# BONUS: Bill Gurley on Investing Early in Tech Disruptors & 'Runnin' Down a Dream'

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 4 Mar 2026, 1 h 09 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/665d3069-cd2a-4f29-bb40-b40301816475/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

On this special bonus episode of Masters in Business, Barry speaks with Bill Gurley of Benchmark about his big bets investing early in now-common names like Uber, Zillow, OpenTable and others, plus his new book, "Runnin' Down a Dream: How to Thrive in a Career You Actually Love". See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in
[0:11] Speaker 1: Business with Barry Ritholts on Bloomberg Radio this week on.
[0:16] Speaker 2: The podcast what Can I Say? Another banger? Bill Gurley
[0:21] Speaker 2: of Benchmark Capital, Legendary VC, early investor in uber, Zillow,
[0:27] Speaker 2: Open Table, Rubhub, next Door, the List, Instagram, just Twitter,
[0:34] Speaker 2: The list just goes on and on and on. What
[0:36] Speaker 2: a fascinating career filled with insights not only about venture investing,
[0:42] Speaker 2: but about building a career that you love. I thought
[0:47] Speaker 2: this conversation was fascinating, and I think you will also
[0:49] Speaker 2: with no further ado my conversation with Benchmarks Bill Girley.
[0:55] Speaker 2: Before we get into the book, which I found very interesting,
[0:59] Speaker 2: and your whole career, Let's start with your background. You
[1:03] Speaker 2: get a bachelor's in computer science from the University of
[1:06] Speaker 2: Florida and then an MBA from UT Austin. What was
[1:11] Speaker 2: the original career plan?
[1:12] Speaker 3: So I fell in love with computers at a young age,
[1:15] Speaker 3: and many people that get to Silicon Valley you hear
[1:17] Speaker 3: that common refrain. I had a Commodore VIC twenty that
[1:20] Speaker 3: would plug into your television and it didn't have solid
[1:24] Speaker 3: state memory, so you type programs in but when you
[1:27] Speaker 3: turned it off, done it done? Yes, to start over anyway.
[1:31] Speaker 3: I fell in love with programming, as many people do,
[1:34] Speaker 3: and just amazed that you could create things, you know,
[1:38] Speaker 3: And so that was my undergrad degree. I worked for
[1:43] Speaker 3: two years in change at Compact Computer Corporation using those
[1:47] Speaker 3: skills and discovered that that wasn't going to be my
[1:51] Speaker 3: long term path.
[1:53] Speaker 2: You said you were exceedingly bored at what looked like
[1:57] Speaker 2: on paper a dream job.
[1:59] Speaker 3: Explain, Well, back then, Compact was a leader in the
[2:06] Speaker 3: personal computer business, and we would release one PC and
[2:09] Speaker 3: then usually around an Intel generation, you would reach the
[2:14] Speaker 3: next PC.
[2:15] Speaker 2: See kids today don't remember three six forty six all DM.
[2:19] Speaker 3: It was like a big deal. H Yeah. And so
[2:22] Speaker 3: we started on the third project that was a lot
[2:26] Speaker 3: like the second and a lot like the first. And
[2:29] Speaker 3: I asked myself a question, and I don't know if
[2:31] Speaker 3: I realized I was doing it as much now as
[2:35] Speaker 3: as much then as I do now. I asked myself
[2:38] Speaker 3: the question, is this what I want to be doing
[2:40] Speaker 3: thirty years from now? And in any organization there's someone
[2:44] Speaker 3: that's a lifer that you can like ask yourself, is
[2:48] Speaker 3: that what I want? AND's with no judgment towards people
[2:51] Speaker 3: that do that. But it became very clear that that
[2:53] Speaker 3: wasn't for me. And this would be particularly interesting for
[2:56] Speaker 3: your audience because it's an investment crowd at home at night.
[3:00] Speaker 3: I had read One Up on Wall Street by Peter
[3:03] Speaker 3: and I had opened a Prodigy account, which was this
[3:06] Speaker 3: precursor to AOL, and I was starting to get really
[3:11] Speaker 3: interested in stocks. I had bought the Value Line. Remember,
[3:14] Speaker 3: this thing became a big notebook with the one pagers.
[3:18] Speaker 2: Updates, the three ring binders, and like a whole shelf
[3:22] Speaker 2: of a malphabetical.
[3:23] Speaker 3: And one thing I'd really encourage people to think about
[3:26] Speaker 3: is what are you doing in your free time? And
[3:29] Speaker 3: maybe you should Is there a clue that that should
[3:31] Speaker 3: actually be what you do full time? And so this
[3:34] Speaker 3: thing was itching at me.
[3:36] Speaker 2: So first gig in finance was that Deutsche Bank.
[3:40] Speaker 3: No, It's credit sweets first Boston. So I while I
[3:43] Speaker 3: was at the University of Texas NBA program, I thought
[3:47] Speaker 3: about venture but it seemed very hard to get towards.
[3:51] Speaker 3: I like technology, I like disruption, I liked programming, and
[3:56] Speaker 3: it seemed hard to get at But at that time,
[3:59] Speaker 3: when you get to business school, some young adults like
[4:02] Speaker 3: to pretend their financiers, and so they read Fortune, Forbes,
[4:06] Speaker 3: the Wall Street Journal, and the Atrium, you know, as
[4:08] Speaker 3: if and I would read the tech articles. And there
[4:12] Speaker 3: was a team at Goldman Sachs on the cell side,
[4:15] Speaker 3: and the cell side I think was more kind of
[4:18] Speaker 3: held in higher regards then show. And this team with
[4:23] Speaker 3: Dan Benton and Rick Sherlin and Goldman got quoted all
[4:25] Speaker 3: the time. And I said to myself, you know, I
[4:27] Speaker 3: really love my corporate strategy class. I love technology. These
[4:32] Speaker 3: people get to opine on it and are treated as experts.
[4:37] Speaker 3: So I went to I came here to New York
[4:39] Speaker 3: and I knocked on doors cold. I asked those that
[4:43] Speaker 3: particular team for a meeting. They let me in. I'm
[4:46] Speaker 3: a freshman, our first year at the URSYECH. They let
[4:50] Speaker 3: me in, and I told all the other research directors,
[4:53] Speaker 3: I'll be in town meeting with those guys. And I
[4:57] Speaker 3: got like ten meetings doing that. And one of those
[5:01] Speaker 3: individuals was Al Jackson, and he gave me a shot.
[5:04] Speaker 3: And I can remember the first day of orientation there
[5:08] Speaker 3: were like forty new people from NBA programs and we
[5:11] Speaker 3: had to go around and say our name in school
[5:13] Speaker 3: and it was what you'd expect Columbia, Wharton, Harvard, but
[5:18] Speaker 3: I was a University of I was, but I'm so
[5:24] Speaker 3: grateful to Al for giving me that shot. The cell
[5:27] Speaker 3: side analyst job has one trait that is remarkable, which
[5:31] Speaker 3: is you immediately get to start talking to CEOs and
[5:34] Speaker 3: CFOs and I don't know of any other job where
[5:38] Speaker 3: that just happens right away, right out of school. Yeah,
[5:41] Speaker 3: so the access was amazing. I ended up getting to
[5:44] Speaker 3: cover the industry. I worked in the computer industry. I
[5:47] Speaker 3: got to know the team at Dell. We I very force.
[5:52] Speaker 3: This story involves our mutual friend Mike Mobison, sure, but
[5:57] Speaker 3: because of something Mike taught me, I got very bullish
[6:01] Speaker 3: on Dell, and it was trading it six times earnings
[6:04] Speaker 3: because they had had some issues, and.
[6:07] Speaker 2: I recall the big I think that a CFO that
[6:10] Speaker 2: was doing some dumb swap they had.
[6:12] Speaker 3: They had an options future currency thing that went wrong,
[6:16] Speaker 3: and their laptop caught on fire, and both those things
[6:20] Speaker 3: happened at the same time. And so mister Mobison had
[6:24] Speaker 3: really gotten into ROC analysis at that time, one of
[6:27] Speaker 3: the first people to really get behind it, and he
[6:30] Speaker 3: had me read this book valuation from McKenzie and the
[6:33] Speaker 3: stern Stewart book. And when I ran those ro i
[6:37] Speaker 3: C calculations on all the players, Dell was like, it's
[6:41] Speaker 3: way of everybody, way above everybody because they were building
[6:44] Speaker 3: to individual order. They weren't building to him Andry. The
[6:47] Speaker 3: balance sheet was not tied up at all. They had
[6:49] Speaker 3: a positive cash conversion cycle. It was unbelievable.
[6:53] Speaker 2: You just had a weather the storm and on the
[6:55] Speaker 2: other side, but that means you're buying something.
[6:58] Speaker 3: Well, we went, we went strong by but because of
[7:00] Speaker 3: this ri C differential that no one was talking about.
[7:03] Speaker 3: Michael kindly tweeted about my book the other day and
[7:06] Speaker 3: said he taught us some things we didn't know ourselves
[7:10] Speaker 3: about our business. And it was a great run. I
[7:12] Speaker 3: mean that really launched my career because that stock went
[7:15] Speaker 3: up one hundred x.
[7:16] Speaker 2: Yeah, that was a that's a home run. That's a
[7:19] Speaker 2: venture like return. Yes, from a public company. How did
[7:22] Speaker 2: you end up at Deutsche Bank from CSFB.
[7:27] Speaker 3: I had the same thing happen one night. I was
[7:29] Speaker 3: at Parker Avenue Plaza on the thirty sixth floor and
[7:33] Speaker 3: I was there at like ten pm, as the young
[7:35] Speaker 3: people do, and I walked around and the lifers were
[7:37] Speaker 3: in the corner offices, and I stopped in front of
[7:40] Speaker 3: each of their offices and I said, is this what
[7:43] Speaker 3: I want to do the rest of my life? And
[7:46] Speaker 3: that night when I walked home, I knew it wasn't
[7:50] Speaker 3: to sellside. But I loved theel side. I had a
[7:52] Speaker 3: great run getting access to all those people being here
[7:56] Speaker 3: in New York, working like on Wall Street. As a
[7:59] Speaker 3: young person, it gave me so much energy and excitement,
[8:04] Speaker 3: like it's just it's a different deal if you're in it,
[8:07] Speaker 3: It's just a different deal. But but I knew it
[8:11] Speaker 3: was it was time, and I started looking around. I
[8:14] Speaker 3: almost took a job with Capital Group in la who
[8:19] Speaker 3: I still hold in a mintary guard as an investment organization.
