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

Summary

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

Host: Barry Ritholtz (Bloomberg)
Guest: Bill Gurley (Benchmark Capital)
Original Air Date: March 4, 2026

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Episode Overview

This special episode of “Masters in Business” delves deep into the storied career of Bill Gurley, a legendary venture capitalist at Benchmark Capital and early backer of transformative companies like Uber, Zillow, OpenTable, and others. Gurley discusses career pathfinding, why Benchmark’s unique partnership model endures, identifying early disruptors, the future of AI in investing, and lessons from his new book “Runnin' Down a Dream: How to Thrive in a Career You Actually Love.” The conversation is rich in insights for investors, entrepreneurs, and anyone looking to find meaning and success in their careers.

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Bill Gurley’s Early Journey: From Computer Science to Venture Capital

[01:52–05:14]

• Early fascination with technology: Gurley’s career began with a bachelor’s degree in computer science from the University of Florida, inspired by programming on an early Commodore VIC-20.

  “I fell in love with computers at a young age... amazed that you could create things, you know.” (Bill Gurley, 02:50)

• Corporate experience at Compaq: Though initially excited, he quickly found corporate life at Compaq unfulfilling.

  “I asked myself…is this what I want to be doing 30 years from now? And... it became very clear that that wasn't for me.” (Bill Gurley, 03:53)

• Spark for finance: Reading “One Up on Wall Street” by Peter Lynch and tinkering with stocks in his downtime, Gurley reconsidered his career path.

  “One thing I really encourage people to think about is what are you doing in your free time?... Is there a clue that that should actually be what you do full time?” (Bill Gurley, 05:01)

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Transition to Finance and Entry to Venture Capital

[05:14–13:08]

• First break on Wall Street: Gurley hustled his way into a sell-side analyst job at Credit Suisse First Boston, learning the value of access and industry analysis.

  “The sell side analyst job has one trait that is remarkable, which is you immediately get to start talking to CEOs and CFOs.” (Bill Gurley, 07:00)

• Critical lesson from Michael Mauboussin: Gurley learned the power of Return on Invested Capital (ROIC) analysis through Mauboussin, propelling his bullish call on Dell at the right time.

  “Michael kindly tweeted about my book the other day and said he taught us some things we didn't know ourselves about our business.” (Bill Gurley, 08:35)

• Restlessness and Next Career Leap: After recognizing the limits of the sell-side, Gurley was mentored by Frank Quattrone, who moved him to Silicon Valley and introduced him to top VCs—eventually leading to his seat at Benchmark.

  “He introduced me to every venture capitalist that I know. And he knew them all.” (Bill Gurley, 10:46)

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Benchmark's Unique Structure and Venture Investing Philosophy

[11:57–15:13]

• Benchmark’s partnership model: Distinct from hierarchical VC firms, Benchmark splits power and economics equally among partners.

  “The Benchmark guys... decided to do something crazy, which was to create an equal partnership where everyone makes the exact same amount of money and everyone has the exact same power within the organization for decision making.” (Bill Gurley, 13:08)

• Impact of structure: This model breeds a culture of support, mentorship, and resilience that outlasts generational transitions and supports collective success.

  “It is a culture that I think is really great for generational change.” (Bill Gurley, 14:19)

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On the Unconventional Pathways into Venture Capital

[15:13–16:22]

• Diversity of backgrounds: Gurley notes that venture isn’t only for financiers—historians, journalists, and engineers have built successful VC careers.

  “There's real diversity. There's a whole bunch of different pathways.” (Bill Gurley, 15:34)

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Bill Gurley’s Book: “Runnin' Down a Dream” – Why and What’s Inside

[18:36–22:10]

• Why write the book? Inspired by Tom Petty’s anthem, Bill wrote his book to help people find work they truly love, not just to share VC secrets.

  “If I'd have written a book about being a VC or an investor, there's only a handful of people it might have touched. And I felt very compelled to share this...because it's a much broader book about doing what you love.” (Bill Gurley, 21:49)

• On regret and career pivots: Surveys show six in ten would choose a different path if they could start over; the book urges readers to pursue curiosity and avoid quiet quitting.

  “The regrets of inaction... weigh in our brain. We ruminate far more on those than regrets of action.” (Bill Gurley, 23:26)

• Key Principle – Obsessive Curiosity:

  “All of the people that we studied... are obsessive learners in their field.” (Bill Gurley, 24:09)
  Using examples from restaurateurs to musicians (Danny Meyer, Bob Dylan), Gurley demonstrates that relentless learning defines successful careers.

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On Storytelling, Hustle Culture, and Career Wellbeing

[25:02–33:02]

• Storytelling makes lessons memorable: Gurley intentionally chose narrative-driven profiles over “textbook” structures for greater reader engagement and retention.

  “Storytelling is something that people really love to read... Reading the stories, I think, puts it in your memory a little bit better than just reading a principle alone.” (Bill Gurley, 29:16)

• Critique of hustle culture:

  “My fear was that we've taught young adults how to grind… we've pushed and pushed and pushed, and many... graduate from college exhausted.” (Bill Gurley, 31:02)

• Encourages exploration and play: Citing research and other cultures, Gurley advocates stepping off the “conveyor belt” and resisting relentless competition to find one’s true calling.

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Venture Investing: Lessons from OpenTable, Uber, Zillow, and More

[35:55–41:27]

• Pattern of identifying network effects: Inspired by complexity theory and the notion of “increasing returns,” Gurley targeted companies that achieve “winner-take-all” dynamics.

  “If you got all the restaurants on, the consumers would only want to go there...that was the thesis when we made the original bet [on OpenTable].” (Bill Gurley, 38:00)

• Progression of investments: OpenTable, Uber, and Zillow fit Gurley’s search for companies transforming industries through these network effects.

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Venture Culture: Embracing Failure and Missing Google

[39:56–41:27]

• Learning from misses: Gurley discusses the crucial difference between missing a 1000x opportunity (like Google) and losing on failed investments.

  “If you fail to invest $12 million in Google, you miss out on a thousand X... at Benchmark, I would tell you that I don't recall very many discussions at all about 'oh that one went to zero'... You orient yourself towards the failure being missing out on a huge winner.” (Bill Gurley, 40:27)

• Focus on the upside, not the risk of loss:

  “You have to really, really focus on could this work as opposed to could it fail and only be obsessed about that part.” (Bill Gurley, 41:35)

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The State of Venture and Discipline in the Era of Artificial Intelligence

[42:38–44:52]

• Shifts in the VC landscape: Large new VC funds are comfortable “betting it forward” on late-stage companies, but Benchmark intentionally stays smaller and focused on early, artisan investing.

  “It is very hard to stay focused on the artisan craft of identifying early opportunities if you’re running this thing that has to look after billions.” (Bill Gurley, 43:58)

• Valuation Discipline:

  “I brought to the venture capital industry a study of investing history that most VCs never have... Some people call me the VC cynic, but that’s okay.” (Bill Gurley, 45:09)

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Wisdom for Investors: Variant Perspective, Cycles, and ‘Bubbles’

[45:59–49:43]

• Power of contrarianism: Echoing Howard Marks—non-consensus but correct views are necessary for outsized returns.

  “The way you make really good money is to have contrarian, non-consensus predictions that are right.” (Bill Gurley, 46:17)

• Bubbles, speculation, and cycles: Gurley references Carlotta Perez’s work and stresses that real technology waves inevitably attract speculation and “charlatans.”

  “Bubbles always follow real waves... If you use the word bubble, you don’t believe in AI, but it’s the opposite. I believe it’s real and that’s why it’s attracting the charlatans.” (Bill Gurley, 46:54)

• Current non-consensus view:

  “The notion that every tech company in the world needs to have their terminal value set to zero is probably not true.” (Bill Gurley, 47:59)

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Advice for Aspiring Investors and Career-Builders

[50:33–55:49]

• On luck and learning: Gurley strongly recommends Michael Mauboussin’s books (e.g., “The Success Equation”) and Buffett’s letters to anyone entering finance, highlighting the importance of studying history—and embracing the role of luck.

  “If studying the history of your field is uninteresting, I think you’re not in the right field.” (Bill Gurley, 54:04)

• Maximizing luck:

  “Increase the surface area of luck is the phrase that always sticks out.” (Barry Ritholtz, 55:03)

• Finding your dream job: Gurley’s book is for anyone pursuing deep meaning and fulfillment in their work—encouraging both heroes of their own journey and the advisors who support them.

