eBoys
How venture capital made billions
Description
In 1995, four partners left the established venture firm where they had been working and opened a new shop on Sand Hill Road, the two-lane strip in Menlo Park where most of Silicon Valley's money lives. They called it Benchmark. The name was deliberate — it promised nothing about the founders and everything about a standard. Two more partners joined soon after, and the six of them set out to do something almost arrogant in its simplicity: build the best-performing venture capital firm in the world, from scratch, against houses that had decades of reputation on them.
The journalist Randall Stross spent roughly two years with them, from 1997 into 1999, with a level of access that venture firms almost never grant. He sat in the partner meetings on Monday afternoons where deals lived or died. He watched money get committed on instinct and a handshake. And he was there for the one that changed everything: a small online auction site called AuctionWeb, run by a founder named Pierre Omidyar, that Benchmark backed when it was worth about $20 million. The company would soon be called eBay. Within two years its value had climbed past $21 billion, and each founding partner's stake was worth hundreds of millions.
That single number — a firm's small early stake turning into a fortune that dwarfed the entire fund — is the engine of Stross's book, and the puzzle underneath it. eBoys reads like a novel, all round-the-clock meetings and gut calls, but it is reporting, and the reporting keeps circling one uncomfortable fact: nobody involved could reliably tell the eBay from the disaster while it was happening.
The question we’re asking : How did six men with a new firm and no track record turn a $20 million bet into billions — and what does that kind of return actually cost?What we’ll see : A firm built from nothing, the auction site that made its name, the ventures that went the other way, and what a reporter with total access learned about how the money really gets made.
Table of contents
01Chapter 1 — Six men and a name that meant nothing
The founders of Benchmark did not look like insurgents. Bob Kagle, Bruce Dunlevie, Andy Rachleff, and Kevin Harvey had all worked venture capital or built companies before; they were seasoned, not scrappy. What made the firm new was a decision about structure. Where older Sand Hill firms had layers — senior partners, junior partners, a hierarchy of who got the carry — Benchmark set out to be flat. Every general partner would share the profits equally. The idea was that equal stakes would kill the internal politics that slowed other firms down and let all of them chase the same big wins without hedging against each other.
The equal split sounds like a small accounting choice. In practice it shaped everything. It meant that a partner who found a huge deal did not personally get more than a partner who did not, which removed the incentive to hoard credit and encouraged the six to pile onto whatever looked promising. Stross watched this in the Monday meetings: a deal would come in, the partners would argue, and the argument was collegial in a way that the money at stake made almost strange. They were fighting over conviction, not over shares.
02Chapter 2 — The eBay bet that rewrote the math
When Benchmark first looked at AuctionWeb in 1997, the company was already profitable, which in the internet era was almost suspicious. Pierre Omidyar had built a site where strangers auctioned things to each other, and it was quietly making money on transaction fees while the rest of the web burned cash chasing eyeballs. Bob Kagle championed the deal inside the firm. Benchmark put in roughly $6.7 million for a large minority stake, valuing the whole company at around $20 million. It was, at the time, a respectable but unremarkable early-stage bet.
What happened next is the part that reads like fiction. eBay's marketplace had a property the partners understood better than most: it got more valuable as more people used it, because buyers went where the sellers were and sellers went where the buyers were. Benchmark helped bring in Meg Whitman as CEO to run the thing at scale. When eBay went public in September 1998, the stock did what internet stocks were starting to do — it climbed, and then it kept climbing, far past anything the fundamentals justified.
03Chapter 3 — The other side of the ledger
eBay is the story people remember, but Stross spends real time on the bets that did not print money, and one of them looms over the second half of the book: Webvan. The idea was grocery delivery, built on enormous automated warehouses that would take orders online and drive them to your door. In the logic of the late nineties it was exactly the kind of thing venture capital was supposed to fund — a huge market, a bold reinvention, a company willing to spend heroically to own it before anyone else could.
Benchmark backed Webvan, and the money poured in from every direction; the company raised staggering sums and built its warehouses at a pace that assumed demand would arrive to fill them. Stross watched the meetings where the scale kept getting bigger. There was a confidence in the room that came partly from eBay — the recent proof that betting huge could pay huge. Webvan went public and was briefly valued in the billions, another paper fortune stacked on top of the first.
04Chapter 4 — What the fly on the wall actually saw
What makes eBoys more than a highlight reel of a hot firm is what Stross's access reveals about the model itself. Venture capital, seen from the Monday meeting rather than the annual report, is not a machine for identifying winners. It is a machine for placing a spread of bets in a domain where the returns are wildly lopsided — where most investments return little or nothing, and the entire performance of a fund can hang on one or two positions that multiply by a hundred or more. The skill is real, but it operates inside an outcome distribution that no amount of skill can tame.
This reframes what the partners were actually doing when they got rich. They had built a firm designed to capture outliers — flat, small, disciplined — and then an outlier arrived. But the size of eBay's payoff was set by a public market that had lost its grip on valuation. Benchmark's structure earned it a seat at the table; the mania of 1999 set the stakes. Stross keeps both facts in view at once, which is harder than it sounds, because the easy version of the story credits everything to the men in the room.
05Conclusion
By the time Stross closed his notebook, the arithmetic was settled: a $6.7 million stake in a small auction site had become one of the great returns in venture history, and six men who had opened a firm with an aspirational name had made themselves, on paper and then in fact, extraordinarily rich. eBay carried the fund. Webvan and the others reminded everyone what the fund had been risking. Both stories came out of the same room, the same instincts, the same Monday meetings.