Today's number: $100,000. I'm already laughing. Today's number: $100,000. That's how much a German tourist sued New York City chain Los Tacos for — number one due to physical trauma from spicy salsa.
Well, Ed, how did Hitler rise to power? How did he bring out the worst in people?
I don't know why I find that so funny. Get it? Bring out the worst.
He brought out the worst. Probably going to say he brought out the worst in people to sort of get it.
Okay, true story. I just told a very funny but very dirty joke and the team wouldn't let me do it because we have Bill Gurley, a famous venture capitalist, on. So VCs continue to ruin my life. Anyways, what are you up to?
Just got back from Vegas.
Oh, how was that? Guys weekend?
Guys weekend, bachelor party. It was awesome. We did a lot of gambling. Played a lot of blackjack. Played a lot of craps. Lost a lot of money. Did what we're supposed to do. We stayed at the Wynn. We stayed at the Encore. We had dinner at Zuma.
Let's just pause right there. You entitled, spoiled... When I was your age and I would go to Vegas, I would stay at the Golden Nugget downtown with my friend Louis. We would make sure we saved $5 so we had enough gas to get home. And we would eat twice the whole weekend, both times for $9.99 at the Golden Nugget's all-you-can-eat buffet. And then we would bet all night long at these $2 blackjack tables. And that was it. And by the way, it was amazing. But no, there was no Wynn. There was no Zuma.
We did it right. We ball'd out, and yeah, it was a good time.
It's like Jimmy Carr says that people don't realize how fortunate they are today to just be able to take a hot shower. You are literally constantly taking a hot shower, and I'm worried you don't appreciate it enough. Claire, do you think Ed really appreciates how fortunate he is?
No comment. I'm not taking sides on this one.
Claire, you're also part of this entitled generation, right? How old are you? Claire's a little bit older. You're 28. Is that right, Claire?
Oh, you're both 27 now. Claire, what did you do this weekend?
Slept a lot. And I went to an art fair, made some purchases, bought a couple photographs. One of my favorite things to spend money on is art. So that was my big event of the weekend. Oh, I had friends over for Shabbat dinner Friday, so that was nice.
Oh my god, Claire wins. Let me get this. Ed goes to Vegas. I go to — wait, hold on. I go to Tulum and buy Molly from a woman in the bathroom. And Claire goes and buys photography and has Shabbat dinner. Okay. Yeah. Claire wins. Claire wins. I think we're doing it right. Should we get on with the show? Let's do it. Let's get into our conversation with Bill Gurley, general partner at Benchmark Capital and author of the new book Running Down a Dream. Bill, so good to have you on the show. A lot of people have been interested in having you on. I'm glad we have you on today. You are a legendary investor. But I want to start with your book, Running Down a Dream. It was based on a talk that you gave at UT Austin, and it's essentially your advice to young people. Your career advice. Let's just start with: what is your career advice to young people? What do you talk about in the book?
I had this moment in my life almost 10 years ago where I was reading biographies, a lot of biographies, and I noticed a throughline through some of them. I'm a former blogger as a venture capitalist. I look for patterns and ideas, and this thing kind of synthesized for me. And all of these people started at the bottom rung, and all these people were working in fields your parents would probably tell you not to go into. And I think the single synthesis of the whole thing is that if you can find something where you have just immense curiosity, that you end up in this learning loop that's self-reinforcing. And almost all the people we profiled are lifelong learners, just constantly learning in their field. And when I decided to turn it into a book, a bunch of people noticed the presentation. James Clear was one of them that reposted it, and that's part of what pushed me to go do the book. But we probably studied a hundred more biographies. We went through all the academic literature. We talked to Angela Duckworth and Adam Grant and Daniel Pink and all the people that are known in the field. Got a lot of help from all of them. And so there was a lot more work that — and we also did a study with Wharton about people and whether they end up in a job that they're happy with or not. And so there's a lot more synthesis, a lot more data in the book that relates to that.
People should go read it if they want the full story. But if you could tell us, what are a few of the main things that you saw across every successful person you profiled? Curiosity, it sounds like, is the big one. Are there any other things that you noticed?
