The Equal Partnership
Divide the pie evenly and the emergent behaviours — voice, candour, rooting for each other — follow.
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 5
- Confidence
- 88%
Gurley offers the structure as the precondition for Benchmark's decision process rather than as a compensation policy. The founding partners did something that had not been done in venture: they created an equal partnership. Most business partnerships, including private equity, law firms and real estate firms, run a hierarchy where the longest-tenured sit at the top and take an outsized amount. Some of Benchmark's founding partners had worked at those firms and felt the young people did more of the work, so the structure was not conducive to the right type of internal behaviour. The mechanism is that equality is granted, not earned: even today when Benchmark hires a new partner, they come in with an equal seat at the table and the pie is simply divided. Gurley identifies three emergent properties. Everyone's voice is heard, because in a hierarchical firm the big boss's pronouncement would carry disproportionate weight. Partners root for one another, since at an up-or-out firm you are competing with your peers, whereas here Gurley wants new partners to be as successful as possible. And the learning process gets passed down through partner meetings where new partners bring in every company they meet and the group discusses them afterwards — the same way, he notes, storytelling worked in a tribe centuries ago.
Origin
Benchmark's founding partners created the equal partnership at the firm's inception, deliberately breaking with the tenure-based hierarchies at the private equity, law and real estate firms several of them had come from, where they judged that junior people did more of the work for a smaller share.
Core principles
- 01Most partnerships — private equity, law, real estate — rank by tenure, so those who have been there longest take an outsized share.
- 02Benchmark's founders had worked in those firms and judged that the young people did more of the work, which produced the wrong internal behaviour.
- 03An equal split is applied to new partners on arrival, not earned over years, which is what makes the signal credible.
- 04Equality changes whose voice carries: in a hierarchical firm the big boss's opinion outweighs everyone else's by structure.
- 05Under an equal split, senior partners actively want new partners to succeed, because the pie is shared rather than competed for.
- 06Gurley describes these as natural emergent properties of the structure, not values you have to enforce.
How to run it
- 1
Audit the existing allocation against the work
Map who takes the largest share and who does the most work. Benchmark's founders started from the observation that in hierarchical firms the young people did more of the work.
Pro tip Do this honestly at founding, when nobody's share is yet entrenched.
Watch out Retrofitting equality onto an established hierarchy means asking incumbents to give up economics they already hold.
- 2
Make the split equal from arrival
Grant a new partner an equal seat and an equal share of the pie the day they join, rather than vesting them toward parity over years.
Pro tip Say it explicitly in the offer — the credibility of the structure depends on it being unconditional.
- 3
Remove up-or-out dynamics
Eliminate the promotion tournament that makes peers into competitors. Under an equal split, a partner's incentive is for their colleagues to succeed.
Pro tip Gurley describes feeling this both on the way in and on the way out of his own career at the firm.
Watch out If any residual carry or seniority ladder survives, the competitive dynamic returns.
- 4
Run meetings where every voice actually carries
Structure decision meetings so that no single person's view dominates by position. The point of the flat economics is that they make flat discussion credible.
Pro tip Have the newest partner speak before the most tenured on each item.
Watch out Equal economics with a dominant personality in the room recreates the hierarchy informally.
- 5
Use the partner meeting as the apprenticeship
Tell new partners to bring in every company they meet, have those companies present, and discuss them afterwards. That discussion is where the collective wisdom transfers.
Pro tip Expect a long run of nos before the first quick yes; the learning is in the sequence.
Watch out The passed-down patterns are loose pattern recognition, not rules, and must be constantly re-checked.
In the wild
Bruce Dunlevie had built relationships deep in the org chart at a software tools company, and an engineer from there came to him about a marketplace called eBay. Bob Kagle turned out to be far more excited about it than Dunlevie was, so Dunlevie simply made the introduction and Kagle did the deal.
→ Kagle became the number one ranked VC in the land off that investment. Gurley's point is that this hand-off is only frictionless because the partnership is equal — as he puts it, that's all cool.
A new Benchmark partner was told to bring in every company he met. The group said no to company one and no to company two, and he became frustrated. On the tenth, the reaction was the complete opposite: close that immediately.
→ The partner absorbed the firm's collective wisdom through the meeting itself, which is how Benchmark passes down judgement rather than codifying it into rules.
Common mistakes
Assuming the split is only about money
Gurley presents the equal partnership as the reason Benchmark's decision process works at all. Treating it as a compensation choice rather than a governance choice misses that voice, candour and mutual support are the actual outputs.
Keeping a residual seniority ladder
If any part of the economics still rewards tenure, the up-or-out competitive dynamic survives and partners return to competing with their peers rather than rooting for them.
Codifying the passed-down patterns into hard rules
The learning transferred in partner meetings is deliberately loose pattern recognition. Gurley warns that those rules can get you in trouble and must constantly be checked, because a hard rule sets you up for the next Google-shaped miss.
Is it for you?
Best for
Founders designing an investment firm, agency or professional partnership where judgement quality depends on candid disagreement.
Not ideal for
Organisations where contribution genuinely varies by an order of magnitude between partners and equal economics would be plainly unjust.
From the transcript
“the founding partners of Benchmark did something that was not hadn't been done before in Venture which is they created an equal partnership”
“even today when we go hire a new partner they come in and they have an equal seat at the table we just divide the…”
“I think everyone's voice is heard whereas if you had a hierarchical firm and the big boss walked in and said blah blah blah like…”
“here because we're going to divide it equally I want our new partners to be as successful as I possibly can”
From the episode
#651: Legendary Investor Bill Gurley on Investing Rules, Finding Outliers, Insights from Jeff Bezos and Howard Marks, Must-Read Books, Creating True Competitive Advantages, Open-Source Strategies, Adapting Mental Models to New Realities, and More