  “I think there is this overwhelming, well-intentioned instinct to put the economic stability of a child's life at the front. And I'm not sure it's the right answer.” (Bill Gurley, 56:27)

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Notable Quotes & Moments

• “Sometimes what you do in your free time should be what you do full time.” – Bill Gurley (05:01)
• “You orient yourself towards the failure being missing out on a huge winner.” – Bill Gurley (40:27)
• “Storytelling is something that people really love to read... puts it in your memory a little bit better than just reading a principle alone.” – Bill Gurley (29:16)
• “The best way to protect yourself against AI disruption is to run at it and be the person in your field that knows the most about it.” – Bill Gurley (50:04)
• “If studying the history of your field is uninteresting, I think you’re not in the right field.” – Bill Gurley (54:04)

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Timestamps for Key Segments

• Bill Gurley’s Early Tech and Wall Street Background: 01:52–07:18
• Transition to Venture and Benchmark’s Partnership Model: 09:05–15:13
• On Career Regret and Principles from ‘Runnin' Down a Dream’: 22:10–24:09
• Harnessing Obsessive Curiosity and Learning: 24:09–26:22
• Pushback Against Hustle Culture and “Conveyor Belt” Careers: 30:32–33:02
• Framework for Identifying Disruptors (Uber, Zillow, etc.): 36:56–41:27
• Embracing Misses and Fixating on What Could Go Right: 39:56–41:27
• Venture in the Age of AI and Mega-Funds: 42:38–44:52
• Non-Consensus Views, Cycles, and Investment Lessons: 45:59–49:43
• Mentors, Book Recommendations, and Maximizing Luck: 50:33–55:49
• Advice for Future Investors and Career-Builders: 53:52–56:27
• Benchmark’s Model and Cultural Advantages: 58:37–62:10

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Takeaways & Closing Thoughts

• Benchmark’s Model: The firm’s egalitarian partnership structure fosters a collaborative, mentor-rich, and sustainable culture that supports generational success.
• Career and Investment Wisdom: Gurley urges listeners to pursue relentless curiosity, reflect on what truly excites them, and not to fear risk and failure—since the greatest regret is not acting, rather than a misstep taken.
• On Venture & Tech Investing: Success rests on identifying massive disruptive waves, cultivating variant perspectives, and focusing relentlessly on tail-risk upside.
• For those eyeing the future: To navigate AI-driven change or any paradigm shift, “run at it”—become the person in your field who thoroughly understands the disruption.
• Final lesson: “Increase the surface area of luck” by pursuing epicenters—the places and people where innovation happens—and constantly learning.

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Recommended Resources Mentioned:

• Bill Gurley, “Runnin' Down a Dream”
• Michael Mauboussin books (“The Success Equation”)
• Peter Lynch, “One Up on Wall Street”
• Carlotta Perez, “Technological Revolutions and Financial Capital”
• Daniel Pink, “The Power of Regret”
• Arthur C. Brooks, “Strength to Strength”
• “The New Journalism” (Tom Wolfe)
• Adam Grant, Angela Duckworth, Tony Fadell, Danny Meyer

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This episode is a must-listen for anyone seeking candid insights on disruptive investing, building a satisfying career, and the evolving landscape of technology, venture capital, and AI.

Transcript

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[Bill Gurley]

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Bloomberg Audio Studios Podcasts Radio News

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this is

[Bill Gurley]

Masters in Business with Barry Ritholtz on

[Barry Ritholtz]

Bloomberg Radio this week on the podcast what Can I say? Another banger Bill Gurley of Benchmark Capital. Legendary VC, early investor in Uber, Zillow, OpenTable, GrubHub next door. The list Instagram? Just Twitter. The list just goes on and on and on. What a fascinating career filled with insights not only about venture investing, but about building a career that you love. I thought this conversation was fascinating and I think you will also, with no further ado, my conversation with Benchmarks Bill Gurley before we get into the book, which I found very interesting and your whole career, let's start with your background. You get a bachelor's in computer science from the University of Florida and then an MBA from UT Austin. What was the original career Plan.

[Bill Gurley]

So I fell in love with computers at a young age and many people that get to Silicon Valley, you hear that common refrain. I had a Commodore VIC 20 that would plug into your television and it didn't have solid state memory. So you type programs in, but when you turned it off.

[Barry Ritholtz]

Done.

[Bill Gurley]

They were done. Yes, start over. Anyway, I fell in love with programming, as many people do, and just amazed that you could create things, you know. And so that was my undergrad degree. I worked for two and two years and change at Compact Computer Corporation using those skills and discovered that that wasn't going to be my long term path.

[Barry Ritholtz]

You said you were exceedingly bored at what looked like on paper, a dream job.

[Bill Gurley]

Yeah.

[Barry Ritholtz]

Explain.

[Bill Gurley]

Well, back then Compaq was, was a leader in the personal computer business. And we would release one PC and then, and usually around an intel generation, you would reach the next PC.

[Barry Ritholtz]

See, kids today don't remember. 3,646.

[Bill Gurley]

Yeah, it was like a big deal. Yeah, yeah. And so we started on the third project that was a lot like the second and a lot like the first. And I asked myself a question. I don't know if I realized I was doing it as much now, as much then as I do now. I asked myself the question, is this what I want to be doing 30 years from now? And in any organization there's someone that's a lifer that you can like ask yourself, is that what I want? And that's with no judgment towards people that do that. But it became very clear that that wasn't for me. And this would be particularly interesting for your audience because it's an investment crowd at home at night. I had read one up on Wall street by Peter.

[Barry Ritholtz]

Peter Lynch.

[Bill Gurley]

Yeah. And I had opened a Prodigy account, which was this precursor to aol. And I was starting to get really interested in stocks. I had bought the value line. You remember the stock? Oh sure. The big notebook with the one pagers,

[Barry Ritholtz]

updates and the three ring binders and like a whole shelf of them alphabetical.

[Bill Gurley]

And, and one thing I really encourage people to think about is what are you doing in your free time? And maybe should. Is there a clue that that should actually be what you do full time? And so this thing was itching at me.

[Barry Ritholtz]

So first gig in finance, was that Deutsche Bank?

[Bill Gurley]

No, it was Credit Suisse First Boston. So I, while I was at University of Texas, MBA program, I thought about Venture, but it seemed very hard to get towards. I like technology, I like disruption, I like programming. And it seemed hard to get at. But at that time, when you get to business school, some young adults like to pretend they're financiers. And so they read Fortune, Forbes, the Wall Street Journal, and the Atrium, you know, as if. And I would read the tech articles. And there was a team at Goldman Sachs on the sell side there. And the sell side, I think was more kind of held in higher regards

[Barry Ritholtz]

back then for sure.

[Bill Gurley]

Yeah. And this team with Dan Benton and Rick Sherlin and Goldman got quoted all the time. And I said to myself, you know, I really love my corporate strategy class. I love technology. These people get to opine on, on it and are treated as experts. So I went to, I came here to New York. I knocked on doors cold. I asked those particular, that particular team for a meeting. They let me in. I'm a freshman or first year at the University of Texas. They let me in. And I told all the other research directors, I'll be in town meeting with those guys. And I got like 10 meetings doing that. And one of those individuals was Al Jackson. And he gave me a shot. And I can remember the first day of orientation, There were like 40 new people from MBA programs and we had to go around and say our name in school. And it was what you'd expect. Columbia, Wharton, Harvard. But I was a University of Tech. I was, I was the owl.

[Barry Ritholtz]

You're the odd man out.

[Bill Gurley]

But I'm so grateful to Al for giving me that shot. The sell side analyst job has one trait that is remarkable, which is you immediately get to start talking to CEOs and CFOs. And I don't know of any other job where that just happens right away.

[Barry Ritholtz]

Right out of school.

[Bill Gurley]

Yeah. So the access was amazing. I ended up getting to cover the industry. I worked in the computer industry. I got to know the team at Dell. We, we I very fortunate this story involves our, our mutual friend Mike Mauboussin.

[Barry Ritholtz]

Sure.