Yeah, I mean, identifying something that you have that much curiosity about is difficult, and it's not easy. And Angela Duckworth, six years after she wrote Grit, said if she were doing it over again, she had said grit was half passion, half perseverance. And she said, 'Many kids we've taught to persevere, especially with the state of the kind of resume arms race that goes into the college application, but then they burn out.' And the thing is, if you find something that you have this fascination with, and then that lifelong honing goes forever, and it's just really hard to find. And I have a number of examples in the book that I borrowed mostly from other people that have written books in the career space on trying to identify that thing. But if you do, then you have just this immense kind of learning machine that goes on where I like to say, one way to test if you're really in that lane or not: would you study about your field at night instead of watching Breaking Bad? Like, does it compete with what you would consider to be free-time activities? Because for most of the people that are really on top of this thing, if a new article pops up, it's something they want to consume right away. And that work, or what some people would think of as work, doesn't require energy. In fact, I think it emits energy when they're able to think about this thing that they love so much. And so that's really the foundational block. After that, I'm a big believer in peer groups, which is something I don't think a lot of other people had really explored as much. And so finding people that are on the journey with you at the same time, and embracing them. And we have some incredible examples in the book of people that did that early on and the whole group went on to success. I think a lot of our learning from how to think about your career climb comes from zero-sum games, comes from athletics and that kind of thing. And so some people come in sharp-elbowed, and there's no reason to — there's tons and tons of winners in any career path, and peers can be super helpful along the way. We added a chapter that wasn't in the presentation about going to the epicenter, and probably have gotten some of the most positive feedback about that. There's a lot of reasons why a human would be afraid, for instance, to go launch their film career in LA or to just up and move to Silicon Valley. But I really think — and I could go into detail — I think there's just tons of reasons why that's going to maximize optionality for the individual. And then lastly, the last principle — there's six principles in the book — has to do with having a give-back mindset from the very beginning. And I think that there's a self-reinforcing loop that happens when you do that.
What would you say to the people who take your views, take the knowledge, take the lessons, but then they say, 'Well, AI is here now.' And if we've got AI leaders telling us that half of entry-level white-collar work is going to be wiped out in the next one to five years — something that we have literally heard from people like Dario Amodei and other AI leaders — that the rules of the game have just entirely changed. Now, if there were things that worked for you in your career, and we know that your career was a massive success, well, maybe it's not going to work this time round. What would you say to those people?
There are a number of people. I think there was a Gallup poll survey in 2023 that said 59% of people — they use this word 'quiet quitting,' but I would say, you know, ambivalent about their job or indifferent. They're not engaged or passionate about their job. And to me, those are the ones — and unfortunately it's a really big group of people — that are most at risk from AI. If you think about it, the rote best practice of yesterday is exactly what's in the models, right? Like, they've studied the best practice, what's in the textbooks, and it's put it in the models. The thing that's not in there is the stuff that's on the edge, you know, the creativity, the ideation of trying to understand the nuance in your field. And that kind of artisan mindset is, I think, part and parcel with these people that are fascinated by what they do. They're just constantly studying on the edge. And in some ways, I would say people with high agency that are really fascinated about what they do, their life is accelerated by AI. There's the people that you meet where they go, 'You won't believe what I did today. I got Claude to do this.' You know, I've met a lot of what I might call local entrepreneurs who run businesses like, you know, storage facilities and whatnot, and they're like, 'Oh, I needed a third location and I asked it to map the city and what intersection was best.' And they're like bouncing off the walls, you know, hyper-excited about how their life's going to be easier with this solution. And so I think the answer is, if you're high agency and super curious, it's an accelerator. But the unfortunate reality is, I'd say the vast majority of people, at least in the US, aren't in that place.
Which seems to — for those people, if you're not curious, if you're not enthusiastic, if you're low agency, it's probably an accelerator to the downside, which seems like it will widen the gap even more.
