The Ledger
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Gurley: IPOs popping 50% to 70% are far more expensive than SPACs
“You know, everyone says SPACs are expensive, but when your stock pops 50 to 70% in the IPO, that's way more expensive than a SPAC, and so it created this window.”
Gurley: Claims of Disrupting Traditional Venture Capital Have Been Proven False
“I think this whole notion that you're going to disrupt and fundamentally take over the business has just been proven false over and over again. AngelList is awesome, but it's not 20% of the industry, you know. Andreessen said, we're going to completely, you kn…”
Gurley: Capitalist benevolent dictatorships operate more efficiently than the US
“If you have a benevolent dictatorship attached to capitalism, you can actually fix problems faster and cause capitalism to, I think, achieve what it's meant to achieve in a much more efficient way than where we are in the US.”
Gurley: Only a fraction of VCs take board duties seriously
“If you look at all the venture dollars that are out there, I think the numbers that really take that role seriously is actually a small fraction of.”
Gurley: Public optimism from VCs is targeted founder marketing
“Any time a venture capitalist opens their mouth, they're probably sending a message to the founder they haven't met yet, and saying that it's going to be 30 years of wonderful glory, all roses, and no thorns, is certainly a better message than screaming, the s…”
Gurley: Trying to call the market top is a VC's biggest mistake
“I think you have to invest as a venture capitalist over the cycle, like, over a 20 or thirty-year period, and the biggest mistake you could possibly make is trying to call the top, and so, unfortunately, I think, you know, have a little, I call it the Thelma a…”
Gurley: Benchmark practices stage discipline, not price discipline
“I think he's misinterpreting price discipline for stage discipline. So we have notably stayed focused on early stage investing, whereas most people have moved to multi-stage. I think that makes the impression look like that your price discipline because you're…”
Gurley: Trying to call the market top is a VC's biggest mistake
“I think you have to invest as a venture capitalist over the cycle, like over a 20 or thirty-year period, and the biggest mistake you could possibly make is trying to call the top.”
Gurley: There Is No Such Thing as Conservative Venture Capital
“There's no such This thing is conservative venture. You don't take your cards off the table and maximize return. It never works.”
Bill Gurley: Tiger Global's late-stage strategy is meticulous and research-driven
“Having talked to Scott and understand what they're doing, it's very meticulous and Top down. Tons of research. They have a plan they're executing on, but that's provoking other people to lay chase”
Bill Gurley: Power-law returns make late-stage venture investors valuation-agnostic
“It's easy to become valuation agnostic to a certain extent, because you've seen, if you hit a winner, if you hit a snowflake, if you hit a Uber or whatever, it ends up being a hundred X more than where you are today, so you become indifferent.”
Gurley: 2021 tech market resembles 1999 dot-com bubble more than 2016
“Compared where we were to the dot-com bubble five years ago, and I have a little bit of a chicken little reputation issue here, but things are clearly more like 99 today than they were five years ago”
Gurley: Tiger Global's venture strategy is meticulous and research-driven
“Having talked to Scott and understand what they're doing, it's very meticulous and Top down. Tons of research.”
Gurley: Trying to call market tops is a venture investor's biggest mistake
“And so, I think you have to invest as a venture capitalist over the cycle, like, over a 20 or thirty-year period, and the biggest mistake you could possibly make is trying to call the top.”
Gurley: Nine-Month Venture Deployment Cycles Eliminate Portfolio Time Diversity
“I also think there's massive benefit to time diversity in a portfolio. Having lived through cycles before you spend a fund in nine months, you've got no time diversity on that.”
Gurley: Failing to pursue Google at 25 employees was my biggest mistake
“My biggest mistake was clear because I brought Larry and Sergey in to present when there were 25 employees, and we didn't lay chase.”
Gurley: Benchmark passed on Jack Dorsey's Series A pitch for Square
“Another one that's very similar, and it wasn't me, it was a different partner, but I don't think I was helpful, was Jack That brought Square to us on the A.”
Gurley: There is no such thing as conservative venture capital
“And so there's no such thing as conservative venture. You don't take your cards off the table and maximize return. It never works, and so you're forced to, you know, I've used this phrase before, but play the game on the field.”
Gurley: Near-zero interest rates break DCF models and drive market speculation
“Clearly the one thing that's different from the past 102 hundred years are near zero interest rates, maybe below zero real rates across the globe, and, you know, technically your DCF model just Blows up. It doesn't work, right? It doesn't solve. And at the ver…”
Gurley: SaaS valuation multiples of 20-40x revenue match 1999 bubble
“And we're seeing, you know, not since oh one, we're seeing unprecedented valuations, you know, these SAS companies, 20, 30, 40 times revenue, which hasn't happened since, since 99, 2000.”
Gurley: Conservative founders will be left behind by aggressive competitors
“Well, unfortunately, you are forced to play the game on the field. So if you act conservatively, and your two competitors act aggressively, you will be left behind.”
Gurley: Markets favoring growth over profits create massive company wrecks
“When the world is rewarding, aggressive growth, don't care about profitability, you're going to have a mix of end results. You're going to have some of the snowflakes in Amazons, and you're going to end up with a lot of wrecks on the, you know, massive wrecks.”
Gurley: Autonomous driving won't eliminate all Uber drivers within 30 years
“Oh, autonomous driving is going to get rid of every Uber driver. You know, if that happens within 30 years, I'll be shocked.”
