Aug 11, 2023 · 1h 35m · allin
E141: State of Series A's, VC dry powder, IPO window opens + more with Bill Gurley & Brad Gerstner
Jason Calacanis · 25m spoken David Sacks · 15m spoken Bill Gurley · 15m spoken Brad Gerstner · 14m spoken David Friedberg · 11m spoken Chamath Palihapitiya · 27s spoken Margin Call · 21s spoken
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In Episode 141 of the All-In Podcast, hosts Jason Calacanis, David Sacks, and David Friedberg are joined by guest venture capitalists Bill Gurley and Brad Gerstner to analyze the post-bubble venture capital contraction, LP liquidity crunches, impending down-round IPOs, enterprise software headwinds, AI investment trends, and macroeconomic debt realities.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 63.2% of the talking time here. How this is scored →
The hosts as informed peer 5.0 Guest teaching 4.8 Guest disagreement 2.4 The hosts pushing back 2.5
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 46:00 Gerstner rejects the austerity consensus
Brad Gerstner explicitly takes the opposite side of the hosts' narrative, arguing that market activity in Series A-C AI deals and sovereign wealth spending contradicts claims of total VC austerity.
Hardest push from the hosts ▶ 1:12:14 Sacks stops J-Cal on insider information framingDavid Sacks directly interrupts J-Cal to reject his framing that private market venture capital relies on illegal or improper insider information.
Biggest teaching moment ▶ 34:38 Gurley demystifies VC dry powder and LP marksBill Gurley educates the entire panel on how LP capital commitment mechanics work in practice and why mutual incentive alignment prevents realistic write-downs of inflated startup paper valuations.
The host holds their own ▶ 59:14 Sacks breaks down the denominator effectDavid Sacks demonstrates deep market expertise by analyzing how timing, public equity market declines, and portfolio allocation percentages created the denominator effect freezing LP capital.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Pre-Show Banter: Friedberg's $10 Haircut | 2 | 2 | 1 | 1 | Casual pre-show banter covering Friedberg's bad haircut experience and light introductions. Bill Gurley briefly previews his upcoming book on career advice and studying industry history. | |
| Favorite Biographies and Books That Shaped Careers | 3 | 3 | 1 | 1 | The group exchanges book and biography recommendations. Chamath briefly zoom-bombs from a boat in the Mediterranean before the panel resumes sharing favorite business and life biographies. | |
| Cinematic Inspirations, Kurosawa's Impact, and Biohacking Tangents | 2 | 2 | 1 | 1 | A relaxed conversation shifting from Kurosawa's cinema to personal biohacking routines like cold plunges and saunas. Everyone maintains an agreeable, conversational tone. | |
| VC Market Update: State of Series A Funding | 5 | 6 | 2 | 2 | The group analyzes Series A Carta data showing dropped valuations and check sizes. Gurley explains how large fund sizes pulled VC focus to late-stage deals where management fees are easier. | |
| VC Dry Powder Misconceptions & LP Mechanics | 4 | 7 | 3 | 2 | Gurley debunks the dry powder myth, explaining that committed capital sits with LPs rather than in VC bank accounts. He further details how LP bonus incentives prevent accurate paper markdowns. | |
| SaaS Market Headwinds & The Dot-Com Parallel | 6 | 3 | 1 | 2 | Sacks draws a parallel between current SaaS headwinds and Yahoo during the dot-com crash, where startup austerity crippled enterprise customer budgets. | |
| LP Liquidity Squeeze & Long-Term Capital Crunch | 5 | 6 | 2 | 2 | Friedberg and Gurley discuss LP distribution mandates and liquidity squeezes caused by illiquid asset over-allocation under the Swenson endowment model. | |
| The Counter-Perspective: AI Mania & Sovereign Capital Inflows | 4 | 6 | 5 | 3 | Gerstner pushes back against the total austerity narrative, pointing out intense competition in early AI rounds and heavy continuous capital deployment from sovereign wealth and pension funds. | |
| The Reopening IPO Window & Late-Stage Cap Table Complexity | 5 | 7 | 2 | 2 | Gurley breaks down the structural friction of unicorn cap tables, showing how stacked liquidation preferences force companies to seek IPOs as a clean conversion mechanism. | |