It certainly would seem to me that you'd be more at risk in that case. Like, ambivalence becomes a bit of a problem. And the other thing that I would say, which is not something that's necessarily in the book, which is the best way to inoculate yourself against AI risk is to be the most AI-enabled version of yourself you can possibly be. And so to know in your field what it's capable of, and even just — you could be more prescriptive. Let's say there are 30 people in your role at your company. Let's say you're the one that knows the most about what AI can do in that functional group. You're the least at risk. Like, you're the one they're going to talk to about how to get leverage. So the worst thing you could possibly do would be to be skeptical about AI and angry about AI and to, you know, have blinders and not even try and play with it.
Bill, it's good to see you. I have a story about how we actually met, and I'll use that as a lead into a question because I don't know if you've listened to the pod, but it's basically an excuse. It's basically an excuse for me to talk about me. So from '92 to 2000, I felt like I was at Sand Hill Road pitching some nice white dude every week. Every week. And in '99, I was starting an e-commerce incubator in New York. And it was backed by Goldman and JP Morgan and Maveron. And I thought, I need a Silicon Valley investor. And I met with a guy named Andy Rachleff.
And he said — it was either late '99 or early 2000 — he said, 'I want you to meet one of our new partners.' And I rolled by and I shook your hand, and all I remember thinking was, 'This guy is taller than me sitting down.' And I think we met for like 10 seconds, but that was back in literally late '99 or early 2000. I think he just joined Benchmark. Anyway, I haven't been back to Sand Hill Road in 26 years. If I were to go back now as an entrepreneur and try to raise money, how has the business changed? How have the entrepreneurs changed? How have the companies that are the winners changed? Like, give me a vision of Sand Hill Road and the dynamics and the underpinnings in 2000, and then fast-forward it to 2026.
The industry has only systematically gotten more competitive through my entire career. And it was more competitive when I joined than it was 20 years before that, when it was very oligopolistic. And it's way more competitive now as I move away from the venture industry. And that competitive dynamic in its current form has resulted in really, really big checks going into any company that looks like it's breaking away. And most of those rounds now are done preemptively, meaning the company didn't decide to go out and raise money. There are investors with billion-dollar funds who may not have that bumper sticker on their car who are calling saying, 'Please, please take my money.' And that's just a very different reality, you know, from when I started. And today, you know, you'll read about a $300 million Series B. You know, the numbers were very small back in those days. I mean, these companies were going public with one or two million a quarter in revenue and not having raised that much money, like $20 million or something. Today, every company that is being identified as a winner is ingesting four or $500 million minimum before they even think about going public, if they're ever going to think about that. So it's institutionalized in a way somewhat similar to what happened to the PE industry, you know, the private equity industry 10 or 15 years ago. There are cycles of mania, and obviously that time frame you were talking about was a peak cycle in that way, and certainly one could argue things are manic today for a lot of different reasons.
I think the big theme here is the money has gotten unbelievably big in a way that it wasn't before, to the point where — and this is something that Scott and I have discussed on our show, and I believe it's something you've talked about too — companies don't really need to go public anymore. At least that's not what we're seeing with OpenAI. That's not what we're seeing with Anthropic. We're seeing these ridiculous rounds. We're seeing Series L rounds. We're seeing companies raising at $800 billion valuations. Like, these are insane numbers. And I try to think about, like, why has this happened and what are the implications of this? It seems as though the institutions and the most moneyed individuals realize that there are a lot of gains to be had in the venture market, and so they poured into that market, and it has resulted in coming at the expense of, say, retail investors, where the way they would get into a great company like Amazon or Apple, as you say, who went public at far lower valuations — I think Amazon was like a billion dollars when it went public. They had that opportunity early, but they don't have that anymore. That's something that I worry about. I wonder if it's something that you worry about, too.
I do. I worry about it quite a bit. And there's a number of data points. So the number of public companies in the US is less than half of peak.