[Bill Gurley]

But because of something Mike taught me, I got very bullish on Dell. And it was trading at 6 times earnings. Cause they had had some issues and

[Barry Ritholtz]

I recall the big, I think they had a CFO that was doing some dumb.

[Bill Gurley]

They had, they had an options currency thing that went wrong.

[Barry Ritholtz]

Yeah.

[Bill Gurley]

And their laptop caught on fire. And those, both those things happened at the same time. And so Mr. Mauboussin had really gotten into ROIC analysis at that time. One of the first people to really get behind it. And he had me read this book, valuation from McKinsey and the Stern Stewart book. And when I ran those ROIC calculations on all the players, Dell Was like

[Barry Ritholtz]

it's way above everybody.

[Bill Gurley]

Way above everybody. Because they were building to individual order. They weren't building Tim and Tory. The balance sheet was not tied up at all. They had a positive cash conversion cycle. It was unbelievable.

[Barry Ritholtz]

You just had to weather the storm. And on the other side, but that means you're buying something.

[Bill Gurley]

Well, we went, we went strong buy because of this ricochet differential that no one was talking about. Michael kindly tweeted about my book the other day and said he taught us some things we didn't know ourselves about our business. And it was a great run. I mean that really launched my career because that stock went up 100x.

[Barry Ritholtz]

Yeah, that was a, that's a home run. That's a, that's a venture like return.

[Bill Gurley]

Yes.

[Barry Ritholtz]

From a public company. How did you end up at Deutsche bank? From csfb?

[Bill Gurley]

I had the same thing happen one night. I was at Park Avenue plaza on the 36th floor and I was there at like 10pm as the young people do. And I walked around and the lifers were in the corner offices and I stopped in front of each of their offices and I said, is this what I want to do the rest of my life? And that night when I walked home, I knew it wasn't the sell side, but I loved the sell side. I had a great run getting access to all those people. Being here in New York, working like on Wall street as a young person, like it gave me so much energy and excitement. Like it's just, it's a different deal if you're in it. It's just a different deal. And, but the, but I knew it was, it was time and I started looking around. I almost took a job with Capital Group, who in la, who, who I still hold in a minute as an investment organization. And Frank Quattrone called me out of the blue. And Frank had, was leaving Morgan Stanley. He is the most notable high tech investment banker of all time. And he sat down with me and we had a very candid conversation. He asked me what I wanted to do long term. And I told him, I said, I've come to this conclusion. I don't want to be a sell side analyst anymore. He said, what do you want to do? And I said, I, I think I want to be a venture capitalist. And he said, this almost sounds too good to be true. He says, come to work for me for a while. Be a sell sign. That's a little bit longer. I will move you to Silicon Valley. I'll put you in the epicenter and I'll Introduce you to every venture capitalist that I know. And he knew them all.

[Barry Ritholtz]

Wow. And so, yeah, he was, he was probably the ax on tech IPOs. Certainly one of the top three.

[Bill Gurley]

Yeah. And so I took that trade. He did everything he said. I only worked for him for 13 months, so it all. And in that window, we secured the mandate for the lead left position on the, on the Amazon ipo, which turned

[Barry Ritholtz]

out to work out pretty okay.

[Bill Gurley]

And that's such a great piece of kind of IPO tech history. If no one could name whose lead left on the Amazon ipo. And you can go find. I do this frequently. Go look at the S1 and it's Deutsche Morgan Grunfeld lead left.

[Bowen Yang]

Wow.

[Barry Ritholtz]

So how did you transition from working with Quattrone at Deutsche bank to Benchmark if you're right in the heart of Silicon Valley?

[Bill Gurley]

He did what he said. He introduced me to every VC I was taking.

[Barry Ritholtz]

So. Out of that list.

[Bill Gurley]

Yeah. I'm taking quarterly meetings with Benchmark where they're inviting me into their Monday meeting and we're just chatting about where the industry's going. Yeah. He really did what he said. And.

[Barry Ritholtz]

But why Benchmark as opposed to Sequoia, Kleiner Perkins?

[Bill Gurley]

Well, here, actually. My first offer into Venture came from Ann Winblatt, and I was so eager to get into Venture. When the offer came at Hummer Winblad, I said yes. And I didn't know what I didn't know. I got involved in the organization. It was structured like a very traditional firm where the founders made more equity than the young people. And, and there was also a bit of a power differential where, you know, the person that got to dictate how things went were the elder statesman, old school lawyer account. They're all set up. Yeah. And the Benchmark guys had lived within those frameworks and had decided to do something crazy, which was to create an equal partnership where everyone makes the exact same amount of money and everyone has the exact same power within the organization for decision making and there's no leader. And I can't tell you, like, what it's like to have someone from an organization like that reach out to a young person and say, come on and be a part of this versus the traditional one.

[Barry Ritholtz]

Be, be a partner. Although I would imagine the whole eat what you kill ethos could be a little intimidating.

[Bill Gurley]

Well, but, but, but here's the thing. I think at those hierarchical firms, there's an up or out mentality. So the, the people at the bottom live in constant fear of what you're talking about and they also get sharp elbow to the side at Benchmark. These founders were going to split equally whatever I did. And so what I found was the cultural zeitgeist that came out of that structure is one of immense help and support. And so I immediately had four mentors who had been doing this a lot longer than I did, who were in my corner every single day. And then I got to live through bringing other people in. It's wonderful recruiting tool to tell someone you're going to be equal, but then you win when they win. And you know those original Benchmark founders who did very well with their ebay and Ariba investment in Fund one, they all participated in Uber investment that I brought in the table. And today, you know, Eric Vischer has got Cerebras and I'm going to benefit from that. And it's, it's a, it is a culture that I think is really great for generational change. And when I talk to LPs about what I mean, the LP doesn't have much they can control, right? They're trying to decide and the window for how successful a fund is moving from seven years to 15. Like you're getting past, I mean like the time you're going to turn around and analyze whether investors any good or not, you're going to be retiring. And so what you can study is do you think the organization has elements that will cause it to be able to succeed with generational change? And I think one of the proudest things of just me serving as part of it is that we were able to move from a place where the founders were the ones behind all the winners to where the next generation was.

[Barry Ritholtz]

So when you joined Benchmark, I think you were relatively, I don't want to say a unicorn, but there weren't a whole lot of public market research folks in the VC world then. Now it seems that it's a little more common. But were you a little bit of a one off when you joined?

[Bill Gurley]

I know a piece of history that's probably not well known, but Ben Rosen of seven Rosen, who's not a brand you hear much of anymore and we're involved in Compaq, he was actually the chairman of Compaq. He was a semiconductor analyst in the 70s. So he was the first one. And then after me and kind of, it was kind of at the same time, Danny Reimer was, was a sell side analyst. Mary Meeker was a sell side. So there were. The weird thing about venture is if you like polled people on their background prior to Venture is a. There's real diversity. There's like a whole bunch of different pathways. Mike Moritz was a writer, but that's right. I recall that there's a handful of us that came that path.

[Barry Ritholtz]

Huh. Really interesting. Coming up, we continue our conversation with Benchmark's Bill Gurley discussing his new book, running down a how to thrive in a career you actually love. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

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[Barry Ritholtz]

I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is Bill Gurley of Benchmark Capital. He has a new book, running down a dream, how to thrive in a career you actually love. I love the Tom Petty title. What. What led you to start with that?

[Bill Gurley]

I. I put together back when I was super active writing blog posts. I would Keep these notes in digital form. But I would start. I'd probably start three or four times as many blog posts as I finished. And so if an idea popped in my head, I just write notes down and see if I went back to it.

[Barry Ritholtz]

And that was a note.

[Bill Gurley]

Yeah, I. I had read these three biographies of people that were from very different fields that all started on the bottom rung and. And became remarkably successful in their field. And I noticed a through line between them, and I just wrote it down the same way I would figure out how an Internet marketplace company might thrive, like, oh, do this, this, and this. And I got invited one day back to my alma mater to do a speech and at Texas business School. And I asked if I could do this one. And. And so then I developed it a little more, and I. I put it out there. They put it on YouTube. And a few people noticed. And one of those was James Clear, who wrote Atomic Habit.

[Barry Ritholtz]

Sure.