| M&A Chill & The Wave of Down-Round IPOs | 5 | 6 | 3 | 2 | Gerstner shares Altimeter's internal tracking data showing tech IPO counts falling to zero in 2023, while predicting an impending wave of necessary down-round IPOs. | |
| University Endowments, Free Money Bubble & The Denominator Effect | 7 | 4 | 2 | 3 | Sacks articulates the denominator effect on LP portfolios following the 2021 market peak, explaining why domestic allocations to venture capital abruptly halted. | |
| Software Recession, Post-Bubble Hangover & 'Margin Call' Lessons | 6 | 5 | 2 | 2 | Sacks describes the ongoing software recession using a Twitter contract renegotiation case study, while Gurley reflects on VCs holding positions past peak market valuations. | |
| Public Tech Power Laws, QQQ Benchmarking & VC Value Realization | 6 | 7 | 4 | 4 | Friedberg brings up Gokul Rajaram's QQQ benchmark tweet. Gurley counters the logic, noting that only a dozen companies in history justify holding post-IPO, making broad application a mistake. | |
| Crossover Investing Strategy & Market Valuation Realities | 6 | 4 | 3 | 5 | Gerstner discusses crossover fund opportunities when public markets overshoot downward. Sacks firmly corrects J-Cal's assertion that private investing relies on insider information. | |
| Benchmark Analysis & Historical Venture Deployment Totals | 7 | 3 | 3 | 4 | Sacks highlights hindsight bias in benchmark charts and presents historical deployment figures demonstrating how $350B in 2021 was an extreme outlier relative to historical norms. | |
| Debating Venture Capital Dynamics and Unicorn Valuations | 5 | 5 | 3 | 3 | Gurley notes the cultural difficulty of transforming growth-at-all-costs unicorns into disciplined operators. Sacks contrasts the historical 17 great companies per year metric with recent unicorn inflation. | |
| Macroeconomic Analysis: Inflation Rates and Mounting Debt | 7 | 5 | 2 | 3 | Gerstner walks through CPI disinflation charts and San Francisco Fed proxy rates, while Sacks cites record consumer and national debt statistics to evaluate macroeconomic risk. |
Statements from this episode (30)
Friedberg: Steve Jobs' biography transformed his management style at Climate Corp
“Reading about how jobs ran his management team, it actually changed my behavior going into the office. I took a very different approach, and I saw the results almost immediately.”
Sacks: Business self-help books are too theoretical to be helpful
“I kind of came away from, like, thinking that business self-help books just weren't that, they're too theoretical and weren't that helpful.”
Friedberg: Seven Samurai is the best movie for startup founders
“Seven Samurai, by the way, if you're a startup founder, entrepreneur, CEO, best film to watch.”
Gurley says investing is now a hobby and rejects new board seats
“This is more of a hobby thing for me. And I don't want board seats anymore.”
Sacks predicts one to two years of distress for peak 2021 startups
“However, I think there's going to be a one to two year period of distress for all of these companies that raised in the peak. 20, 2020, 21, and are now running out of money, and they don't have enough revenue, they're not growing fast enough, and or their burn…”
Gerstner: 100% of 2021's thousand unicorns will face down rounds
“Remember we had a thousand unicorns at the end of 2021. And I've said a hundred percent of those are going to do a down round. And we're still in the early stages of that reset to occur.”
Gurley: LP bonus structures disincentivize GPs from marking down valuations
“Many LPs are actually bonus on the paper mark, and this is something that a lot of people don't realize, and so they don't have an incentive to dial around to the GPs and say, get your marks right, because it's actually gonna reflect poorly on them if they wer…”
Gurley has never seen an LP pressure a GP for valuation markdowns
“I've never heard of an LP like browbeating GPs to get their marks right. Like, especially on the downside. Never heard of that ever.”
David Sacks: Craft Ventures is deploying capital slowly despite heavy dry powder
“We do have a lot of dry powder and we're going really slow. I mean, there's no feeling that we have to rush out and deploy this capital.”