[8:25] Speaker 3: And Frank Quatrone called me out of the blue. And
[8:28] Speaker 3: Frank was leaving Morgan Stanley. He is the most notable
[8:33] Speaker 3: high tech investment banker of all time. And he sat
[8:37] Speaker 3: down with me and we had a very candid conversation.
[8:40] Speaker 3: He asked me what I wanted to do long term,
[8:43] Speaker 3: and I told him, I said, I've come to this conclusion.
[8:46] Speaker 3: I don't want to be a seal sidnas anymore. He said,
[8:48] Speaker 3: what do you want to do? And I said, I
[8:50] Speaker 3: think I want to be a venture capitalist. And he said,
[8:53] Speaker 3: this almost sounds too good to be true. He says,
[8:56] Speaker 3: come to work for me for a while, be a
[8:58] Speaker 3: sales side as a little bit longer, I will move
[9:01] Speaker 3: you to Silicon Valley. I'll put you in the epicenter,
[9:04] Speaker 3: and I'll introduce you to every venture capitalist that I know.
[9:07] Speaker 3: And he knew them all. Wow, and yeah he was.
[9:11] Speaker 2: He was probably the acts on tech IPOs, certainly one
[9:15] Speaker 2: of the top three.
[9:17] Speaker 3: Yeah, and so I took that trade. He did everything,
[9:20] Speaker 3: he said. I only worked for him for thirteen months,
[9:23] Speaker 3: so it all. And in that window we secured the
[9:28] Speaker 3: mandate for the lead left position on the Amazon IPO.
[9:33] Speaker 2: Which turned out to work out.
[9:34] Speaker 3: Are you okay? And that's such a great piece of
[9:38] Speaker 3: kind of IPO tech history. If no one could name
[9:43] Speaker 3: whose lead left on the Amazon IPO, and you can
[9:46] Speaker 3: go find I do this frequently. Go look at the
[9:49] Speaker 3: S one and it's Deutsche Morgan grunt Fell lead left. Wow.
[9:53] Speaker 2: So how did you transition from working with Quatron at
[9:59] Speaker 2: Deutsche Bank to Benchmark? If you're right in the heart
[10:02] Speaker 2: of Silicon Valley?
[10:03] Speaker 3: He did what he said, he introduced me to every
[10:05] Speaker 3: VC I was taking so out of that list. Yeah,
[10:08] Speaker 3: we're taking quarterly meetings with Benchmark, where they're inviting me
[10:12] Speaker 3: into their Monday meeting and we're just chatting about where
[10:14] Speaker 3: the industry's going. Yeah, he really did what he said.
[10:17] Speaker 2: And but why Benchmark as opposed to Sequoia.
[10:25] Speaker 3: Actually, my first offering Adventure came from Anne Windblad, and
[10:29] Speaker 3: I was so eager to get into venture. When the
[10:33] Speaker 3: offer came at Hummer Windblad, I said yes, and I
[10:37] Speaker 3: didn't know what I didn't know. I got involved in
[10:40] Speaker 3: the organization. It was structured like a very traditional firm
[10:43] Speaker 3: where the founders made more equity than the young people,
[10:46] Speaker 3: and there was also a bit of a power differential
[10:49] Speaker 3: where you know, the person that got to dictate how
[10:52] Speaker 3: things went, where the elder states.
[10:55] Speaker 2: Old school lawyer account structure.
[10:58] Speaker 3: Yeah, and the guys had lived within those frameworks and
[11:04] Speaker 3: decided to do something crazy, which was to create an
[11:06] Speaker 3: equal partnership where everyone makes the exact same amount of
[11:10] Speaker 3: money and everyone has the exact same power within the
[11:14] Speaker 3: organization for decision making, and there's no leader. And I
[11:18] Speaker 3: can't tell you what it's like to have someone from
[11:23] Speaker 3: an organization like that reach out to a young person
[11:26] Speaker 3: and say, come on and be a part of this
[11:29] Speaker 3: versus the traditional one.
[11:31] Speaker 2: Be a partner, although I would imagine the whole eat
[11:34] Speaker 2: what you kill ethos could be a little intimidating.
[11:38] Speaker 3: Well, but here's the thing. I think at those hierarchical firms,
[11:42] Speaker 3: there's an upper out mentality, so the people at the
[11:45] Speaker 3: bottom live in constant fear of what you're talking about,
[11:48] Speaker 3: and they also get sharp elbows to the side. At Benchmark,
[11:52] Speaker 3: these founders were going to split equally whatever I did,
[11:56] Speaker 3: and so what I found was the cultural zeitgeist that
[12:02] Speaker 3: came out of that structure is one of immense help
[12:05] Speaker 3: and support. And so I immediately had four mentors who
[12:09] Speaker 3: had been doing this a lot longer than I did,
[12:11] Speaker 3: who were in my corner every single day, and then
[12:15] Speaker 3: I got to live through bringing other people in. It's
[12:18] Speaker 3: a wonderful recruiting tool to tell someone you're going to
[12:21] Speaker 3: be equal, but then you win when they win. And
[12:24] Speaker 3: you know, those original Benchmark founders who did very well
[12:28] Speaker 3: with their eBay and a REBA investment in fun one,
[12:32] Speaker 3: they all participated in uber investment that I brought in
[12:35] Speaker 3: the table and today you know, Eric Visher has got
[12:38] Speaker 3: cerebraus and I'm going to benefit from that. And it's
[12:42] Speaker 3: it is a culture that I think is really great
[12:47] Speaker 3: for generational change. And when I talked to LPs about
[12:53] Speaker 3: what I mean, the LP doesn't have much they can control,
[12:56] Speaker 3: right they're trying to decide, and the window for how
[13:00] Speaker 3: successful a fund is moving from seven years to fifteen
[13:03] Speaker 3: like you're getting past I mean, like the time you're
[13:06] Speaker 3: going to turn around and analyze whether investors any good
[13:10] Speaker 3: or not, you're going to be retiring. And so what
[13:14] Speaker 3: you can study is do you think the organization has
[13:19] Speaker 3: elements that will cause it to be able to succeed
[13:22] Speaker 3: with generational change? And I think one of the proudest
[13:25] Speaker 3: things of just me serving as part of it is
[13:28] Speaker 3: that we were able to move from a place where
[13:30] Speaker 3: the founders were the ones behind all the winners to
[13:33] Speaker 3: where the next generation was.
[13:35] Speaker 2: So when you joined Benchmark, I think you were relatively
[13:41] Speaker 2: I don't want to say a unicorn, but there weren't
[13:43] Speaker 2: a whole lot of public market research folks in the
[13:50] Speaker 2: VC world then Now it seems that it's a little
[13:52] Speaker 2: more common. But were you a little bit of a
[13:55] Speaker 2: one off one you join.
[13:56] Speaker 3: I know a piece of history that's probably not well known.
[14:00] Speaker 3: But Ben Rosen of seven Rosen, who's not a brand
[14:04] Speaker 3: you hear much of anymore. And and we're involved in Compact.
[14:08] Speaker 3: He was actually the chairman of Compact. He was a
[14:12] Speaker 3: he was a semiconductor analyst in the seventies, so he
[14:15] Speaker 3: was the first one, and then yeah, and then after
[14:18] Speaker 3: me and kind of it was kind of at the
[14:20] Speaker 3: same time. Danny Rymer was was a sell side analyst.
[14:24] Speaker 3: Mary Meeker was a self science so it was there
[14:26] Speaker 3: there were It was. The weird thing about venture is
[14:30] Speaker 3: if you like pulled people on their background prior to venture,
[14:33] Speaker 3: is is real diversity. There's like a whole bunch of
[14:36] Speaker 3: different pathways. Mike Meritch was a writer. But but right
[14:41] Speaker 3: I recall that there's a handful of us that came
[14:43] Speaker 3: that path. Huh.
[14:44] Speaker 2: Really interesting. Coming up, we continue our conversation with Benchmark's
[14:48] Speaker 2: Bill Gurley discussing his new book Running Down a Dream,
[14:53] Speaker 2: How to Thrive in a career you actually love. I'm
[14:57] Speaker 2: Barry Ritolts. You're listening to Masters and Business on Bloomberg Radio.
[15:15] Speaker 2: I'm Barry Ridolts. You're listening to Masters in Business on
[15:17] Speaker 2: Bloomberg Radio. My extra special guest today is Bill Gurley
[15:22] Speaker 2: of Benchmark Capital. He has a new book, Running Down
[15:25] Speaker 2: a Dream, How to Thrive in a Career you actually love.
[15:30] Speaker 2: I love the Tom Petty title What led you to
[15:33] Speaker 2: start with that I.
[15:35] Speaker 3: Put together back when I was super active writing blog posts.
[15:40] Speaker 3: I would keep these notes in digital form, but I
[15:44] Speaker 3: would start. I'd probably start three or four times as
[15:48] Speaker 3: many or blog posts as I finished, and so if
[15:52] Speaker 3: an idea popped in my head, I'd just write notes
[15:54] Speaker 3: down and see if I went back to it.
[15:56] Speaker 2: And that was a note.
[15:58] Speaker 3: Yeah. I had read these three biour fees of people
[16:00] Speaker 3: that were from very different fields, that all started on
[16:03] Speaker 3: the bottom rung and became remarkably successful in their field,
[16:08] Speaker 3: and I noticed a through line between them, and I
[16:11] Speaker 3: just wrote it down the same way I would figure
[16:13] Speaker 3: out how an internet marketplace company might thrive, Like, oh,
[16:17] Speaker 3: do this, this and this. And I got invited one
[16:21] Speaker 3: day back to my alma man to do a speech
[16:23] Speaker 3: and at Texas Business School, and I asked if I
[16:26] Speaker 3: could do this one and and so then I developed
[16:29] Speaker 3: it a little more and I put it out there.
[16:31] Speaker 3: They put it on YouTube and a few people noticed,
[16:34] Speaker 3: and one of those was James Clear, who wrote Atomic Cabage.
[16:39] Speaker 3: And I want to make this sound too mushy, but
[16:44] Speaker 3: like at some point I decided that it was time
[16:49] Speaker 3: to declare victory and hang up my boots and venture.