[Bill Gurley]

And I don't want to make this sound too mushy, but at some point, I decided that it was time to declare victory and hang up my boots in venture. And it was a decision. It wasn't like the other decisions. I spent 25 years in venture capital. I loved every minute of it. It was my dream job. But I wanted to start doing other things. And there's a great book by Arthur Brooks, Strength to Strength, that talks about people that reached that stage in life. And it really spoke to me, and I decided to push this book out. And two people had really gotten behind me and pushed me to do that. One of them was Tony Fadell, who invented the ipod and was head of engineering on the iPhone.

[Barry Ritholtz]

I knew. I recognized that name.

[Bill Gurley]

He had a book called Build. He also started Nest. And he told me that it was the best thing that he'd ever done. And that's kind of hard to believe. And then I was talking to Danny Meyer last night, the famous New York restaurateur and founder of Shake Shack, and he said the same thing. He said. He said the book Setting the Table was more rewarding for him than anything he had done. And I asked him, why is that? And he told a story. This is a very long answer. I'm sorry. He told a story about being in Africa at a hotel. And one of the local workers in this restaurant we were in, he was in, told him, look at how I'm doing the eggs. And it was a technique out of his book Setting the Table.

[Barry Ritholtz]

Oh, really?

[Bill Gurley]

And the reach. His argument was the reach that he could get in sharing what he knew via a book, you know, was exponential compared to what he could do just opening another restaurant. And that was power. Anyway, once again, it sounds maybe a little too, too mushy or Satan.

[Barry Ritholtz]

Not at all.

[Bill Gurley]

But if I'd have written a book about being a VC or an investor, there's only a handful of people it might have touched. And I felt very compelled to share this because I thought it could have a big, much bigger reach because it's not just about, it could be applied to a career in investing, but it's a, it's a much broader book about doing what you love.

[Barry Ritholtz]

So, so let's talk about some of the items from the book, starting with There's a stat, I think it's in the, the introduction. It's not even in the first chapter. Six in 10 people say they do something differently if they could start over. That's a horrifying statistic.

[Bill Gurley]

Well, we were studying this Gallup poll that said like 53% of people were, are quiet, quitting at work, they're not engaged or don't consider themselves engaged at work. And I think other people have echoed those types of thoughts. And on a whim we, I was working with a co writer and researcher, we did a survey monkey survey and asked this question. If you could start over again, would you do something different? That one came out seven in 10. We hired Wharton to do an official academic review. And that one came out six in 10. There's a book by Daniel Pink about regrets called the Power of Regrets. And he says that the regrets of inaction, the stone unturned, the path not taken, weigh in our brain. We ruminate far more on those than regrets of action. So we, we let ourselves off the hook for making mistakes. We're pretty good at getting past them and moving on. But the thing we never tried, it really eats at us.

[Barry Ritholtz]

I forget the name of the book. They interviewed a bunch of 90 year old people talking about their life regrets. And it's never the commissions or errors, it's always the things they never did. Because in your mind you imagine an entire different pathway and that's the, that's the regret.

[Bill Gurley]

And one of the catchphrases we use in the book, which came from my partner Kevin Harvey, is life is a use it or lose it proposition. For sure.

[Barry Ritholtz]

Absolutely for sure. So the idea of career regret, you lay out a variety of principles to avoid it, starting with obsessive curiosity. Dive into that. Tell us about obsessive curiosity.

[Bill Gurley]

All of the people that we studied and we expanded it from the presentation. I gave it to school. And. And probably read 100 biographies, but. But every single one of these people are obsessive learners in their field. And you and I are both. I already mentioned, but you and I are both. Both friends and a fan of Michael Maubousson. And. And I don't think there's a human that reads more books on finance than Mike.

[Barry Ritholtz]

It's a race between him and Warren Buffett.

[Bill Gurley]

Yes. And he fully synthesizes him. You know, one cheat code, if you want to chase a dream job in investing, is you could just start by reading Michael's books, because he's read all the other books, and it'd be a great place to start.

[Barry Ritholtz]

But I literally have a couple of chapters in here based on his work.

[Bill Gurley]

Yes, that.

[Barry Ritholtz]

Cause it's. He's just so seminal in so many ways.

[Bill Gurley]

And in the book, you'll see examples of Danny Meyer, the restaurateur, Bob Dylan, you know, the folk singer. There's this part we uncovered. You know, most. I. I'm sorry that the. The new movie missed this, but you. You get more of it if you go back to the Scorsese documentary. Some people called him a music expeditionary. So he studied music at a level no one would know this, like, if they just listened to Dylan. But he is obsessive about learning about the art. And they. Early on, they called him a mimic because he was able to kind of parrot every other artist that he studied. And even today, you know, he did a podcast for a while where he went through, like, histories of music. His newer book goes through 50 songs that he thinks changed the world. Like, this study element is just inherent in so many of these people. And what I love about. First of all, I think it is a defining factor of success. Are you. Does. Does continuous learning in your field come easy to you? And it's a great test of whether you're pointing in the right direction or not. Because if it feels grindy to do that, that you're not in the right place, you need to try some other things.

[Barry Ritholtz]

You're gonna laugh. I. Every morning I take a quick look at a bunch of headlines and run through. And I saw something this morning that said there's a high correlation between people who read books and longevity. So all these folks chasing down, you know, blood treatments and all these longevity things, it turns out just read a couple of books a month, you'll extend your lifespan.

[Bill Gurley]

How about that?

[Barry Ritholtz]

Yeah, really, really interesting. So you. You mentioned Danny Meyer, you mentioned Bob Dylan, Sam Hinkey, the Coach is another one. What. When I first got the book. I'm always a little nervous when I get a book and I'm like, oh, this is going to be preachy and tedious. But it wasn't. It's interesting and narrative driven. What led you to the storytelling format of all these people's life experiences as opposed to the more traditional?

[Bill Gurley]

Your listeners can't tell because we're not on video, but I'm smiling, grinning ear to ear and I'm so glad you noticed that.

[Barry Ritholtz]

Oh, very, it's. It leaps off the page.

[Bill Gurley]

So there was, there was quite a bit of intention in that. So just as when I was, when I was a computer scientist, I was at home trading stocks as a, as an investor, I developed on the side somehow, I guess through this act of reading. Just a super appreciation for really well written nonfiction. And there's actually, there's two back of the book.

[Barry Ritholtz]

You have chapters on it on all your favorite books.

[Bill Gurley]

There's a, there's a book called the New Journalism and a follow up called the New New Journalism and the Tom Wolf put together the first one. The second one is writers. People would know more today that studied the craft of great nonfiction writing. Like that's what that book's about. And it covers Lewis and Krakauer and Gladwell and all the books that have done extremely well. And there is a through line in there that storytelling is something that people really love to read. Morgan Houselike was on this podcast called why We Write. And he went on and on about that technique and I had discovered it as well. And so my co writer actually does most of his work for the Atlantic. And so every, the book's divided into two, two halves. There's, there's a profiles and there's principles. And if you look at the table of contents, we all, we interleave them, which was a technique I, I borrowed actually from Michael Dell's book where he interleaved two stories in the same book. And the idea, there was, there was two things behind that. One, I thought the book would be more readable if, if it did that a lot of the books that are the cornerstones of the career category, like Designing youg Life and what colors your parachute are structured more like a textbook.

[Barry Ritholtz]

Right.

[Bill Gurley]

And I, I just felt that the, if it were more readable, it would be more approachable and more consumable for more people. And then I also. And this goes back to what Morgan Housel was pushing. Reading the stories is, is, I think puts it in your memory a little Bit better than just reading a principle alone.

[Barry Ritholtz]

Oh, we are geared to remember narratives as opposed to data or, you know, dry principles. And, you know, the intentionality behind telling stories makes it very readable as opposed to, let's be honest, you know, what color is your parachute's been in print for, I don't.

[Bill Gurley]

57 years.

[Barry Ritholtz]

Yeah, forever.

[Bill Gurley]

Still in the top 10 in the

[Barry Ritholtz]

category, but it's kind of a slog to ply through. It's like reading a textbook and when. When is the test? So. So I have a couple more questions about the book. I got to. To appreciate it, to bring up the book. Book seems to be very much a bit of a pushback to modern hustle culture. Was that on purpose or was it really. Hey, you know, it's not a grind if you're really enjoying it and you should listen to your own body's signals that I'm really hating this, but I'm grinding it out.