And so we've really had a fall-off in the number of companies that are actually public. Partially you could blame that on just bureaucratic creep, and I would say kind of legal creep, right? The number of, like, weird derivative lawsuits that are allowed are part of what causes it to be expensive to be public. There was another thing that happened. There used to be a shareholder threshold that would force you to go public, and there were a number of companies that literally had to file as a result of that mechanism. That has been whittled away and taken down. And then I'd say more — if you're going to point the finger more directly — I would say the latest-stage funds have come up with a pretty clever premise, which is if they can intercept those growth years that used to be in the public markets and keep it for themselves in an oligopolistic kind of way — there's only a handful of these really, really big funds — then they get that growth. They get to steal that economic upside. Maybe 'steal' is a strong word, but simultaneously with telling the founder, 'You don't ever need to go public,' they'll go around to the LP community, the endowments and foundations, and say, 'Look, these companies are no longer going public. If you want exposure to those growth years, guess who you need to give money to? You know, me.' And so it becomes self-reinforcing. And that's what's been happening. I also — one other thing that I think the venture industry used to go through these periods and cycles where it would get reset and people would learn that you're taking too much risk and you'd get wiped out. From like '01 to '08, the number of venture capitalists got cut in half. I think we were headed towards a correction like that coming off the ZERP years, the zero-interest-rate period. And right when there was about to be a correction, this AI wave took off and the money just flowed back in. So it's almost like I felt like we missed a bit of a correction, and there's just risk-seeking dollars everywhere. The thing that would cause it to stop is if somehow the money ran out. There was fear of an endowment tax causing a liquidity crisis at some of the foundations. Harvard and Yale, I think, got into the secondary market last year. And so there was, you know, a sign that, oh wait, this could cause a liquidity crunch. And I think there's a reasonable argument, by the way, that both the commercial real estate, the venture capital, and the PE marks are all too high at all of those endowments and foundations. But that's a whole other story.
We'll be right back after the break. And if you're enjoying the show so far, please send it to a friend and follow us if you haven't already.
This is advertiser content brought to you by Virgin Atlantic. Ed, a couple weeks back, I got you a birthday gift. Not to pat myself on the back, but it was a pretty good one.
It was indeed. You surprised me with Virgin Atlantic upper class tickets to London.
So, tell us all about it.
It was pretty incredible. From the moment I entered that upper class cabin, I have to tell you, I felt like a VIP. Anything I needed — a drink, snack, assistance with the seats.
Flat seats. Exactly. Had the four-course meal. Got my champagne. Very delicious. Enjoyed the food.
The journey home was great. And I went to the Virgin Atlantic LHR clubhouse. That's the Heathrow Clubhouse. The Heathrow clubhouse was awesome. Got myself a coffee, headed over to the meditation pod that they call the Soma Dome. Kind of felt like a sort of spaceship where you relax and think nice thoughts. So I did that for a little bit. Then we went over to The Wing, which are these acoustically sealed booths where you could do some work. You could even record a podcast. I didn't do that, but maybe I should have. It was a very enjoyable experience.
So, Ed, the real question here is: what are you planning to get me for my birthday?
See the world differently with Virgin Atlantic. Flying should be more than just transport. It is part of the adventure. Go to virginatlantic.com to learn more.
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We're back with Prof G Markets. What do you think would happen? I mean, how would a correction play out? Are you worried that we are maybe about to face one in this market? I know there are concerns in the private credit markets. There were seemingly concerns about AI, that there was a bubble. Now that's slightly dissipated. We're seeing the value. We're seeing these incredible tools. What are your thoughts on the possibility of a correction? What would it look like?
I mean, I always give credit to Carlota Perez, who wrote this book that says that bubbles follow waves that are real. So I disagree with this idea that, oh, it's either a bubble or it's real. Because that's what — when you say, 'Oh, there's a bubble,' people go, 'Oh, you don't believe in AI.' No, the fact that it's real causes people to get rich quick. And when people get rich quick, charlatans and speculators flood in and things get overheated. And I think that certainly has happened. I don't have any crystal ball to predict, like, what would cause it to reverse. I think the circular deals are horrific. I don't think the auditor should have approved them. And I think whenever you eventually have an unwinding, they're going to make it worse because they won't be sustainable. You shouldn't be able to move cash from your balance sheet and create revenue on your income statement. I just don't think that should be okay. But they're all doing it. Like, every single one of the big players is doing it.
What would one of those big players say when you make that point to them? Because this is a point that some people have been making, especially in financial media — the circular deals where Nvidia will invest in a company and the company pays them back. But your voice holds more weight in those rooms, and I'd be interested to hear how they respond when you say it.