[16:52] Speaker 3: And it was a decision. It wasn't like the other decisions.
[16:56] Speaker 3: I spent twenty five years in Venture capita. I loved
[16:59] Speaker 3: every minute of it. It was my dream job. But
[17:02] Speaker 3: I wanted to start doing other things. And there's a
[17:05] Speaker 3: great book by Arthur Brooks, Strength The Strength, that talks
[17:08] Speaker 3: about people that reached that stage in life, and it
[17:11] Speaker 3: really spoke to me. And I decided to push this
[17:15] Speaker 3: book out. And two people had really gotten behind me
[17:18] Speaker 3: and pushed me to do that. One of them was
[17:20] Speaker 3: Tony Fidel, who invented the iPod and was head of
[17:23] Speaker 3: engineering on the iPhone.
[17:24] Speaker 2: I know I recognized that name.
[17:26] Speaker 3: He had a book called Build. He also started Nest
[17:29] Speaker 3: and he told me that it was the best thing
[17:32] Speaker 3: they had ever done, and that's kind of hard to believe.
[17:35] Speaker 3: And then I was talking to Danny Meyer last night,
[17:38] Speaker 3: the famous New York restaurant tour and founder of Shakesheck
[17:41] Speaker 3: and he said the same thing. He said. He said
[17:44] Speaker 3: the book Setting the Table was more rewarding for him
[17:47] Speaker 3: than anything he had done. And I asked him why
[17:49] Speaker 3: is that? And he told a story. This is a
[17:51] Speaker 3: very long answer. I'm sorry. He told his story about
[17:54] Speaker 3: being in Africa at a hotel and one of the
[17:58] Speaker 3: local workers in this restaurant were in. He was in
[18:03] Speaker 3: told him, look at how I'm doing the eggs and
[18:05] Speaker 3: it was a technique out of his book setting the table.
[18:09] Speaker 3: Oh really. And the reach, his argument was the reach
[18:13] Speaker 3: that he could get in sharing what he knew via
[18:16] Speaker 3: a book, you know, was exponential compared to what he
[18:19] Speaker 3: could do just opening another restaurant. And that was powerful. Anyway.
[18:23] Speaker 3: Once again, it sounds maybe a little too mushi or
[18:26] Speaker 3: sound not at all, But if I'd have written a
[18:28] Speaker 3: book about being a VC or an investor, there's only
[18:31] Speaker 3: a handful of people it might have touched. And I
[18:35] Speaker 3: felt very compelled to share this because I thought it
[18:39] Speaker 3: could have a bigger, much bigger reach, because it's not
[18:41] Speaker 3: just about a career. It could be applied to a
[18:44] Speaker 3: career in investing, but it's it's a much broader book
[18:47] Speaker 3: about doing what you love.
[18:49] Speaker 2: So let's talk about some of the items from the book,
[18:53] Speaker 2: starting with there's a stat I think it's in the introduction,
[18:57] Speaker 2: it's not even in the first chapter six ten people
[19:00] Speaker 2: say they do something differently if they could start over.
[19:04] Speaker 2: That's a horrifying statistical.
[19:06] Speaker 3: Well, we were studying this Gallup poll that said like
[19:08] Speaker 3: fifty three percent of people are quite quitting at work,
[19:12] Speaker 3: they're not engaged or don't consider themselves engaged at work.
[19:16] Speaker 3: And I think other people have echoed those types of thoughts.
[19:20] Speaker 3: And on a whim we I was working with a
[19:24] Speaker 3: co writer and researcher. We did a survey Monkey survey
[19:27] Speaker 3: and asked this question, if you could start over again,
[19:30] Speaker 3: would you do something different? That one came out seven
[19:32] Speaker 3: and ten. We hired we hired Wharton to do an
[19:35] Speaker 3: official academic review, and that one came out six and ten.
[19:40] Speaker 3: There's a book by Daniel Pink about regrets called The
[19:43] Speaker 3: Power of Regrets. He says that the regrets of inaction,
[19:47] Speaker 3: the stone unturned, the path not taken way in our brain.
[19:51] Speaker 3: We ruminate far more on those than regrets of action.
[19:54] Speaker 3: So we let ourselves off the hook for making mistakes.
[19:58] Speaker 3: We're pretty good getting passed them. And moving on. But
[20:01] Speaker 3: the thing we never tried, it really eats at us.
[20:05] Speaker 2: I forget the name of the book. They interviewed a
[20:07] Speaker 2: bunch of ninety year old people talking about their life regrets.
[20:11] Speaker 2: And it's never the comissions or errors. It's always the
[20:15] Speaker 2: things they never did because in your mind you imagine
[20:19] Speaker 2: an entire different pathway, and that's the that's the regret.
[20:24] Speaker 3: And one of the catchphrases we use in the book,
[20:27] Speaker 3: which came from my partner Kevin Harvey's life, is a
[20:30] Speaker 3: use it or lose it proposition.
[20:31] Speaker 2: For sure, Absolutely for sure. So the idea of career regret,
[20:36] Speaker 2: you lay out a variety of principles to avoid it,
[20:41] Speaker 2: starting with obsessive curiosity. Dive into that tell us about
[20:46] Speaker 2: obsessive curiosity.
[20:47] Speaker 3: All of the people that we studied and what we
[20:50] Speaker 3: expanded it from the presentation. I gave it to school
[20:53] Speaker 3: and probably read one hundred biographies. But every single one
[20:57] Speaker 3: of these people are obsessive learners in their field. And
[21:01] Speaker 3: you and I are both I already mentioned, but you
[21:03] Speaker 3: and I are both both a friends and a fan
[21:07] Speaker 3: of Michael Mobison. And and I don't think there's a
[21:10] Speaker 3: human that reads more books on finance than Mike.
[21:13] Speaker 2: It's a race between him and Larren Buffett.
[21:16] Speaker 3: Yes, and and he fully synthesizes him. When you know
[21:20] Speaker 3: one cheat code if you want to chase a dream
[21:23] Speaker 3: job and investing is you could just start by reading
[21:25] Speaker 3: Michael's books, because he's read all the other books, and
[21:29] Speaker 3: it'd be a great place to start.
[21:31] Speaker 2: But I literally have a couple of chapters in here
[21:34] Speaker 2: based on his work. Yes, yes, that because it's he's
[21:38] Speaker 2: just so seminal in so many ways.
[21:40] Speaker 3: And and and and in the book, you'll you'll see
[21:42] Speaker 3: examples of of Danny Meyer, the restaurant tour, Bob Bob Dylan,
[21:48] Speaker 3: you know, the folk singer. There's this part we uncovered,
[21:51] Speaker 3: you know most I'm sorry that the new movie missed this,
[21:55] Speaker 3: but you get more of it if you go back
[21:57] Speaker 3: to the Scorsese documentary. Some people called him a music expeditionary,
[22:04] Speaker 3: so he studied music at a level no one would
[22:08] Speaker 3: know this, like if they just listened to Dylan. But
[22:10] Speaker 3: he is obsessive about learning about the art. And early
[22:16] Speaker 3: on they called him a mimic because he was able
[22:19] Speaker 3: to kind of parrot every other artist that he studied.
[22:23] Speaker 3: And even today, you know, he did a podcast for
[22:25] Speaker 3: a while where he went through like histories of music.
[22:28] Speaker 3: His his newer book goes through fifty songs that he
[22:32] Speaker 3: thinks changed the world. Like this, This study element is
[22:37] Speaker 3: just inherent in so many of these people. And what
[22:40] Speaker 3: I love about first of all, I think it is
[22:43] Speaker 3: a defining factor of success. Are you does continuous learning
[22:48] Speaker 3: in your field come easy to you? And it's a
[22:51] Speaker 3: great test of whether you're pointing in the right direction
[22:54] Speaker 3: or not, because if it feels grindy to do that,
[22:57] Speaker 3: you're not in the right place. You need to try things.
[23:00] Speaker 4: You're gonna laugh.
[23:01] Speaker 2: I every morning I take a quick look at a
[23:04] Speaker 2: bunch of headlines and run through. And I saw something
[23:07] Speaker 2: this morning that said there's a high correlation between people
[23:12] Speaker 2: who read books and longevity. So all these folks chasing down,
[23:18] Speaker 2: you know, blood treatments and all these longevity things, it
[23:21] Speaker 2: turns out just read a couple of books a month,
[23:23] Speaker 2: you'll extend your lifespan.
[23:25] Speaker 3: How about that?
[23:25] Speaker 2: Yeah, really really interesting. So you mentioned Danny Meyer, you
[23:29] Speaker 2: mentioned Bob Dylan, Sam Hinky the Coach is another one.
[23:34] Speaker 2: What when I first got the book, I'm always a
[23:37] Speaker 2: little nervous when I get a book, and I'm like, oh,
[23:40] Speaker 2: this is gonna be preachy and tedious, but it wasn't.
[23:43] Speaker 2: It's interesting and narrative driven. What led you to the
[23:48] Speaker 2: storytelling format of all these people's life experiences as opposed
[23:53] Speaker 2: to the more traditional.
[23:55] Speaker 3: Your listeners can't tell because we're not on video, but
[23:57] Speaker 3: I'm smiling, grinning ear to ear, and I'm so glad
[24:00] Speaker 3: you noticed that.
[24:01] Speaker 2: Oh very it's it leaps off the page.
[24:03] Speaker 3: So there was there was quite a bit of intention
[24:06] Speaker 3: in that. So just as when I was when I
[24:12] Speaker 3: was a computer scientist, I was at home trading stocks
[24:15] Speaker 3: as a as an investor, I developed on the side somehow,
[24:19] Speaker 3: I guess through this act of reading, just a super
[24:22] Speaker 3: appreciation for really well written non fiction. And there's actually there's.
[24:27] Speaker 2: Two packs of the book. You have chapters on all
[24:30] Speaker 2: your favorite books.
[24:31] Speaker 3: There's a there's a book called The New Journalism and
[24:33] Speaker 3: a follow up called The New New Journalism, and the
[24:36] Speaker 3: Tom Wolf put together the first one. The second one
[24:39] Speaker 3: is writers people would know more today that studied the
[24:44] Speaker 3: craft of great nonfiction writing. Like that's what that book's about.