[Bill Gurley]

1. One fortunate thing in putting this book together is, and I think this is really just easier in the modern world. We were able to connect with some like, true, amazing leaders in this field. So we ended up talking to Adam Grant and Daniel Pink and Angela Duckworth and. And people that have really made a name for themselves in this field. We stumbled across a podcast Angela Duckworth had done recently where she was looking back 10 years after on Grit. The book and the original thesis of grit was you need passion and perseverance. And she said if she were going to rewrite it, she would maybe instead of 50, 50, say 2/3, 1/3 passion. And her fear was that we've taught young adults how to grind like we've. And I feel that the evolution of the college matriculation conveyor belt has been negative. I feel like it's. It's become an arms race that to get these kids into the hardest schools, the schools aren't expanding capacity, so they just keep getting harder and harder to get into. And the kids get taught to fill their schedule with. With. With programming so that that resume can be perfect. And they're not given the time to really explore and find. And many people don't really know what their dream job is, and some of them might not find it till they're 30 or 40, and that's okay, too. But we've pushed and pushed and pushed, and many of them have risen to the occasion of doing all that work, but they graduate from college exhausted.

[Barry Ritholtz]

You describe this whole section. Step off the conveyor belt. I was just watching something about Norway. Is this tiny little country, yet it dominates the Winter Olympics despite lots of other cold weather countries. And their secret is all these kids are encouraged to join sports as kids. But unlike here, there's no. There's no trophies, there's no competition. It's do you want do for as long as you want, as long as it's interesting. And every one of their medalists say, yeah, I was a slalom skier Till I was 14, and then I switched to whatever. But I had the background and it was, it was great. There was no pressure. You could do what you want. It turns out letting kids play is

[Bill Gurley]

a great strategy, and I'm not the first one to, like, make that point. There's a chapter in coddling of the American mind titled the Decline of Play. And I do wonder if it's harder to find your obsession and find this thing that you're totally fascinated with if you're stuck in this. This game that not one of your own making.

[Barry Ritholtz]

And you know, it's funny, the phone, which is always within reach, means that you're never bored. But boredom is what leads to creative output. And I'm wondering what this generation is going to look like down the road.

[Bill Gurley]

Well, hopefully some of them will be able to get a hold of this book and find their way to a better place.

[Barry Ritholtz]

Coming up, we continue our conversation with Benchmark's Bill Gurley, talking about the state of venture capital today. I'm Barry Ritholtz. You're listening to Masters in Business.

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[Barry Ritholtz]

I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Bill Gurley. His new book, running down a dream, how to thrive in a career you actually love is out today. He's also a member of Benchmark Capital, a legendary venture firm. Let's talk a little bit about some of my favorite benchmark investments that I seem to use constantly. I think it's ironic we're recording this the day after this giant blizzard hit New York. The trains aren't running, the buses aren't running. I took an Uber here, so kind of full circle. You're the guy who brought Uber to the public attention, funded it and walked it through the IPO. Zillow I use all the time. OpenTable I have to use a few times a week. Tell us about these giant consumer facing companies that became wildly successful.

[Bill Gurley]

So I stumbled upon, and this actually will involve Mike Maubousin again. Him and I were working together in the research department at CSFB and we became enamored. We became book shares and that's been true for 30 years. But we became enamored with this book Complexity by Mitchell Waldrop about the rise of the Santa Fe Institute, which I

[Barry Ritholtz]

know he's involved in.

[Bill Gurley]

Yeah, I am as well. So we're both on the board and Bill Miller of Legg Mason, longtime involvement. Carl Kawagia from Capital Group just joined the board. So there's a, there's a handful of investors that get a lot out of it. But there were the, the original book highlighted this guy named Brian Arthur and Brian had done work on what he called increasing returns and they published his, one of his pieces in Harvard Business Review. It was ironically co written by Cormac McCarthy but no one knew it at the time and that's come out since then. Anyway, increasing returns was this argument that if, if you have the right pieces in place, your, your company will accelerate towards winner take all. And when I read that and I started looking at what was capable with the Internet and possible. This notion really was prominent in my mind. And I can remember, I think the first one of those that we invested in was OpenTable. And I remember my partners pushing back and saying, selling computer hardware to a restaurant is a crappy business. And you know, SMBs, how we ever scale it? And the idea was, well, if you got more, if you got all the restaurants on, the consumers would only want to go there. And if you got all the consumers on, the restaurants would feel obligated to be in that place. So, you know, there's no reason to have multiple of these things. And that was the thesis when we made the original bet. It wasn't straight up. We lived through the dot com burst and had to grow after that. But it did play out that way and the network effects were present. And then from there I started thinking about what other industries would that apply to and that's what led to all these other things.

[Barry Ritholtz]

So OpenTable leads to Uber, leads to Zillow. Is that the progression?

[Bill Gurley]

Absolutely.

[Barry Ritholtz]

Huh. Because, because, you know, it's hard to argue that those three are pretty indispensable.

[Bill Gurley]

Yeah.

[Barry Ritholtz]

What about others that stand out next door? Grubhub. What else is in that group?

[Bill Gurley]

Yeah, and Stitch Fix, you know, did really well. I. And then, you know, also the firm, you know, while I was there, invested in Twitter and Snapchat and so many different companies that in the, in the social space, Instagram. I don't know how we did them all.

[Barry Ritholtz]

Well, you didn't do them all. You have, first of all, VCs in general do something that I'm very much enthralled with. They're kind of proud of their failures, which the rest of finance is sort of terrified of. The idea that, hey, we invested in this, it went to zero, we skipped this, we missed this. A lot of VCs on their websites have, hey, here's what we blew, here's what didn't work out. And you very famously miss Google.

[Bill Gurley]

Yes.

[Barry Ritholtz]

What were the lessons from that experience?

[Bill Gurley]

Well, the, I think the biggest takeaway which leads to what you just described, Barry, is that when you miss a big winner, it's. It's very asymmetric to the counterfactual. Right. If we invest $12 million and it goes to zero, you lose one time your money. If you fail to invest $12 million in Google, you miss out on a thousand X. A thousand X. And so over the years at Benchmark, I would tell you that I don't recall very many Discussions at all about oh that one went to zero. You're, you know, let's study why that happened. You orient. My partner Bruce came up with this phrase what could go right. You orient yourself towards the failure being missing out on a huge winner. And so we changed how we, how the kind of things that we studied as failure that you want to correct.

[Barry Ritholtz]

How different is that an experience and a process from making investments in existing legacy public companies?

[Bill Gurley]

Well, I don't think you have the potential for the thousand X is often and so you're not going to. And the thousand X can, can, can make up for, you know, eight losses that you never heard of. And so it just forces you, if you're in that big game hunting mindset to really, really focus on could this work as opposed to could it fail and only be obsessed about that part

[Barry Ritholtz]

you mentioned it makes.

[Bill Gurley]

And I think it's different, I think because we are oriented to absorb failure at a level that you can't do in the public market.

[Barry Ritholtz]

So you mentioned it's 1 in 10. Is it that much or is it closer to 1 or 2 in 100?

[Bill Gurley]

I mean for the, for the big, big outliers, of course it's what you're saying but. But 1 in 100 could return the fund, you know, but you got to find that one. I mean think about that. That's a really weird dynamic to be out there doing so.

[Barry Ritholtz]

So I'm legally obligated to ask you about AI and artificial intelligence. How do you look at this sector? What do you think is going to.

[Bill Gurley]

By the way, one last thing before I think that the venture industry is constantly evolving and today's venture industry looks nothing like what I practice, which looks nothing like what the generation before me saw there. It's gotten in way more competitive and the best investors have become aware of power loss where these big winners go on forever and they become these, these trillion dollar companies. And as a result they're very comfortable now betting it forward. And so we have, you know, firms like Thrive and CO2 and altimeter are willing to put big, big checks into private companies in a way they never would have in the past. Making the bet that that compounding law is going to keep playing out. So everything's changed.

[Barry Ritholtz]

So that raises a really interesting issue. Benchmark has stayed kind of small, early nimble, while a lot of other VCs really beefed up. What, what is it about avoiding becoming a mega fund, chasing late stage growth that was so appealing to you guys?