Gurley: Ignore Airbnb and DoorDash valuations until post-lockup expiration
“I wouldn't put too much on an Airbnb or DoorDash valuation. I'd wait until you get, you know, three to six months past the lockup release when you have full of”
Gurley: Tech valuations imply impossible 100% annual growth for 10 years
“You're going to have implied taggers of a hundred percent for 10 years just to be able to earn your way into the valuation.”
Gurley: SPAC companies are more speculative with some EV firms showing zero revenue
“To date, a lot of the companies that have gone out via SPAC are more speculative than ones that would take a traditional IPO route, and you could measure that by their level of profitability or their level of immaturity from a revenue standpoint, some of which…”
Gurley: India failed to meet economic potential due to tribal democracy
“By the way, it's one of the reasons why India has failed to, like, live up To expectation from a population standpoint, because they've had a tribal democracy for a very long time that causes a lot of the same problems.”
Gurley: Most Multi-Decade VC Returns Accrue at Cycle Ends
“The vast majority of the average returns over a multi-decade window are right at the end of the cycle.”
Gurley: Startup Burn Rates Are Orders of Magnitude Higher Than 1999
“The burn rates now are probably tours of magnitude higher than they were in the 99, 2000 timeframe for some of these companies.”
Gurley: Entry price is irrelevant for startups with 100x return potential
“I think the real caveat to it is if this company we're talking about has optionality to be a hundred X or be a fund maker kind of company, then certainly entry price does not matter.”
Gurley: Over-focusing on TAM analysis causes major early-stage investment mistakes
“And so what Sarah and I have talked about is just that I've come to believe people get into more trouble by over focusing on TAM analysis, especially in these super early stage companies.”
Gurley: Benchmark will not invest in a startup without a board seat
“We won't invest without a board seat. It's a tenant that we have that a lot of other firms don't.”
Gurley: A VC's long-term reputation dictates their future deal flow
“You know, if you're going to be a successful venture capitalist, For two or three decades, you're going to have a reputation, and your reputation is going to be a part of what allows you to win or not win investment opportunities in the future, and so you'd be…”
Gurley: Venture capital inherently favors younger investors
“I think venture capital bends towards youth. There's a hustle element. There's a curiosity element. There's a lot of these really big outcomes are started by people that are 19 to 21.”
Gurley: Venture capitalists spend 85% to 90% of their time selling
“I think people on the outside may not realize how much selling goes into venture capital. It's probably the one thing that I didn't realize when I joined that I know innately now. But I could argue you're spending 85 or 90% of your time selling, and so if you …”
Gurley: Capture late-cycle market upside rather than playing defensive
“The best way to protect against the downside is to enjoy every last bit of the upside. I've got no incentive to change my operating principles or the way I go about doing the job just because I think one day the cycle might end. And so I'm going to be operatin…”
Gurley: Benchmark should have accepted Google's $100M valuation offer
“So I had a meeting or my firm benchmark had a meeting with Larry and Sergey where they said, will you invest at a hundred pre? And we should have said, yes, I would tell myself that.”
Gurley: Venture firms must dwell on missed winners, not bad investments
“Because of the asymmetry situation that I talked about, we do dwell on the decision errors that led us to miss big winners. We don't dwell on the decision errors that led us to make a bad investment.”
Gurley: VC LP Gains Peak Right Before Major Market Resets
“If you were a LP that had been exposed to venture capital for the past 30 years, it'd be interesting, you would notice that some of your biggest gains were the years right prior to the resets, in like, oh, one and oh, nine.”
Bill Gurley: Crossover hedge funds have shifted to closed-end venture structures
“A lot of these hedge funds used to run a two-in-twenty book that marked every year, and they've all switched to this venture model where they raise capital, invest it, and then return it.”
Gurley: 2021 Startup Burn Rates and Capital Raised Are 10-20x 1999 Levels
“The scale is way larger, both in terms of the amount of money being raised by each company and the burn rate. And I would say that's by 10 to 20 X.”
Gurley: Non-SaaS mid-cap public tech stocks dropped 50% in six months
“You know, people were forwarding around some charts on Twitter that showed a lot of the non-SaaS, non-FANG, mid-cap public companies. They're already average cut in half right now. In the past six months, no one's really paying attention to it”
Gurley: Major Shareholders Cannot Realistically Sell Large Secondary Stakes Privately
“If you own 20% of a company and they're raising a private round and you try and take half of that off the table, you're going to affect the price pretty dramatically. So I don't think those type situations are realistic liquidity events for large shareholders.”
Gurley: Real VC risk is missing a winner, not losing $10M
“When I think back on that or any of the other misses, there's just this failure to imagine how high is up and to recognize that the risk is really missing it rather than losing ten million dollars.”
Gurley: Speculative busts leave behind valuable infrastructure that benefits society long-term
“Yeah, I mean, other people have talked about this, but, you know, if you look back at a 2000 time frame, a lot of the money that was, that busted went into telecom infrastructure, and people argue that we are better off having that stuff built out, even if the…”
Gurley: Institutional LPs and endowments are full on venture capital allocations
“I'll call it tiger chase, and so I've seen some signs that Would suggest they're full, actually, partially because of the returns and partially because of, you know, how far do you want to take the risk on morphing your asset allocation model?”
Gurley: Benchmark Studies Missed Breakout Deals More Than Portfolio Failures
“I personally, in our firm, we study the great breakouts that we miss the most. So that's not failure in our portfolio. That's failure of us to chase the deal that ends up outside of our portfolio. That's the thing we sweat the most.”