[24:48] Speaker 3: And it covers Lewis and Krackauur and Gladwell and all
[24:51] Speaker 3: the books that have done extremely well, and there is
[24:55] Speaker 3: a through line in there that storytelling is something that
[25:00] Speaker 3: people really loved to read. Morgan Housel was on this
[25:05] Speaker 3: podcast called Why We Write, and he went on and
[25:07] Speaker 3: on about that technique and I had discovered it as well.
[25:10] Speaker 3: And so my co writer actually does most of his
[25:14] Speaker 3: work for The Atlantic. And so the books divided into
[25:18] Speaker 3: two halves. There's a profiles and there's principles and if
[25:24] Speaker 3: you look at the table of contents, all we interleave them,
[25:27] Speaker 3: which was a technique I borrowed actually from Michael Dell's
[25:32] Speaker 3: book where he interleaved two stories in the same book.
[25:36] Speaker 3: And the idea there was two things behind that. One,
[25:41] Speaker 3: I thought the book would be more readable if it
[25:43] Speaker 3: did that. A lot of the books that are the
[25:47] Speaker 3: cornerstones of the career category, like Designing Your Life and
[25:51] Speaker 3: What Colors Your Parachute are structured more like a textbook,
[25:54] Speaker 3: and I just felt that the if it were more readable,
[25:58] Speaker 3: it would be more approachable and more consumable for more people.
[26:02] Speaker 3: And then I also, and this goes back to what
[26:04] Speaker 3: Morgan House was pushing. Reading the stories is I think
[26:09] Speaker 3: puts it in your memory a little bit better than
[26:11] Speaker 3: just reading a principle alone.
[26:13] Speaker 2: Oh, we are geared to remember narratives as opposed to
[26:16] Speaker 2: data or you know, dry principles, and you know, the
[26:22] Speaker 2: intentionality behind telling stories makes it very readable as opposed
[26:29] Speaker 2: to let's be honest, you know what color is your pasture?
[26:31] Speaker 2: It's been in print for I don't know.
[26:33] Speaker 3: Fifty seven years, yeah, forever in the category.
[26:36] Speaker 2: But it's kind of a slog to ply through. It's
[26:39] Speaker 2: like reading a textbook and when when is the test?
[26:42] Speaker 2: So so I have a couple more questions about the book.
[26:45] Speaker 2: I got to to bring up. The book seems to
[26:51] Speaker 2: be very much a bit of a pushback to modern
[26:55] Speaker 2: hustle culture. Was that on purpose or was it really Hey,
[27:00] Speaker 2: you know, it's not a grind if you're really enjoying it,
[27:03] Speaker 2: and you should listen to your own body's signals that
[27:08] Speaker 2: I'm really hating this, but I'm grinding it out.
[27:10] Speaker 3: One fortunate thing in putting this book together is, and
[27:16] Speaker 3: I think this is really just easier in the modern world.
[27:19] Speaker 3: We were able to connect with some true amazing leaders
[27:25] Speaker 3: in this field. So we ended up talking to Adam
[27:28] Speaker 3: Grant and Daniel Pink and Angela Duckworth and people that
[27:33] Speaker 3: have really made it a name for themselves in this field.
[27:36] Speaker 3: We stumbled across a podcast Angela Duckworth had done recently
[27:40] Speaker 3: where she was looking back ten years after on Grit,
[27:43] Speaker 3: the book, and the original thesis of Grit was you
[27:46] Speaker 3: need passion and perseverance. And she said if she were
[27:50] Speaker 3: going to rewrite it, she would maybe instead of fifty
[27:53] Speaker 3: to fifty, say two thirds one third passion. And her
[27:56] Speaker 3: fear was that we've taught young adults how to grind.
[28:01] Speaker 3: And I feel that the evolution of the college matriculation
[28:07] Speaker 3: conveyor belt has been negative. I feel like it's become
[28:11] Speaker 3: an arms race that to get these kids into the
[28:14] Speaker 3: hardest schools. The schools aren't expanding capacity, so they just
[28:18] Speaker 3: keep getting harder and harder to get into. And the
[28:21] Speaker 3: kids get taught to fill their schedule with programming so
[28:27] Speaker 3: that that resume can be perfect, and they're not given
[28:31] Speaker 3: the time to really explore and find and many people
[28:35] Speaker 3: don't really know what their dream job is, and some
[28:37] Speaker 3: of them might not find it till they're thirty or forty,
[28:39] Speaker 3: and that's okay too. But we've pushed and pushed and pushed,
[28:44] Speaker 3: and many of them have risen to the occasion of
[28:48] Speaker 3: doing all that work, but they graduate from college exhausted.
[28:52] Speaker 2: You describe as all sections step off the conveyor belts.
[28:57] Speaker 2: I was just watching something about Norway. Is this tiny
[29:01] Speaker 2: little country, yet it dominates the Winter Olympics despite lots
[29:05] Speaker 2: of other cold weather countries. And their secret is all
[29:10] Speaker 2: these kids are encouraged to join sports as kids, but
[29:14] Speaker 2: unlike here, there's no trophies, there's no competition. It's due
[29:20] Speaker 2: you want for as long as you want, as long
[29:22] Speaker 2: as it's interesting. And every one of their medalists say, yeah,
[29:27] Speaker 2: I was a slalom skier till I was fourteen, and
[29:31] Speaker 2: then I switched to whatever. But I had the background
[29:34] Speaker 2: and it was great. There was no pressure. You could
[29:37] Speaker 2: do you want. It turns out letting kids play is
[29:40] Speaker 2: a great strategy.
[29:41] Speaker 3: And I'm not the first one to make that point.
[29:44] Speaker 3: There's a chapter in Coddling of the American Mind titled
[29:48] Speaker 3: the Decline of Play. And I do wonder if it's
[29:52] Speaker 3: harder to find your obsession and find this thing that
[29:55] Speaker 3: you're totally fascinated with, if you're stuck in this game
[30:00] Speaker 3: that not one of your own making.
[30:03] Speaker 2: And you know, it's funny the phone, which is always
[30:06] Speaker 2: within reach, means that you're never bored. But boredom is
[30:10] Speaker 2: what leads to creative output. And I'm wondering what this
[30:13] Speaker 2: generation is going to look like down the road.
[30:16] Speaker 3: Well, hopefully some of them will be able to get
[30:19] Speaker 3: a hold of this book and find their way to
[30:22] Speaker 3: a better place.
[30:23] Speaker 2: Coming up, we continue our conversation with Benchmark's Bill Gurley,
[30:27] Speaker 2: talking about the state of venture capital today. I'm Barry Ridults.
[30:32] Speaker 2: You're listening to Masters in Business. I'm Burry Redults. You're
[30:51] Speaker 2: listening to Masters in Business on Bloomberg Radio. My extra
[30:55] Speaker 2: special guest this week is Bill Gurley. His new book
[30:58] Speaker 2: Running Down a Dream, How to Throw in a career
[31:00] Speaker 2: you Actually love, is out today. He's also a member
[31:06] Speaker 2: of Benchmark Capital, a legendary venture firm. Let's talk a
[31:10] Speaker 2: little bit about some of my favorite Benchmark investments that
[31:15] Speaker 2: I seem to use constantly. I think it's ironic we're
[31:19] Speaker 2: recording this the day after this giant blizzard hit New York.
[31:23] Speaker 2: The trains aren't running, the buses aren't running. I took
[31:27] Speaker 2: an Uber here, so kind of full circle. You're the
[31:29] Speaker 2: guy who brought Uber to the public attention, funded it
[31:35] Speaker 2: and walked it through the ibo Zillow I use all
[31:38] Speaker 2: the time, open table I have to use a few
[31:41] Speaker 2: times a week tell us about these giant consumer facing
[31:47] Speaker 2: companies that became wildly successful.
[31:50] Speaker 3: So I stumbled upon and this actually will involved Mike
[31:56] Speaker 3: Mobison again. Him and I were working together in the
[32:00] Speaker 3: research department at CSFB and we became enamored. We became
[32:04] Speaker 3: book shares, and that's been true for thirty years. But
[32:08] Speaker 3: we became enamored with this book Complexity by Mitchell Waldrip
[32:12] Speaker 3: about the rise of the Santa Fe Institute, which.
[32:15] Speaker 4: I know he's involved.
[32:16] Speaker 3: Yeah, I am as well. So we're both on the board.
[32:20] Speaker 3: Bill Miller of leg Mason's a long time involvement. More
[32:23] Speaker 3: Carl Kowadi from Capitol Group just joined the board. So
[32:26] Speaker 3: there's a there's a handful of investors that get a
[32:29] Speaker 3: lot out of it. But there was the original book
[32:33] Speaker 3: highlighted this guy named Brian Arthur, and Brian had done
[32:37] Speaker 3: work on what he called increasing returns and they published
[32:41] Speaker 3: his one of his pieces in Harvard Business Review. It
[32:46] Speaker 3: was ironically co written by Cormick McCarthy, but no one
[32:51] Speaker 3: knew it at the time, and that's come out since
[32:54] Speaker 3: then anyway, increasing returns was this argument that if you
[32:58] Speaker 3: have the right pieces in place, your company will accelerate
[33:03] Speaker 3: towards winner take all. And when I read that and
[33:09] Speaker 3: I started looking at what was capable with the Internet
[33:12] Speaker 3: and possible, this notion really was prominent in my mind,
[33:17] Speaker 3: and I can remember I think the first one of
[33:19] Speaker 3: those that we invested in was Open Table, and I
[33:22] Speaker 3: remember my partners pushing back and saying, selling computer hardware
[33:27] Speaker 3: to a restaurant is a crappy business, and you know,
[33:31] Speaker 3: SMB's how we ever scale it. And the idea was, well,
[33:36] Speaker 3: if you've got more, if you got all the restaurants on,
[33:40] Speaker 3: the consumers would only want to go there, and if
[33:42] Speaker 3: you got all the consumers on, the restaurants would feel
[33:46] Speaker 3: obligated to be in that place. So you know, there's
[33:49] Speaker 3: no reason to have multiple of these things. And that
[33:53] Speaker 3: was the thesis when we made the original bet. It
[33:56] Speaker 3: wasn't straight up. We lived through the dot com burst,
[34:00] Speaker 3: had to grow after that, but it did play out
[34:03] Speaker 3: that way and the network effects were present. And then
[34:07] Speaker 3: from there I started thinking about what other industries would
[34:10] Speaker 3: that apply to, and that's what led to all these
[34:12] Speaker 3: other things.