[Bill Gurley]

So one, I do think we've We've reached the point of kind of the industrialization of the venture capital world and these funds are, and these assets under management are starting to parallel large PE firms. And I think one, it's very hard to stay focused on the artisan craft of identifying early opportunities if you're running this thing that has to look after. It's hard to. It's hard to get excited about a $7 million investment if you're managing billions in writing $500 million checks and you're earning by the way, a management fee and a venture carry on the 500. Why would you like. You just get oriented differently and, and second, I think it'll be very difficult for those firms that get that big to have IRR that is anything other than industry at best.

[Barry Ritholtz]

So you've been pretty loud about valuation discipline and, and the risk of having a high burn rate. Is that a function of looking at earlier stage companies or is it just simply an analyst discipline of.

[Bill Gurley]

I think it's the latter. I think it's reading all those books like studying Buffett, Graham and Dodd. Like I brought to the venture capital industry a study of investing history that most VCs never have and I think it was differentiating for me. Some people call me like the VC cynic, but that's okay.

[Barry Ritholtz]

So you're. I would think I think of you as an elder statesman in the VC community but you're hinting at something I'm going to ask explicitly what rules have too many venture capitalists not learned that you think would behoove them and their firm to go back to some basics and you know, focus in on that'll help both their returns, their LPs and their funded companies.

[Bill Gurley]

The thing I would say to answer that Barry, is that the. It's always going to. Howard Marks wrote this great piece a long time ago who highlighted that the way you make really good money is to have contrarian non consensus.

[Barry Ritholtz]

That's right.

[Bill Gurley]

Predictions that are right versus wrong and right now and AI you know, these big waves create so much wealth that I think for a moment when the waves happen, you have to move past that and, and realize that the wave could be so big that you can just plow in. But eventually Howard's going to be right and eventually the market is, is going to become oversaturated. There's this great book by Carlotta Perez where she said that bubbles always follow real waves because you attract speculators and charlatans and all this.

[Barry Ritholtz]

Right.

[Bill Gurley]

And people would want you to say if you're if you're, if you use the word bubble, you don't believe in AI, but it's the opposite. I believe that it's real and that's why it's attracting the charlatans. And eventually we'll go over the top. We always do.

[Barry Ritholtz]

Every new technology comes with this void of people that are deeply enmeshed in it, knowledgeable and articulate, and so there's just a rush to fill that space.

[Bill Gurley]

They get rich quick. And when people are getting rich quick, fools rush in.

[Barry Ritholtz]

I love the Bill Bernstein quote. We use the word guru because it's too difficult to spell charlatan. And it's really very much true. So let's stick with the concept of variant perspective. Another phrase I really like and part of the job of being both contrarian and right. What do you think is a non consensus view you're willing to articulate today? That's going to look obvious 10 years from now, but right now, very non consensus.

[Bill Gurley]

I would. The thing that pops in my head just because people have been talking about it the past few days, I think this, this paper that came out yesterday is just completely over the top. And the notion that every tech company in the world needs to have their terminal value set to 0 is probably not true.

[Barry Ritholtz]

I love the barbell. Either AI is a bubble that is not going to do anything for us, or it's going to be so effective everybody's going to lose their job.

[Bill Gurley]

Yes.

[Barry Ritholtz]

Isn't there anything in the middle? Hey, maybe even this is a.

[Bill Gurley]

Well, look, Buffett's the one that said, be, be fearful when others are greedy, and greedy when others are fearful. So if, if AI fear is the topic of the day, the contrarian thing to do would be to try and figure out where, what price points you believe represent true value. And I'm not, I'm not saying we're there yet, but, but hey, we stocks. Since the zerp period, high tech stocks have been rather expensive from a PE standpoint for what, seven years now they're on sale. All of a sudden Buffett says, you want to be a net buyer. So this should, we should all be excited.

[Barry Ritholtz]

So, you know, people don't. I heard last year that, that the Magnificent Seven, all this market concentration is going to kill us. And yet last year only two of the seven beat the S&P 500. So this sale process started a year ago, and then so far this year it's pretty clear the rally is broadening out. It's going to other stocks. We continue to see sort of a rotating sell off as these AI fears hit different companies. It's going to be really interesting to see what's going to get cheap and attractive and fear driven going forward.

[Bill Gurley]

Yes, I agree. That's where you should be looking.

[Barry Ritholtz]

Before I get to my favorite questions, I have one other sort of non consensus question to ask you. What do you think people are either not talking about or thinking about that they really should be what topic is getting overlooked but should really be much more front and center than it is

[Bill Gurley]

everything but I mean I've never been in a scenario where everyone's so all in on this one thing and it is important. I think the best way to protect yourself against AI disruption is to run at it and be the person in your field that knows knows the most about it. But boy, everything else is just not being discussed. Everything else.

[Barry Ritholtz]

So. So let's jump to our speed round, our favorite questions.

[Bill Gurley]

Let's do it.

[Barry Ritholtz]

We'll plow through this. Tell us about your early mentors who helped shape your career.

[Bill Gurley]

Well, I already mentioned Mobisen. It was kind of more of a peer, but still, I was so lucky Al Jackson gave me that first job on Wall Street. When I showed up there, there was a gentleman named Charlie Wolf. I don't know if you ever met him, of course, Charlie Wolf.

[Barry Ritholtz]

Charlie Wolf was one of the few guys bul bullish on Apple when the first IMAX came out and the ipod and the street did not understand Apple and he's the only guy who did.

[Bill Gurley]

And Charlie was a force of nature. People loved him. He was a professor, simultaneous professor at Columbia and sell side analyst on the street. And I got to hang out with him.

[Barry Ritholtz]

That's a name I haven't heard in a while.

[Bill Gurley]

I love his work.

[Barry Ritholtz]

Yep. Unfortunately you mentioned a lot of books. There's a whole chapter at the back about various books you and other people recommend. What are you reading currently?

[Bill Gurley]

What what's interesting, I'm reading an unreleased. I have an early unreleased copy of of David Epstein's new book called Inside the Box.

[Barry Ritholtz]

He did range.

[Bill Gurley]

He did Range, which I adored. I adored range. And anyway, Inside the Box where he's talking about how constraints drive creativity and it's really been. What I love is when a book makes me think differently and about other things. And I've already. He and I have already started to have a text thread about taking it even further beyond what his intention was, which is awesome.

[Barry Ritholtz]

That description immediately makes me think of the scene from north by Northwest. I don't know if he mentions this in the Book having not seen it.

[Bill Gurley]

Yeah.

[Barry Ritholtz]

The Hollywood MPAA code did not allow movies to show a man and a woman getting into bed. So it's Cary Grant, and I forgot which leading lady is the woman. They're on a train, and they're not allowed to both be seen in bed. And then cut to the image of the long train driving into a tunnel. All the subtlety of a sledgehammer. That was fine. But the two of them sitting on. That's the constraint that forced Hitchcock to say, oh, you're not gonna let me do this. Hold my beer.

[Bill Gurley]

And I had mentioned earlier Tony Fadal, he would tell me that Steve Jobs for the iPhone, he didn't come in and dictate every little thing, but he would say, I want it this thin. And by just saying that, rather than how thin can you make it right, it forces people to think creatively about. And you come up with more ideation and innovation than without the constraint.

[Barry Ritholtz]

Really, really interesting. What are you streaming these days? What's keeping you entertained?

[Bill Gurley]

I just watched Pluribus and my wife

[Barry Ritholtz]

just started it without me, and I'm annoyed. How'd you like it?

[Bill Gurley]

I loved it.

[Barry Ritholtz]

Really?

[Bill Gurley]

I really do.

[Barry Ritholtz]

That's.

[Bill Gurley]

I mean, I. She. She was so good on Better Call, so. And. But this is her shining. She already won the Emmy for it. But. But the, the implication. There's some implications from AI are for AI that are really clever.

[Barry Ritholtz]

Well, it's definitely on my list to check out, so. So my next two questions are kind of answered in the book so that I ask everybody. So essentially it'll be a summation. What sort of advice would you give to a recent college grad interested in a career in either venture capital or finance?

