My guest this week is Eric Vishria, a general partner at Benchmark Capital. Eric joined Benchmark after spending the first part of his career as an operator and CEO. The topic of our conversation is the past, present, and future of software businesses. We begin by explaining why public software companies trade at such incredibly high multiples today. We then explore the several different generations of these businesses and why the future remains so bright for companies building software as their primary product. I’d go one step further and suggest that the information in this episode is even more valuable for non-software businesses and investors, because its crucial to understand the impact that these products will have on the overall business landscape. COVID has accelerated the long-running transition to digital across the corporate world, and Eric serves as the perfect guide. Let’s dive in. This week’s episode is sponsored by Bottomless. Bottomless is a smart coffee subscription which automatically re-orders coffee for you based on your consumption habits. Bottomless is offering one month and your second bag of coffee for free at bottomless.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 (2:29) – (First question) – His take on public markets, and specifically as it relates to SaaS businesses (4:04) – Why these companies trade so high (7:53) – Peter Zeihan Podcast Episode (11:19) – The competitive frontier in the digital markets (14:02) – The API competitive frontier (14:22) – Chetan Puttagunta Podcast Episode (18:36) – Every Company is Becoming a Software Company (20:10) – John Collison Podcast Episode (22:54) – Charging in an API business model (24:09) – Describing the different generations of SaaS, starting with Gen 1 (28:15) – Gen 2 SaaS businesses (31:52) – Being an investor in SaaS (36:55) – Gen 3 and importance of traditional SaaS companies to get into API (38:06) – Other problems software can solve (44:19) – Why more money isn’t going into SaaS (46:48) – Lessons from the investment universe and how it could apply to SaaS (47:26) – The Hierarchy of Marketplaces — Introduction and Level 1 - Sarah Taval (51:49) – Lessons about scaling (57:51) – Cross customer strategy (1:00:01) – Energy and Civilization: A History (1:01:28) – Qualities of an interesting investor (1:03:52) – Kindest thing anyone has done for him 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

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“What did the council decide on item 42?” — answered with the speaker and the moment.