[34:13] Speaker 2: So Open Table leads to Uber, leads to Zillow.
[34:15] Speaker 3: Is that the progression.
[34:17] Speaker 2: Absolutely hucause you know, it's hard to argue that those
[34:21] Speaker 2: three are pretty indispensable. Yeah, what about others that stand out?
[34:26] Speaker 2: Next door, grub Hub, what else is in that group?
[34:29] Speaker 3: Yeah, and stitch Fixed, you know did really well. I
[34:35] Speaker 3: and then the you know, also the firm you know,
[34:38] Speaker 3: while I was there, invested in Twitter and Snapchat and
[34:43] Speaker 3: so many different companies that in the in the social space, Instagram.
[34:48] Speaker 3: I don't know how we did them all.
[34:51] Speaker 2: Well and did into them all you have. First of all,
[34:54] Speaker 2: vcs in general do something that I'm very much enthralled with.
[34:58] Speaker 2: They're kind of proud of their failures. Yes, which the
[35:02] Speaker 2: rest of finance is sort of terrified the idea that, hey,
[35:06] Speaker 2: we invested in this, it went to zero, we skip this,
[35:10] Speaker 2: we miss this. A lot of vcs on their websites
[35:12] Speaker 2: have hey, here's what we blew, here's what didn't work out,
[35:15] Speaker 2: and you very famously missed Google. Yes, what were the
[35:20] Speaker 2: lessons from that experience?
[35:21] Speaker 3: Well, I think the biggest takeaway, which leads to what
[35:26] Speaker 3: you just described, Erry, is that when you miss a
[35:29] Speaker 3: big winner, it's very asymmetric. To the counterfactual. Right, if
[35:37] Speaker 3: we invest twelve million dollars and it goes to zero,
[35:40] Speaker 3: you lose one time your money. If you failed to
[35:43] Speaker 3: invest twelve million dollars in Google, you miss out on
[35:47] Speaker 3: a thousand x one thousand x. And so over the
[35:52] Speaker 3: years at Benchmark, I would tell you that I don't
[35:55] Speaker 3: recall very many discussions at all about, oh that one
[35:59] Speaker 3: went to zero. Your you know, let's study why that happened.
[36:03] Speaker 3: You orient My partner Bruce came up with this phrase,
[36:06] Speaker 3: what could go right? You orient yourself towards the failure
[36:10] Speaker 3: being missing out on a huge winner, And so we
[36:14] Speaker 3: changed how we how the kind of things that we
[36:18] Speaker 3: studied as failure that you want to correct.
[36:21] Speaker 2: How different is that an experience and a process from
[36:25] Speaker 2: making investments in existing legacy public companies.
[36:29] Speaker 3: Well, I don't think you have the potential for the
[36:32] Speaker 3: thousand xs often, and so you're not gonna and the
[36:36] Speaker 3: thousand X can can can make up for you know,
[36:40] Speaker 3: eight losses that you never heard of, And so it
[36:43] Speaker 3: just forces you, if you're in that big game hunting mindset,
[36:49] Speaker 3: to really really focus on could this work, as opposed
[36:53] Speaker 3: to could it fail and only be obsessed about that part.
[36:58] Speaker 2: You mentioned it makes it.
[36:59] Speaker 3: I think it's different. I think because we are oriented
[37:03] Speaker 3: to absorb failure at a level that you can't do
[37:07] Speaker 3: in the public arts.
[37:09] Speaker 2: So you mentioned it's one in ten. Is it that
[37:11] Speaker 2: much or is it closer to one or two and
[37:13] Speaker 2: one hundred?
[37:15] Speaker 3: I mean for the big, big outliers, of course it's
[37:19] Speaker 3: what you're saying. But one in one hundred could return
[37:23] Speaker 3: the fund, you know, but you got to find that one.
[37:26] Speaker 3: I mean, think about that. That's a really weird dynamic
[37:30] Speaker 3: to be out there doing.
[37:32] Speaker 2: So I'm legally obligated to ask you about AI and
[37:35] Speaker 2: artificial intelligence. How do you look at this sector? What
[37:39] Speaker 2: do you think is going to be.
[37:40] Speaker 3: One last thing before? I think that the venture industry
[37:45] Speaker 3: is constantly evolving, and today's venture industry looks nothing like
[37:50] Speaker 3: what I practice, which looks nothing like what the generation
[37:54] Speaker 3: before me. So it's gotten in way more competitive, and
[37:59] Speaker 3: the best in vesters have become aware of power lass
[38:02] Speaker 3: where these big winners go on forever and they become
[38:06] Speaker 3: these these trillion dollar companies and as a result, they're
[38:10] Speaker 3: very comfortable now betting it forward. And so we have,
[38:15] Speaker 3: you know, firms like Thrive and co two and Altimeter
[38:20] Speaker 3: are willing to put big, big checks into private companies
[38:25] Speaker 3: in a way they never would have in the past,
[38:27] Speaker 3: making the bet that that compounding low is going to
[38:30] Speaker 3: keep playing out. So everything's changed.
[38:33] Speaker 2: So that raised a really interesting issue. Benchmark has stayed
[38:37] Speaker 2: kind of small, early nimble, while a lot of other
[38:41] Speaker 2: vcs really beefed up. What is it about avoiding becoming
[38:48] Speaker 2: a megafund chasing late stage growth? That was so a
[38:52] Speaker 2: feeling to you guys.
[38:53] Speaker 3: So one, I do think we've reached the point of
[38:56] Speaker 3: kind of the industrialization of the venture capital world, and
[39:00] Speaker 3: these funds are and these assets under management are starting
[39:04] Speaker 3: to parallel large pe firms. And I think one, it's
[39:10] Speaker 3: very hard to stay focused on the artisan craft of
[39:13] Speaker 3: identifying early opportunities if you're running this thing that has
[39:17] Speaker 3: to look after. It's hard to It's hard to get
[39:20] Speaker 3: excited about a seven million dollar investment if you're managing
[39:23] Speaker 3: billions in writing five hundred million dollar checks and you're earning,
[39:28] Speaker 3: by the way, a management fee and a venture carry
[39:30] Speaker 3: on the five hundred why would you let you just
[39:33] Speaker 3: get oriented differently? And and second, I think it would
[39:38] Speaker 3: be very difficult for those firms that get that big
[39:41] Speaker 3: to have IRR that is anything other than industry at best.
[39:47] Speaker 2: So you've been pretty loud about valuation discipline and the
[39:52] Speaker 2: risk of having a high burn rate. Is that a
[39:55] Speaker 2: function of looking at earlier stage companies or is it
[39:59] Speaker 2: just simply an analyst discipline of.
[40:03] Speaker 3: Of like I think it's I think it's reading all
[40:06] Speaker 3: those books, like studying Buffet, Graham and Dodd like like
[40:10] Speaker 3: I brought to the venture capital industry a study of
[40:15] Speaker 3: investing history that most vcs never have, and I think
[40:20] Speaker 3: it was differentiating for me. Some people call me like
[40:24] Speaker 3: the VC cynic, but that's okay.
[40:26] Speaker 2: So you're I would think, I think of you as
[40:29] Speaker 2: an elder statesman in the VC community. But you're hinting
[40:33] Speaker 2: at something. I'm going to ask explicitly, what rules have
[40:38] Speaker 2: too many venture capitalists not learned that you think would
[40:42] Speaker 2: behoove them in their firm to go back to some
[40:45] Speaker 2: basics and and you know, focus in on that will
[40:49] Speaker 2: help both their returns, their LPs and their funded companies.
[40:54] Speaker 3: The thing I would say to answer that, Barry, is
[40:56] Speaker 3: that the it's always going to Howard Marx wrote this
[41:02] Speaker 3: great piece a long time ago, who highlighted it. The
[41:05] Speaker 3: way you make really good money is to have contrarian,
[41:08] Speaker 3: non consensus predictions that are right versus wrong and right
[41:14] Speaker 3: now and AI. You know, these big waves create so
[41:18] Speaker 3: much wealth that I think for a moment, when the
[41:21] Speaker 3: waves happen, you have to move past that and realize
[41:25] Speaker 3: that the wave could be so big that you can
[41:29] Speaker 3: just plow in. But eventually Howard's going to be right,
[41:32] Speaker 3: and eventually the market is going to become oversaturated. There's
[41:37] Speaker 3: this great book by Carlotta Perez where she says that
[41:41] Speaker 3: bubbles always follow real waves because you attract speculators and
[41:47] Speaker 3: Charlatan's and all that. And people would want you to
[41:50] Speaker 3: say if you're, if you're, if you use the word bubble,
[41:53] Speaker 3: you don't believe in AI. But it's the opposite. I
[41:56] Speaker 3: believe that it's real, and that's why it's attracting the Charlotte.
[42:00] Speaker 3: And eventually we'll go over the top. We always do.
[42:03] Speaker 2: Every new technology comes with this void of people that
[42:09] Speaker 2: are deeply enmeshed in it, knowledgeable and articulate, and so
[42:15] Speaker 2: there's just a rush to fill that bait.
[42:17] Speaker 3: They get rich quick. And when people are getting rich quick,
[42:21] Speaker 3: fools rush in.
[42:22] Speaker 2: I love the Bill Bernstein quote. We use the word
[42:25] Speaker 2: guru because it's too difficult to spell Charlottean and it's
[42:29] Speaker 2: really very much true. So let's stick with the concept
[42:33] Speaker 2: of variant perspective. Another phrase I really like and part
[42:37] Speaker 2: of the job of being both contrarian and right. What
[42:41] Speaker 2: do you think is a non consensus view you're willing
[42:45] Speaker 2: to articulate today That's going to look obvious ten years
[42:49] Speaker 2: from now, but right now very non consensus.
[42:53] Speaker 3: I would the thing that pops in my head just
[42:56] Speaker 3: because people have been talking about it the past few days.
[42:58] Speaker 3: I think this, this paper that came out yesterday is
[43:03] Speaker 3: just completely over the top. And the notion that every
[43:07] Speaker 3: tech company in the world needs to have their terminal
[43:10] Speaker 3: value set to zero is probably not true.