[Bill Gurley]

Well, in finance. This is going to be so redundant. I apologize. I would tell him to go read Michael Maubouson's five books because Mike has read every single. Mike's the most read financial mind that I know of. And he synthesized everything he read in those books. And so it would be like starting on first base. I. I mean, second base. I, I talk about in the book that you should study the history of your field. And if studying the history of your fields. Uninteresting. Once again, I think you're not in the wrong field. So that. That would be it. Like start with the masters Graham and Dodd and read the Buffett letters. Like, like it's all out there. It's so wonderful. There's never been a better time to learn in the history of the world because it's all available I'm so surprised

[Barry Ritholtz]

more people don't talk about the success equation because the idea of the impact of luck. And he talks about investing, business and sports, we underestimate luck tremendously. And it's such a great book, but you can't.

[Bill Gurley]

But you can improve your luck and we have a.

[Barry Ritholtz]

Increase the surface area of luck is the phrase that always sticks out.

[Bill Gurley]

And there's a, there's a principle in the book called go to the epicenter where we recommend, if you can at all go practice where everyone else is practicing precisely to impact that equation.

[Barry Ritholtz]

And our final question, what do you know about the world of venture investing today? Might have been useful 25 years ago when you were first starting.

[Bill Gurley]

It probably goes into the thing we already drilled into. Like had I been more open minded to the question what could go right and pursued the Google investment? Maybe I retire earlier. Maybe. Maybe we're not talking about the book.

[Barry Ritholtz]

I have a feeling you would not have retired early. You would have kept going because you seem to really love what you did.

[Bill Gurley]

I did. No doubt.

[Barry Ritholtz]

So Bill, thank you so much for doing this.

[Bill Gurley]

Can I leave you one last.

[Barry Ritholtz]

Yeah, absolutely.

[Bill Gurley]

The book was written for the the hero that would make this journey. But there are people in every hero's life that act as advisors and counselors. There's parents and there's a whole bunch of people that shape your career process. I think they're going to get a lot out of this book even though it's not written to them because I think there is this overwhelming, well intentioned instinct to put the economic stability of a child's life at the front.

[Barry Ritholtz]

Sure.

[Bill Gurley]

And I'm not sure it's the right answer.

[Barry Ritholtz]

Coming up, we continue our conversation with Benchmark's Bill Gurley. Hi, I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

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[Matt Rogers]

This is Matt Rogers from Las Culturistas with Matt Rogers and Bowen Yang.

[Bowen Yang]

This is Bowen Yang from Las Culturistas with Matt Rogers and Bowen Yang.

[Matt Rogers]

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[Bowen Yang]

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[Matt Rogers]

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[Bowen Yang]

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[Barry Ritholtz]

I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest today is Bill Gurley of Benchmark Capital. So Benchmark has really put together an extraordinary track record. Uber OpenTable, Zillow, Stitch Fix, ebay, go down the list. What is it about Benchmark's model that was so unique and really produced better outcomes than so many VCs have over the years?

[Bill Gurley]

Yeah, I really, I have to give the credit to the founders because they're the ones that put this structure together. But this equal partnership structure has a cultural dynamic that encourages immense amount of support from the partnership. Without I I certainly didn't have a fear of failure or anything like that. And also a element of peer pressure. So the pressure is not a pressure of of do this or you're out. It's a pressure of my partner's putting up these wins and I'm sharing equally. I need to do do that myself. And so it's more the way maybe someone on a sports team might do well and encourage other people on the team to do well as well. And for me, and I won't say that this is necessarily true for everybody else, for me that culture was a perfect fit. I enjoy having the camaraderie and the support of other people. I don't, I wouldn't enjoy being a solo GP and making decisions on my own. There's some great people work that's been done on, on group dynamics and group analysis and one of the really clever things is the group tends to know the weaknesses of the individual better than the individual themselves. And if you're aware of that, you can use that to help. Help your group decision making. So I, I just adored every bit of it. I, I love that they're the, the firm is. Is tilted towards thinking about the work as a craft or an artisan. And I find that to be true of almost everyone I profile in the book. If you care about nuance and detail, it's typically because you're treating the art of what you do in. In a craft like fashion.

[Barry Ritholtz]

Really, really interesting and.

[Bill Gurley]

Yeah. And I think that that's what Benchmark does.

[Barry Ritholtz]

Venture capital as a team sport. Do you, do you want to draw any parallels to playing ball? Anything that comes into that?

[Bill Gurley]

Well, I just, I mean I think it could go beyond, you know, playing ball. But do you create a team culture that that where greatness is going to be expected in an output?

[Barry Ritholtz]

And I bring that up because you mention Sam Hanke in the book.

[Bill Gurley]

Yeah.

[Barry Ritholtz]

I think that's the best coaches try and foster that. It's not just about your individual performance.

[Bill Gurley]

Yeah. And it's hard but. And people I think should be more fascinated with what Bezos did at Amazon and Elon has done across multiple companies because the individual. Everyone knows that Bezos and Elon are innovative and independent thinkers and contrarians. But how do they scale a company to hundreds of thousands of people? How do you take that mindset and put systems in place where it's propagated all the way down? And I don't think enough work is going into figuring out what they do. I'll give you another interesting example. Sure. Satya Nadella probably led the the either the first probably from a market cap creation standpoint, the best turnaround of all time.

[Barry Ritholtz]

No doubt about that. Absolutely. I mean maybe Steve Jobs, but I don't think 20 years earlier.

[Bill Gurley]

Yeah, yeah. Okay. Those two. But. But they ask that one almost went down to the. To the. To the. To the studs if you will, on the rebar.

[Barry Ritholtz]

If Gates didn't save Apple, that would. Would have been it. They would have been done.

[Bill Gurley]

So Steve was starting with more bare metal. Satya had to turn this bigger ship.

[Barry Ritholtz]

Yes.

[Bill Gurley]

And he claims what he did is he told everyone we're going to go from being a know it all to a. To a learn it all culture. And man, if, if that one heuristic is what was the key to this like kudos to him. I mean and wouldn't what a miraculously simple insight. And, and then you know, kudos to him on making it effective like, like pushing it through the organ. I bet they had to push a lot of people out too.

[Barry Ritholtz]

Well, if you look at the culture between him and Bill Gates, the gap ballmer, very different personality, very different approach.

[Bill Gurley]

Yeah.

[Barry Ritholtz]

You can make the case that Nadella was the anti ballmer. And you know, during, during Steve's reign, it, it wasn't great returns, although a lot of people didn't have great returns in the 2000s. So it's a little, little bit of both. I have another question. I've. I kind of suspect I know the answer. Okay, so. So you've spent decades not only picking business models but founders boards, addressable markets. What. What's the single hardest question you wrestle with? Aside from what could go right.

[Bill Gurley]

I'd say the thing that pops in my mind, Barry, is this notion of TAM total addressable market. And the. I think the investor community gets really stuck on that one and are not open minded enough about what's possible, especially if the technology becomes disruptive. There's a, there's a famous interplay between me and this professor at NYU around Uber. He published this piece that said Uber would never be worth more than $4 billion. And I wrote, wrote one of my favorite blog posts ever titled how to Miss by a Mile where I took apart his analysis and tried to. Hi. Well, I had a little, I had an unfair advantage. He, he said that the market Uber was attacking was the taxi market. And he used that as the thesis for his analysis. I already knew in San Francisco that Uber was 20x bigger than the taxi market. He didn't know that. So once you have that piece of knowledge, it's kind of an unfair game. But, but it gets at like, like the product became so much better than what the taxi market offered you and it immediately became, you know, and, and I think in the long run will be a replacement for car ownership which could allow for many, many years of growth.

[Barry Ritholtz]

Growth especially if self driving taxis become a thing. But by the way, huge disadvantage. Analyzing Uber in New York City in the early 2010s because it was a monopoly. Taxis were monopoly.

[Bill Gurley]

Not only that, in the report of his which a summary version got public, but I found the background version, he admits that he had never ridden Uber and only taken taxis. So I think being in New York gave you the exact wrong mindset.

[Barry Ritholtz]

The first time you get into an Uber you're like damn it, I wish I was an early investor. I remember, I remember being a beta tester of Google and sending an email and saying hey, can I invest in this company?

[Bill Gurley]

Like we are.

[Barry Ritholtz]

Good. And then the first time I got into an Uber, it's like, oh, this makes perfect sense on your phone. It's mobile. It knows where you are, it knows where it was so obvious after the fact.

