and emotional patterns of their founders.

We also cover what YC looks for in applications, how the 13 week batch is structured, how Demo Day really works, how to choose the right investors, and what Gary thinks the next phase of YC looks like, including helping founders even after Series A.

At the end, Gary shares his personal AI workflow, including meta prompting, comparing outputs across models, and the tools he uses every day to think and build faster.

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:
(0:05) Moving from Winnipeg to California as a kid
(1:35) How YC interviews work
(2:55) The first batch in 2005
(6:46) Why YC moved from Boston to SF
(8:17) California’s Billionaire Tax
(11:00) Tech should care about public policies
(17:01) Going direct to your audience
(20:28) The 2nd Era of YC
(24:01) Rage quitting Palantir, learning to understand himself
(32:41) Co-founder conflict kills most startups
(35:15) Joining YC as a group partner
(37:22) Initialized Fund 1 (55x DPI)
(39:44) Why Garry went back to lead YC
(42:44) YC funds 20% of all $5B+ companies
(44:30) Lessons from Brian Chesky
(48:01) Garry’s thoughts on YC rejection
(51:41) How to get into YC
(58:03) What it’s like inside a 13-week YC batch
(1:02:23) 20% of YC is hard tech
(1:05:55) YC's 3rd era: founder mode, re-batching
(1:07:56) Escaping the matrix
(1:11:26) Garry's personal AI stack
(1:20:25) Tech optimism

Referenced
Y Combinator: https://www.ycombinator.com/
Initialized Capital: https://initialized.com/
Torch: https://torch.io/
Perplexity: https://www.perplexity.ai/
Anthropic: https://www.anthropic.com/
OpenAI: https://openai.com/
Airbnb: https://www.airbnb.com/
Kyle Vogt on his new startup: https://www.youtube.com/watch?v=XQoFbvyWEy8
Follow Aaron Levie on X: https://x.com/levie

Follow Gary
Twitter: https://x.com/garytan
LinkedIn: https://www.linkedin.com/in/garytan/

Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak

Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/

Miranda Nover is the Co-founder and CEO of Fort Health. Fort builds wearables that automatically track strength training for people who care about longevity.

This is a new format I’m experimenting with. It’s the first time I’ve had a Banana portfolio company founder on the show while they’re still at the pre-seed stage. When I surveyed my subscribers a few weeks ago, you were most interested in more early stage VC-backed founders, and I’d love your feedback on what you think of this.

Miranda is still very much working through the idea maze and iterating on the Fort product. We talk about the megatrends driving consumer health, why she’s building a company that helps people get stronger, and everything she’s learned getting a hardware company off the ground.

She’s also in the middle of the current YC batch, and gives an inside look at what it’s been like and if she’d recommend it to other founders.

Thank 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:
(3:37) Importance of strength training
(6:34) Benefits of being strong
(10:37) Evolution of Fort’s hardware
(15:58) Automating workout tracking
(19:29) Two types of strength trainers
(25:30) Building the strength company
(27:26) How healthcare is consumerizing
(40:43) Lessons building batteries at Tesla
(44:56) Hardest parts about building a hardware startup
(51:01) Adventures in vibe coding
(57:54) How to use Twitter as a founder
(1:02:09) The launch video industrial complex
(1:08:03) What it’s like doing YC
(1:10:19) Selling crayons in 3rd grade, Lemonade stands
(1:14:41) Miranda’s best vintage finds
(1:16:44) How Turner evolved as a VC
(1:22:22) Turner’s early social media PMF
(1:28:53) Inventing shitposting

Referenced
Try Fort: https://www.fort.cx/

Follow Miranda
Twitter: https://x.com/mirandanover
LinkedIn: https://www.linkedin.com/in/mirandanover

Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak

Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/

Dug Song and Jon Oberheide are the co-founders of Duo Security.

If you’ve never heard of Duo, it might be one of the most underrated software stories of all-time.

Starting in 2010, they burned only $14 million to hit $100m in ARR, were acquired by Cisco for $2.35 billion in 2018, and now rumored to be doing over $1 billion in ARR inside Cisco 16 years later.

We talk about how they built one of the most capital efficient SaaS companies ever from Ann Arbor, Michigan, and how their focus on the customer and company culture helped them win in a crowded cybersecurity market.

We talk growing up in the early hacking culture of the 90s, why most security tools are painful to use, sizing their market, solving for non-consumption of a product, and how Duo flipped the model by designing for end users instead of security teams.

We talk about staying in Michigan instead of moving to Silicon Valley, and why staying out of the tech bubble helped them execute.

We break down the mechanics of scaling from zero to $100 million in ARR, everything they learned integrating with Cisco, and why more founders should build outside of San Francisco.

A quick thank you ex-Duo employees Zack Urlocker, Ash Devata, and Katie Kilroy for their help brainstorming topics for the conversation.

Try Numeral, the end-to-end platform for sales tax and compliance: [https://www.numeral.com](https://www.numeral.com/)

Sign-up for Flex Elite with code TURNER, get $1,000: https://form.typeform.com/to/Rx9rTjFz

Timestamps:
(4:49) Meeting from Dug’s Wi-Fi honeypot
(7:33) 90’s hacking culture and cybersecurity’s wild west
(14:49) How the internet was born in Ann Arbor
(18:58) Staying in Michigan instead of moving to Silicon Valley
(31:20) Philosophy on leadership and team building
(39:48) What makes a good engineering leader
(44:01) Starting Duo to make security easier
(45:22) Why most security products suck
(48:36) How fixing account takeover became a $1B ARR company
(59:10) TAM, competition, fixing the non-consumption of security
(1:04:04) Being a radical advocate for the customer
(1:08:35) Duo’s pizza sales play
(1:12:45) Branding lessons from Anthropic, Tesla, Cliff Bar
(1:17:47) When to say no to customers
(1:21:27) Importance of culture when scaling
(1:27:56) Duo’s role in uncovering the SolarWinds breach
(1:31:29) Scaling to $100M ARR on $14M burned
(1:39:30) Inside the $2.35B Cisco acquisition
(1:44:02) What big companies get wrong about customers
(1:51:53) Building Michigan’s startup ecosystem

Referenced
Duo Security: [https://duo.com](https://duo.com/)
Cisco: [https://www.cisco.com](https://www.cisco.com/)
University of Michigan: [https://umich.edu](https://umich.edu/)

Follow Dug
Twitter: https://x.com/dugsong
LinkedIn: https://www.linkedin.com/in/dugsong

Follow Jon
Twitter: https://x.com/jonoberheide
LinkedIn: https://www.linkedin.com/in/jono

Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak

Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/