[43:13] Speaker 2: I love the bar bell. Either AI is a bubble
[43:18] Speaker 2: that is not going to do anything for us, or
[43:20] Speaker 2: it's going to be so effective everybody's going to lose
[43:23] Speaker 2: their job. Isn't there anything in the middle? Hey maybe
[43:26] Speaker 2: this isn't you looked there?
[43:27] Speaker 3: Buffet's the one that said be fearful when others ingreedy,
[43:30] Speaker 3: and greedy when others are fearful. So if AI fear
[43:34] Speaker 3: is the topic of the day, the contrarian thing to
[43:36] Speaker 3: do would be to try and figure out where what
[43:39] Speaker 3: price points you believe represent true value. And I'm not
[43:43] Speaker 3: saying we're there yet, but hey, we stocks since the
[43:48] Speaker 3: Zert period, high tech stocks have been rather expensive from
[43:52] Speaker 3: a PE standpoint for what seven years. Now they're on
[43:55] Speaker 3: sale all of a sudden. Buffett says, you want to
[43:58] Speaker 3: be a net buyer, So this we should all be excited.
[44:01] Speaker 2: You know, people don't. I heard last year that the
[44:05] Speaker 2: Magnificent Seven all this market concentration is going to kill us,
[44:09] Speaker 2: and yet last year only two of the seven beat
[44:12] Speaker 2: the S and P five hundred. So this sale process
[44:16] Speaker 2: started a year ago, and then so far this year,
[44:19] Speaker 2: it's pretty clear the rally is broadening out. It's going
[44:22] Speaker 2: to other stocks. We continue to see sort of a
[44:26] Speaker 2: rotating sell off as these AI fears hit different companies.
[44:30] Speaker 2: It's going to be really interesting to see what's going
[44:33] Speaker 2: to get cheap and attractive and fear driven going forward.
[44:37] Speaker 3: Yes, I agree, that's where you should be looking.
[44:39] Speaker 2: Before I get to my favorite questions, I have one
[44:43] Speaker 2: other sort of non consensus question to ask you. What
[44:46] Speaker 2: do you think people are either not talking about or
[44:49] Speaker 2: thinking about that they really should be what topic is
[44:54] Speaker 2: getting overlooked, but should really be much more front and
[44:57] Speaker 2: center than it is.
[44:59] Speaker 3: Everything but AI. I mean, I've never been in a
[45:03] Speaker 3: scenario where everyone's so all in on this one thing,
[45:08] Speaker 3: and it is important. I think the best way to
[45:12] Speaker 3: protect yourself against AI disruption is to run at it
[45:16] Speaker 3: and be the person in your field that knows the
[45:18] Speaker 3: most about it. But boy, everything else is just not
[45:22] Speaker 3: being discussed. Everything.
[45:24] Speaker 2: So let's jump to our speed round, our favorite questions.
[45:27] Speaker 2: We'll plow through this. Tell us about your early mentors
[45:30] Speaker 2: who helped shape your career.
[45:32] Speaker 3: Well, I already mentioned Mobison. It was kind of more
[45:35] Speaker 3: of a peer, but still I was so lucky Al
[45:38] Speaker 3: Jackson gave me that first job on Wall Street. When
[45:42] Speaker 3: I showed up there, there was a gentleman named Charlie Wolf.
[45:45] Speaker 3: I don't know if you ever met.
[45:46] Speaker 2: Of course, Charlie Wolf was one of the few guys
[45:50] Speaker 2: bullish on Apple when the first IMAX came out in
[45:53] Speaker 2: the iPod and the street did not understand Apple, and
[45:57] Speaker 2: he's the only guy who did.
[45:58] Speaker 3: And Charlie as a force of nature. People loved him.
[46:02] Speaker 3: He was a professor simultaneous professor at Columbia and celside
[46:06] Speaker 3: analyst on the street and I got to hang out
[46:08] Speaker 3: with him.
[46:09] Speaker 2: That's a name I haven't heard. Yeah, Unfortunately, you mentioned
[46:14] Speaker 2: a lot of books as a whole chapter of the
[46:15] Speaker 2: back about various books you and other people recommend.
[46:19] Speaker 4: What are you reading currently? What's in I'm reading an unrelease?
[46:22] Speaker 4: I have an early unreleased copy of David Epstein's new
[46:25] Speaker 4: book called Inside the Box. He did Range, He did Range,
[46:29] Speaker 4: which I adored. I adored Range, and anyway Inside the
[46:33] Speaker 4: Box where he's talking about how constraints drive creativity, and
[46:37] Speaker 4: it's really been. What I love is when a book
[46:40] Speaker 4: makes me think differently and about other things. And I've
[46:43] Speaker 4: already he and I have already started to have a
[46:46] Speaker 4: texture at about taking it even further beyond what his
[46:49] Speaker 4: intention was, which is awesome.
[46:51] Speaker 2: That description immediately makes me think of the scene from
[46:55] Speaker 2: north By Northwest. I don't know if you mentioned this
[46:58] Speaker 2: in the book having Yeah, the Hollywood MPAA code did
[47:04] Speaker 2: not allow movies to show a man and a woman
[47:09] Speaker 2: getting into bed. So it's carry Grant and I forgot
[47:13] Speaker 2: which leading lady is a woman, and they're on a
[47:16] Speaker 2: train and they're not allowed to both be seen in
[47:18] Speaker 2: bed and then cut to the image of the long
[47:22] Speaker 2: train driving into a tunnel, all the subtlety of a sledgehammer.
[47:27] Speaker 2: That was fine, But the two of them sitting on Yeah,
[47:32] Speaker 2: that's the constraint that force Hitchcock to say, Oh, you're
[47:35] Speaker 2: not gonna let me do this, hold my b it.
[47:37] Speaker 3: And I mentioned earlier Tony Fiddel. He would tell me
[47:39] Speaker 3: that Steve jobs for the iPhone. He didn't come in
[47:42] Speaker 3: and dictate every little thing, but he would say I
[47:44] Speaker 3: wanted this then, And by just saying that rather than
[47:48] Speaker 3: how then can you make it right? It forces people
[47:51] Speaker 3: to think creatively about and you come up. You come
[47:55] Speaker 3: up with more ideation and innovation than without the constraint.
[47:58] Speaker 2: Huh, really really interesting thing. What are you streaming these days?
[48:02] Speaker 2: What what's keeping you in? I just watch Pluribus and
[48:05] Speaker 2: my wife just started it without me.
[48:07] Speaker 3: How'd you like it? I loved it? Really, I really did.
[48:10] Speaker 3: That's mean she she she was so good on Better
[48:14] Speaker 3: Call so and but this is her shining. She already
[48:18] Speaker 3: won the Emmy for it. But but the the implication,
[48:22] Speaker 3: there's some implications from AI or for AI that are
[48:25] Speaker 3: really clever.
[48:27] Speaker 2: It's definitely on my list to check out so so
[48:30] Speaker 2: my next two questions are kind of answered in the book,
[48:33] Speaker 2: so that I ask everybody. So essentially it'll be a summation.
[48:38] Speaker 2: What sort of advice would you give to a recent
[48:41] Speaker 2: college grad interest in the career and either venture capital
[48:45] Speaker 2: or finance.
[48:46] Speaker 3: Well, in finance, this is going to be so redundant,
[48:49] Speaker 3: and I apologize. I would tell him to go read
[48:51] Speaker 3: Michael Mobison's five books, because Mike has read every single
[48:56] Speaker 3: Mike's the most read financial mind that I know of,
[49:00] Speaker 3: and he synthesized everything he read in those books. And
[49:04] Speaker 3: so it would be like starting on first base, I
[49:07] Speaker 3: mean on second base. I talk about in the book
[49:11] Speaker 3: that you should study the history of your field, and
[49:15] Speaker 3: if studying the history of your field's uninteresting, once again,
[49:20] Speaker 3: I think you're not in the fil place. So that
[49:23] Speaker 3: would be it like start with the masters Graham and
[49:26] Speaker 3: Dodd and read the Buffett letters like it's all out there.
[49:29] Speaker 3: It's so wonderful. There's never been a better time to
[49:33] Speaker 3: learn in the history of the world because it's all available.
[49:36] Speaker 2: I'm so surprised more people don't talk about the success
[49:42] Speaker 2: equation because the idea of the impact of luck, and
[49:46] Speaker 2: he talks about investing business, in sports, we underestimate luck tremendously,
[49:52] Speaker 2: and it's such a great book.
[49:53] Speaker 3: But you can't. But you can improve your luck, and
[49:56] Speaker 3: we have a increase.
[49:57] Speaker 2: The surface area of luck is the that always sticks out.
[50:01] Speaker 3: And there's a principle in a book called Go to
[50:04] Speaker 3: the Epicenter where we recommend, if you can at all,
[50:08] Speaker 3: go practice where everyone else is practicing, precisely to impact
[50:13] Speaker 3: that equation.
[50:13] Speaker 2: And our final question, what do you know about the
[50:16] Speaker 2: world of venture investing today might have been useful twenty
[50:19] Speaker 2: five years ago when you were first started.
[50:21] Speaker 3: It probably goes into the thing we already drilled into.
[50:24] Speaker 3: Like had I had I been more open minded to
[50:29] Speaker 3: the question what could go right and pursued the Google investment,
[50:33] Speaker 3: maybe I retire earlier. Maybe we're not talking about the book.
[50:36] Speaker 2: I have a feeling you would not have retired early.
[50:38] Speaker 2: You would have kept going because you seem to really
[50:41] Speaker 2: love what you did. I did no doubt, So Bill,
[50:44] Speaker 2: thank you so much for doing this one last year.
[50:47] Speaker 1: Yeah.
[50:48] Speaker 3: Absolutely, the book was written for the hero that would
[50:53] Speaker 3: make this journey. But there are people in every hero's
[50:57] Speaker 3: lives that act as advisors and counts. So there's just
[51:00] Speaker 3: parents and there's a whole bunch of people that shape
[51:03] Speaker 3: your career process. I think they're going to get a
[51:06] Speaker 3: lot out of this book, even though it's not written
[51:09] Speaker 3: to them, because I think there is this overwhelming, well
[51:15] Speaker 3: intentioned instinct to put the economic stability of a child's
[51:20] Speaker 3: life at the front. Sure, and I'm not sure it's
[51:23] Speaker 3: the right answer they coming up.