[Bill Gurley]

And credit to Dar for taking it from 40 billion. He touched 200.

[Barry Ritholtz]

So that's fun.

[Bill Gurley]

200 billion versus 4 is. That's what, that's what like a, a closed minded TAM analysis would get you, that you get your way off.

[Barry Ritholtz]

So I'm legally obligated to ask you about artificial intelligence. How are you looking at the opportunities in this space? I kind of think we address that. Do I really need to ask that?

[Bill Gurley]

I can. You want me to?

[Barry Ritholtz]

Yeah.

[Bill Gurley]

Okay. Yeah. So look, I think there are people in the venture community that would tell you this is the biggest disruption wave they've ever seen. And there's no doubt that venture does extremely well around these dislocations. And there's great books like the Innovator's Dilemma that talk about why. But the mobile wave, the PC wave, the client server wave, all these things birthed really big companies, some of them doing the exact same thing. So there were, there were four companies in the CRM space before Salesforce came along, but the SAS wave allowed them to steal all that. That, that market cap that was in those companies.

[Barry Ritholtz]

And so is that a case of 2nd Mass gets the cheese?

[Bill Gurley]

No, I just think it's that these waves, if are. Are. It's very hard for an incumbent to be at the front of the wave. It's kind of different here with AI because there's certainly an obsession within the Mag 7 about AI and what it might do to them. But anyway, VCs tend to do extremely well when these waves come. And so they're all, everyone's all in. And look, it's very disruptive. It's very different than anything we've seen before. I would encourage people once again to really dive in and ask yourself, no matter what field you're in, what is AI capable of here? And to be that person in your organization that has the answer to that question.

[Barry Ritholtz]

It's fascinating that all of the big hyperscalers are spending tens of billions, hundreds of billions, building out these systems. Apple's writing a check to Google to put Gemini into Siri, which was early and terrible. Now it's late and terrible. I'm hoping Gemini, which has been really good, turns Siri into something useful. How do you think of that sort of approach of saying it's cheaper to buy than build.

[Bill Gurley]

I will tell you I have a couple different answers to this which I think are quite interesting. The first of all, the MAG7 formerly were creating I don't know, 3,400 billion in cash flow and 2 trillion in revenue.

[Barry Ritholtz]

Almost 400 billion in profits.

[Bill Gurley]

Yeah. But now almost all of that has been exhausted into capex and Mike Mobeson and I would have long arguments about like what that meant from a valuation perspective. He sloughs it off and says they can stop tomorrow so and then the cash flow will come back. I'm fair, I argue if you're trying to build a DCF now all of a sudden you have to make a decision about whether that would happen or not and whether there's a return on this capex investment. But the second thing I wanted to say is I have found over the years maybe this is another contrarian thing that not enough that big companies think there's some kind of safety net in making an investor in a new disruptor. And so here we have Microsoft and Google you know doing and Amazon making investments in these foundational model companies and it's not clear to me that that is actually a good hedge because I think both of those companies open anthropic now have escape velocity. I don't think they're dependent on the partner anymore. And it harkens back in my brain to, to IBM letting Microsoft put the OS inside the PC and we sell hardware.

[Barry Ritholtz]

What, what good is software going to be? All right, one last quote. You said there's a mess coming from zombie unicorns that all have stalemarks in private portfolios. I'm a huge fan of Cliff as Ness's volatility laundering or the private ownership that that doesn't get get updated or mark to market. What does that reckoning look like when these marks finally show up in the real.

[Bill Gurley]

So this is probably a three hour conversation that I will try and do in a very short form. There is a very famous investor, I'd call him an endowment manager named David Swenson of course Yale model. That is the Yale model. And David said that everyone should be more invested in privates and, and, and, and famously had returns that were spectacular.

[Barry Ritholtz]

But as someone who's a historian in my space that was 40 years ago when no one was 35, no one was doing it was a white space.

[Bill Gurley]

So I absolutely, I think the great

[Barry Ritholtz]

valuation, great opportunities, I think the Swenson

[Bill Gurley]

mimic effect has now played out and I think personally that most of the endowments and foundations in the US are over invested in private both PE and venture. And I think that the way the industry structured and this would require longer conversation. There's no incentive for the operators inside of the endowments or foundations to get the paper marks right. And there's no incentive for the GPS to get to paper marks right. And based on talking to people that do this for a living every day, I suspect both the venture papermarks and the PE paper marks and the real estate papermarks are all too high.

[Barry Ritholtz]

Nonsense.

[Bill Gurley]

If we had had a liquidity run like if an endowment tax had happened, you might get to that sooner. I think we're going to. It's going to take forever to unwind. You ask kind of like when's the day of reckoning? I don't even know.

[Barry Ritholtz]

So I read over the past few months Harvard and Yale are both trying to sell some secondary right. So they're doing some selling right. And now you see the whole issue with Blue Owl with some marks and, and Boaz Weinstein making an offer to, to buy assets at a substantially discounted price. Are these one offs or is this.

[Bill Gurley]

No, I think that's maybe the first signs of this correcting. But I, I once again there's no. The only thing that could really lead to a faster correction if there was a liquidity crisis within the endowment and

[Barry Ritholtz]

we briefly saw a threat of that when the President threatened to start taxing endowments and other things.

[Bill Gurley]

There's other articles you can find about debt products inside of foundations which hint at the fact that you're not getting liquidity from your privates and you don't want to get over allocated in them so you have to borrow money.

[Barry Ritholtz]

So. Yeah, well all, all crises, financial crises at the underlying is. Is leverage and debt. The other thing that to me was a big warning sign. I'm curious as to your thoughts. The whole democratization and hey we're going to move private credit and private equity to people's 401ks. That to me smells like, like someone rang a bell.

[Bill Gurley]

I'm, I'm so with you on that Barry. And I think you're going to watch the same thing happen with, with Venture because as what I talked about earlier where they're trying to keep these companies private forever they're going to have the same liquidity problem and I think they're going to run out of money because they've gotten these things so big. So watch for someone to lobby to put their 401k into a venture firm as well.

[Barry Ritholtz]

Early or early already began and you know it's going to be an issue.

[Bill Gurley]

I fear the Swenson thing is going to have this. Like you said, when he did it, he was the only one doing it and it was contrarian. Back to the Howard Marks thing, right? The fact that everyone followed him and the time it's going to take for that to play out and get fixed is forever.

[Barry Ritholtz]

Thank you Bill for being so generous with your time. I've been speaking with Bill Gurley of Benchmark Capital and author of the book Running down a Dream how to thrive in a career you actually love. If you enjoy this conversation, well, be sure and check out any of the 600 and change we've done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you get your favorite podcasts. I would be remiss if I didn't thank the crack staff that helps me produce these conversations each week. Alexis Noriega is my audio producer. Anna Luke is my podcast.

[Matt Rogers]

This is Matt Rogers from Las Culturistas with Matt Rogers and Bowen Yang.

[Bowen Yang]

This is Bowen Yang from Las Culturistas with Matt Rogers and Bowen Yang.

[Matt Rogers]

Hey, so what if you could boost the WiFi to one of your devices when you need it most?

[Bowen Yang]

Because Xfinity WI fi can. And what if your wifi could fix itself before there's even really a problem? Xfinity is so reliable. It does that too.

[Matt Rogers]

What if your wifi had parental instincts? Xfinity WI fi is part nanny, part ninja, protecting your kids while they're online.

[Bowen Yang]

And finally, what if your wifi was like smartest WI fi?

[Matt Rogers]

Yeah, it's WI fi that is so smart it makes everything work better together.

[Bowen Yang]

Bottom line, Xfinity is smart and reliable. You deserve the peace of mind of having WI fi that's got your back.

[IBM AI Representative]

Xfinity.

[Lenovo Pro Advertisement Narrator]

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[Bill Gurley]

Jenice Torres here and I'm Austin Hankwitz. We host the podcast Mind the Small Business Success Stories, produced by Ruby Studio in partnership with Intuit QuickBooks.

[Lenovo Pro Advertisement Narrator]

We're back for season four to talk

[Bill Gurley]

to some incredible small business owners. The big thing about working at tech is that it's ever evolving, ever changing. Everyone's a rookie. That's how fast the industry is changing. So what I'm really excited about is to be part of that change. So listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.