David Sacks: Fewer software startups are meeting Craft's investment criteria
“That bar hasn't changed for us, but the number of companies meeting that bar has gone down considerably.”
Friedberg: Institutional LPs are slashing new VC fund commitments up to 100%
“I've heard several folks talk about how they're reducing commitments by 50%, two thirds, or in some cases, a hundred percent, particularly after the mad rush for capital over the last couple of years or capital commitments, I would say for the last couple of y…”
Gerstner: AI startups are raising at $600M valuations on zero revenue
“We're seeing four or five, six hundred million dollar deals get done on zero revenue, two, three million dollars in revenue”
Gurley: IPOs are the easiest way to clean up complex cap tables
“When you get to that place, sometimes going public is just the easiest way to clean it all up.”
Gurley: 2021 hyper-competition eliminated IPO liquidation preference protections for investors
“Because of hyper competition and investing in 99, 2020, 20, 20, 21, there was a term removed from most term sheets that gave Investors the right to protect their Lickpref on IPO. That's gone in most of these cases.”
Gurley predicts more tech IPOs in late 2023 to resolve cap tables
“I think you will see. There's two things. I think that complex, cleaning up complexity is a great reason for the public market, and Brad already said, we've seen a massive recovery in, in software stocks, like the marks are better than they were two years ago.”
Gerstner: Altimeter tracked zero tech IPOs in 2023 year-to-date
“We're one of the major buyers in tech IPOs, so I just went to the team and said, how many IPOs were we tracking and did we consider participating in during these years? So that was 46 in twenty-twenty. A hundred in 20, 21. Three in 20, 22 and zero year to date…”
Gerstner predicts up to seven tech IPOs in late 2023
“I think we're going to see five, six, seven IPOs, good size IPOs in Q four. We'll probably see closer to 10 in Q one, and then it will start opening up in the back half of next year”
Gerstner: Tech companies with $100M-$200M revenue should go public, not stay private
“You should not stay private forever. You should get your company. If you have a hundred or two hundred million in revenue, get your company public, innovate and grow in the public markets with the discipline and cadence of the public markets.”
Sacks attributes LP funding slowdown to denominator effect over-allocation
“That's why all of a sudden the LP commitments have dried up is because they're over allocated to VC.”
Sacks: The software industry faces its worst recession since the dot-com crash
“I think that it's been masked by the fact that the rest of the economy seems to be okay, but this is the worst software recession we've been in. I think since the dot-com crash”
Gurley: VC outperformance depends on rare speculative market peaks
“A vast majority of the reason venture outperforms other asset classes has to do with these tiny windows when you have a super probably market, and if you don't, if you aren't around for that part, you know, if you strip those years out of a forty-year assessme…”
Gurley: Only 10 to 15 VC-backed companies ever generated massive post-IPO returns
“I think the total number of companies that meet that criteria in the history of the venture industry is like, 10 or 15.”
Sacks: Craft Ventures plans to hold SpaceX investment until IPO
“I think we're going to wait till the company IPOs. I think that would be our default.”
Sacks: VCs rarely hold an informational advantage over public market investors post-IPO
“Once the company is public and the public has all the information through disclosures, The odds that I know something special that a seasoned public market investor doesn't is probably pretty low.”
Gerstner: Altimeter bought Meta during 2022 public market collapse
“In 2022, we had this massive correction in the public markets. We believed that they overshot. In part, we believed that because we didn't think we were going to have hyperinflation forever, et cetera. And so you and I invested in, you know, Meta and a lot of …”
Gerstner: Public tech valuations are at fair value; alpha requires stock picking
“A lot of the positive arbitrage that we saw in 22 has been squeezed out of the public markets and we're close to fair value. So now if you want to generate alpha, this is going to be about picking individual winners versus individual losers.”
Sacks: US VC deployment peaked at $350B in 2021 before resetting
“Before 2014, call it, the industry was basically a fifty billion dollar a year industry in terms of deployments. Then you had a run-up where, for several years, it was around a hundred billion, and then in the pre-pandemic years, 2018, 1920, it was around a hu…”
Gerstner notes Google raised only $23M in venture capital before its IPO
“Twenty three million of total venture raised, I think, prior to IPO.”