[51:25] Speaker 2: We continue our conversation with Benchmark's Bill Gurley.
[51:28] Speaker 3: I'm Barry Riddults.
[51:30] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
[51:48] Speaker 2: Bury Ridults. You're listening to Masters in Business on Bloomberg Radio.
[51:51] Speaker 2: Mike Petro special guest today is Bill Gurley of Benchmark Capital.
[51:56] Speaker 2: So Benchmark has really put together an extraordinary track record, Uber,
[52:00] Speaker 2: Open Tables, Zillow, Stitch Fixed, go down the list. What
[52:05] Speaker 2: is it about Benchmark's model that was so unique and
[52:09] Speaker 2: really produced better outcomes than so many vcs have over
[52:13] Speaker 2: the years.
[52:14] Speaker 3: Yeah, I really And I have to give the credit
[52:16] Speaker 3: to the founders because they're the ones that put this
[52:19] Speaker 3: structure together. But this equal partnership structure has a cultural
[52:25] Speaker 3: dynamic that encourages immense amount of support from the partnership
[52:32] Speaker 3: without I certainly didn't have a fear of failure or
[52:36] Speaker 3: anything like that, and also an element of peer pressure.
[52:42] Speaker 3: So the pressure's not a pressure of do this or
[52:46] Speaker 3: you're out. It's a pressure of my partner's putting up
[52:50] Speaker 3: these wins and I'm sharing equally I need to do
[52:54] Speaker 3: that myself. And so it's more the way maybe someone
[52:59] Speaker 3: on a sports team might do well and encourage other
[53:02] Speaker 3: people on the team to do well as well. For me,
[53:05] Speaker 3: and I won't say that this is necessarily true for
[53:08] Speaker 3: everybody else. For me, that culture was a perfect fit.
[53:11] Speaker 3: I enjoy having the camaraderie and the support of other people.
[53:17] Speaker 3: Don't I wouldn't enjoy being a solo GP and making
[53:21] Speaker 3: decisions on my own. There's some great work that's been
[53:24] Speaker 3: done on group dynamics and group analysis, and one of
[53:29] Speaker 3: the really clever things is the group tends to know
[53:32] Speaker 3: the weaknesses of the individual better than the individual themselves,
[53:36] Speaker 3: and if you're aware of that, you can use that
[53:39] Speaker 3: to help your group decision making. So I just adored
[53:43] Speaker 3: every bit of it. I love that there the firm
[53:47] Speaker 3: is tilted towards thinking about the work as a craft
[53:53] Speaker 3: or an artisan, and I find that to be true
[53:55] Speaker 3: of almost everyone I profile in the book. If you
[53:59] Speaker 3: care about nuance and detail, it's typically because you're treating
[54:04] Speaker 3: the art of what you do in a craft like
[54:08] Speaker 3: fashion and really really interesting. And yeah, and I think
[54:12] Speaker 3: that that that's what what what Benchmark does.
[54:15] Speaker 2: Venture capital is a team sport. Do you do you
[54:17] Speaker 2: want to draw any parallels to playing ball? Anything that
[54:22] Speaker 2: comes into.
[54:23] Speaker 3: That, well, I just I mean, I think it could
[54:26] Speaker 3: go beyond, you know, playing ball, But do you create
[54:29] Speaker 3: a team culture that where greatness is going to be
[54:34] Speaker 3: expected in an output?
[54:35] Speaker 2: And I bring that up because you mentioned Sam Hankey
[54:38] Speaker 2: in the book. Yeah, I think that's the best coaches
[54:43] Speaker 2: try and foster that it's not just about your individual performance.
[54:48] Speaker 3: Yeah, and it's hard. But and people I think should
[54:53] Speaker 3: be more fascinated with what Bezos did at Amazon and
[54:57] Speaker 3: Elon has done across multiple companies because the individual everyone
[55:02] Speaker 3: knows that Bezos and Elon are innovative and independent thinkers
[55:08] Speaker 3: and contrarians. But how do they scale a company to
[55:12] Speaker 3: hundreds of thousands of people? How do you take that
[55:17] Speaker 3: mindset and put systems in place where it's propagated all
[55:22] Speaker 3: the way down? And I don't think enough work is
[55:25] Speaker 3: going to into figuring out what they do. I'll give
[55:28] Speaker 3: you another interesting example. Sure, Sacha n Adela probably led
[55:32] Speaker 3: the the either the first probably from a market cap
[55:36] Speaker 3: creation standpoint, the best turnaround of.
[55:38] Speaker 2: All, no doubt about that. Absolutely true. I mean maybe
[55:42] Speaker 2: Steve Jobs twenty years early.
[55:44] Speaker 3: Yeah, yeah, okay, those two, but they ask that one
[55:48] Speaker 3: almost went down to the to the to the to
[55:51] Speaker 3: the studs if you will, in the region.
[55:53] Speaker 2: If Gates didn't save Apple, that would would have been it.
[55:57] Speaker 3: They would have been done. So Steve was starting with
[56:00] Speaker 3: or bear metal. Tatya had to turn this bigger shift. Yes,
[56:03] Speaker 3: and he claims what he did is he told everyone
[56:06] Speaker 3: we're going to go from being a know it all
[56:09] Speaker 3: to a to a learn it all culture. And man
[56:13] Speaker 3: if if that one heuristic is what was the key
[56:17] Speaker 3: to this? Like, kudos to him, I mean, and what
[56:21] Speaker 3: a miraculously simple insight. And and then you know, kudos
[56:26] Speaker 3: to him. I'm making it effective, like like pushing it
[56:29] Speaker 3: through the organ I bet they had to push a
[56:30] Speaker 3: lot of people out too.
[56:32] Speaker 2: Well. If you look at the culture between him and
[56:35] Speaker 2: Bill Gates, the gap ballmer, very different personality, very different approach.
[56:44] Speaker 2: You can make the case that Nadella was the anti Bollmer,
[56:47] Speaker 2: and you know, during during Steve's reign, it wasn't great returns,
[56:53] Speaker 2: although a lot of people didn't have great returns in
[56:55] Speaker 2: the two thousands, so it's a little little bit of both.
[57:00] Speaker 2: I have another question I've I kind of suspect I
[57:02] Speaker 2: know the answer. Okay, so you've spent decades not only
[57:06] Speaker 2: picking business models but founders boards addressable markets. What's the
[57:13] Speaker 2: single hardest question you wrestle with, aside from what could
[57:18] Speaker 2: go right?
[57:20] Speaker 3: I'd say the thing that pops in my mind Berry
[57:22] Speaker 3: is this notion of TAM total addressable market and the
[57:26] Speaker 3: I think the investor community gets really stuck on that
[57:30] Speaker 3: one and are not open minded enough about what's possible,
[57:34] Speaker 3: especially if the technology becomes disruptive. There's a there's a
[57:39] Speaker 3: famous interplay between me and this professor at NYU around Uber.
[57:45] Speaker 3: He published this piece that said Uber would never be
[57:48] Speaker 3: worth more than four billion dollars, and I wrote one
[57:52] Speaker 3: of my favorite blog posts ever titled how to Miss
[57:55] Speaker 3: by a mile, where I took apart his analysis and
[58:00] Speaker 3: tried to well, I had a little I had an
[58:02] Speaker 3: unfair advantage. He said that the market Uber was attacking
[58:07] Speaker 3: was a taxi market, and he used that as the
[58:09] Speaker 3: thesis for his analysis. I already knew in San Francisco
[58:13] Speaker 3: that Uber was twenty x bigger than the taxi market.
[58:16] Speaker 3: He didn't know that. So once you have that piece
[58:19] Speaker 3: of knowledge, it's kind of an unfair game. But it
[58:25] Speaker 3: gets that like the product became so much better than
[58:30] Speaker 3: what the taxi market offered you, and it immediately became
[58:35] Speaker 3: you know, and I think, in the long run, will
[58:38] Speaker 3: be a replacement for car ownership, which could allow for many,
[58:42] Speaker 3: many years of.
[58:43] Speaker 2: Growth, especially if self driving taxis become a thing. But
[58:48] Speaker 2: by the way, huge disadvantage analyzing Uber in New York
[58:52] Speaker 2: City in the early twenty tens because it was monopoly tax.
[58:57] Speaker 3: Not only that. In the report of his which a
[59:00] Speaker 3: summary version got public, but I found the background version,
[59:03] Speaker 3: he admits that he had never written Uber and only
[59:06] Speaker 3: taken taxi. So I think being in New York gave
[59:09] Speaker 3: you the exact wrong mindset that the first time you.
[59:12] Speaker 2: Get into an Uber, you're like damn. And I wish
[59:14] Speaker 2: I was an early investor. I remember I remember being
[59:18] Speaker 2: a beta tester of Google and sending an email and saying, Hey,
[59:21] Speaker 2: can I invest in this company?
[59:23] Speaker 3: You're like, we are good.
[59:25] Speaker 2: And then the first time I got into an uber,
[59:27] Speaker 2: it's like, oh this makes perfect. Yeah, on your phone,
[59:30] Speaker 2: it's mobile, it knows where you are, it knows where
[59:33] Speaker 2: It was so obvious after the fact.
[59:35] Speaker 3: And credit to Darr for taking it from forty billion
[59:39] Speaker 3: to he touched two hundred. So that's two hundred billion
[59:42] Speaker 3: versus four is a that's what that's what like a
[59:47] Speaker 3: closed minded tam analysis to get you, you get your
[59:51] Speaker 3: way off.
[59:52] Speaker 2: So I'm legally obligated to ask you about artificial intelligence.
[59:56] Speaker 2: How are you looking at the opportunities in the space.
[1:00:01] Speaker 2: I kind of think we address that. Do I really
[1:00:02] Speaker 2: need to ask that?
[1:00:04] Speaker 3: I can? You want me to? Yeah? Okay, yeah. So look,
[1:00:08] Speaker 3: I think there are people in the venture community that
[1:00:11] Speaker 3: would tell you this is the biggest disruption wave they've
[1:00:13] Speaker 3: ever seen. And there's no doubt that venture does extremely
[1:00:18] Speaker 3: well around these dislocations. And there's great books like The
[1:00:22] Speaker 3: Innovator's Dilemma that talk about why. But the mobile wave,
[1:00:25] Speaker 3: the PC wave, the client server wave, all these things
[1:00:28] Speaker 3: birth really big companies, some of them doing the exact
[1:00:32] Speaker 3: same thing. So there were there were four companies in
[1:00:34] Speaker 3: the CRM space before Salesforce came along, but the SaaS
[1:00:37] Speaker 3: wave allowed them to steal all that that market cap
[1:00:41] Speaker 3: that was in those companies.
[1:00:43] Speaker 2: Is that a case of second maskets the cheese.
[1:00:46] Speaker 3: No, I just think it's that these waves are are
[1:00:50] Speaker 3: It's very hard for an incumbent to be at the
[1:00:52] Speaker 3: front of the wave. It's kind of different here with
[1:00:54] Speaker 3: AI because there's certainly an obsession within the MAC seven
[1:00:59] Speaker 3: about and what it might do to them. But anyway,
[1:01:02] Speaker 3: vcs tend to do extremely well when these waves come,
[1:01:06] Speaker 3: and so everyone's all in and look, it's very disruptive.
[1:01:11] Speaker 3: It's very different than anything we've seen before. I would
[1:01:14] Speaker 3: encourage people once again to really dive in and ask yourself,
[1:01:19] Speaker 3: no matter what field you're in, what is AI capable
[1:01:23] Speaker 3: of here? And to be that person in your organization
[1:01:28] Speaker 3: that has the answer to that question.
[1:01:30] Speaker 2: You know, it's fascinating that all of the big hyperscalers
[1:01:33] Speaker 2: are spending tens of billions, hundreds of billions building out
[1:01:38] Speaker 2: these systems. Apple's running a check to Google to put
[1:01:42] Speaker 2: Gemini into SyRI, which was early and terrible now it's
[1:01:46] Speaker 2: late and terrible. I'm hoping Gemini, which has been really good,
[1:01:50] Speaker 2: turns SyRI into something useful. How do you think of
[1:01:54] Speaker 2: that sort of approach of saying it's cheaper to buy
[1:01:57] Speaker 2: them Bill, I.
[1:01:58] Speaker 3: Will tell you I have a couple of diferent answers
[1:02:00] Speaker 3: to this, which I think are quite interesting. The first
[1:02:03] Speaker 3: of all, the mag seven formerly we're creating I don't know,
[1:02:08] Speaker 3: three four hundred billion in cash flow.
[1:02:11] Speaker 2: And two trillion in revenues, almost four hundred billion in profits.
[1:02:16] Speaker 3: But now almost all of that has been exhausted into Capex,
[1:02:20] Speaker 3: and Mike Mosen and I would have long arguments about
[1:02:24] Speaker 3: like what that meant from evaluation perspective. He slows it
[1:02:28] Speaker 3: off and says they can stop tomorrow, so and then
[1:02:31] Speaker 3: the cash flow will come back. I'm there. I argue,
[1:02:34] Speaker 3: if you're trying to build a DCF now all of
[1:02:37] Speaker 3: a sudden, you have to make a decision about whether
[1:02:39] Speaker 3: that would happen or not, and whether there's a return
[1:02:42] Speaker 3: on this Capex investment. But the second thing I wanted
[1:02:45] Speaker 3: to say is I have found over the years, maybe
[1:02:48] Speaker 3: this is another contrarian thing that not enough that big
[1:02:52] Speaker 3: companies think there's some kind of safety net in making
[1:02:56] Speaker 3: an investor in a new disruptor. And so here we
[1:03:01] Speaker 3: have Microsoft and Google, you know, doing and Amazon making
[1:03:08] Speaker 3: investments in these foundational model companies. And it's not clear
[1:03:13] Speaker 3: to me that that is actually a good hedge because
[1:03:18] Speaker 3: I think both of those companies open up anthropic now
[1:03:21] Speaker 3: have escape velocity. I don't think they're dependent on the
[1:03:24] Speaker 3: partner anymore. And it harkens back in my brain to
[1:03:28] Speaker 3: IBM letting Microsoft put the OS inside your PC.
[1:03:32] Speaker 2: And we sell hardware. What good is software going to be?
[1:03:36] Speaker 3: All Right?
[1:03:36] Speaker 2: One last quote, you said there's a mess coming from
[1:03:40] Speaker 2: zombie unicorns that all have stale marks and private portfolios.
[1:03:46] Speaker 2: I'm a huge fan of cliff astness is volatility laundering
[1:03:50] Speaker 2: or the private ownership that doesn't get updated or marked
[1:03:54] Speaker 2: to market? What does that reckoning look like when these
[1:03:59] Speaker 2: marks fund show up in the real essam?
[1:04:01] Speaker 3: So this is probably a three hour conversation that I
[1:04:05] Speaker 3: will try and do in a very short form. There
[1:04:09] Speaker 3: is a very famous investor or, or i'd call him
[1:04:14] Speaker 3: an endowment manager named David Swinson. Of course, Yale model,
[1:04:18] Speaker 3: that is the Yale model, and David said that everyone
[1:04:22] Speaker 3: should be more invested in private and famously had returns
[1:04:28] Speaker 3: that were spectacular.
[1:04:30] Speaker 2: But as someone who's a historian in my space. That
[1:04:33] Speaker 2: was forty years ago, when no one was thirty five,
[1:04:37] Speaker 2: no one was doing it was a white space.
[1:04:39] Speaker 3: So I absolutely I think.
[1:04:40] Speaker 2: Great valuation, great opportunities.
[1:04:42] Speaker 3: I think the Swinson mimic effect has now played out,
[1:04:47] Speaker 3: and I think personally that most of the endowments and
[1:04:51] Speaker 3: foundations in the US are over invested in private both
[1:04:54] Speaker 3: PE Adventure and I think that the way the industry
[1:04:58] Speaker 3: structured in this would require longer conversation. There's no incentive
[1:05:04] Speaker 3: for the operators inside of the endowments or foundations to
[1:05:08] Speaker 3: get the paper marks right, and there's no incentive for
[1:05:11] Speaker 3: the gps to get to paper marks right. And based
[1:05:13] Speaker 3: on talking to people that do this for a living
[1:05:16] Speaker 3: every day, I suspect both the venture paper marks and
[1:05:20] Speaker 3: the PE paper marks and the real estate paper marks
[1:05:23] Speaker 3: are all too high. Non if we had had a
[1:05:26] Speaker 3: liquidity run like of an endowment tax it happened, you
[1:05:30] Speaker 3: might get to that sooner. I think we're going to
[1:05:33] Speaker 3: it's going to take forever to online. You asked kind
[1:05:35] Speaker 3: of like, when's the day of reckoning? I don't even know.
[1:05:38] Speaker 2: So I read over the past few months Harvard and
[1:05:41] Speaker 2: Yelle are both trying.
[1:05:43] Speaker 3: To sell some secondary right.
[1:05:44] Speaker 2: So they're doing some selling right, And now you see
[1:05:48] Speaker 2: the whole issue with Blue Owl with some marks and
[1:05:54] Speaker 2: Boas Weinstein making an offer to buy assets at a
[1:05:59] Speaker 2: substand actually discounted price. Are these one offs or is this?
[1:06:04] Speaker 3: I think that's maybe the first signs of this correcting,
[1:06:08] Speaker 3: But once again, there's no The only thing that could
[1:06:12] Speaker 3: really lead to a faster correction if there was a
[1:06:15] Speaker 3: liquidity crisis within the endowment and we.
[1:06:17] Speaker 2: Briefly saw a thread of that when the President threatened
[1:06:21] Speaker 2: to start taxing endowments and other things.
[1:06:25] Speaker 3: There's other articles you can find about debt products inside
[1:06:28] Speaker 3: of foundations which hint at the fact that you're not
[1:06:31] Speaker 3: getting liquidity from your privates and you don't want to
[1:06:34] Speaker 3: get over allocated in them, so you have to borrow money.
[1:06:37] Speaker 2: So yeah, well, all crises, financial crises, at the underlying
[1:06:44] Speaker 2: is leveraging debt. The other thing that to me was
[1:06:48] Speaker 2: a big warning sign. I'm curious as to your thoughts
[1:06:51] Speaker 2: the whole democratization and hey, we're going to move private
[1:06:55] Speaker 2: credit and private equity to people's four one case, that
[1:06:59] Speaker 2: to me smells like someone rang a bell.
[1:07:01] Speaker 3: I'm so with you on that. Berryer, and I think
[1:07:04] Speaker 3: you're gonna watch the same thing happen with venture because
[1:07:08] Speaker 3: is what I talked about earlier, where they're trying to
[1:07:11] Speaker 3: keep these companies private forever. They're gonna have the same
[1:07:15] Speaker 3: liquidity problem. And I think they're going to run out
[1:07:17] Speaker 3: of money because they've gotten these things so big. So
[1:07:19] Speaker 3: watch for someone to lobby to put their four one
[1:07:22] Speaker 3: k into a start venture firms.
[1:07:25] Speaker 2: Early already began, and you know it's gonna be an issue.
[1:07:30] Speaker 3: I fear this Swinson thing is gonna have this. Like
[1:07:35] Speaker 3: you said, when he did it, he was the only
[1:07:37] Speaker 3: one doing it, and it was contrariant back to the
[1:07:39] Speaker 3: Howard Marks thing. The fact that everyone followed him and
[1:07:44] Speaker 3: the time it's going to take for that to play
[1:07:47] Speaker 3: out and get fixed is forever.
[1:07:50] Speaker 2: Thank you, Bill for being so generous with your time.
[1:07:53] Speaker 2: I've been speaking with Bill Gurley of Benchmark Capital and
[1:07:56] Speaker 2: author of the book Running Down a Dream, How to
[1:07:59] Speaker 2: Thrive and Career you actually love. If you enjoy this conversation, well,
[1:08:04] Speaker 2: be sure and check out any of the six hundred
[1:08:06] Speaker 2: and change we've done over the past twelve years. You
[1:08:09] Speaker 2: can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you
[1:08:15] Speaker 2: get your favorite podcasts. I would be remiss if I
[1:08:18] Speaker 2: didn't thank the crackstaff that helps me produce these conversations
[1:08:22] Speaker 2: each week. Alexis Noriega is my audio producer. Anna Luke
[1:08:26] Speaker 2: is my podcast

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