Bill Gurley on Mental Models, Systems Thinking, and the AI Boom

Bill Gurley

I'm a big believer in systems thinking. There's a book called Thinking in Systems that I read.

Bill Gurley

I'm on the board of the Santa Fe Institute. The Santa Fe Institute studies complexity theory. I would describe complex systems as multivariable nonlinear systems, and multivariable nonlinear systems are very hard to predict. They can behave one way for a long time and then one variable can switch and they can behave another way — the weather, stock markets, all these things. There are consequences that can be first, second, third derivative. You can't just think with a linear model, or think about one variable, because things can go way off the path. You have to be aware that if you make a change here, it could change something here, which could change something there. It has to be the whole system.

Bill Gurley

I think it keeps you out of trouble, because you can avoid consequences that you might find out about later. I was talking to a guy who worked at one of the large dating sites. They had this idea that making the profile longer would lead to more engagement — a simple heuristic. They tested it and it was true, so they rolled it out. Then they found out many months later that it was negative for conversion, because when people knew more at that level it hurt. You find that out way later. That's my point about a second-derivative effect. You have to be really conscious of the consequences and not get too deterministic about a single metric or a single variable — know what's important and what's on top.

Bill Gurley

Because I started on Wall Street, not in venture directly, I got caught up in all the people you would expect around Wall Street and stocks. That starts with Peter Lynch, One Up on Wall Street — probably the first book I read about investing — A Random Walk Down Wall Street by Burton Malkiel, all the Buffett letters, Ben Graham. Once you read Buffett, you have to read Ben Graham. And then Howard Marks, who's just incredible. Those people spent their whole career assembling their thoughts and publishing them along the way. Those were the ones I read everything of. I had a very strong bedrock of financial understanding.

Bill Gurley

Having a firm understanding of the bedrock is super valuable, and then when you recognise the need to innovate on top of it, it's really good to have that foundation. I have an incredible peer in Michael Mauboussin, a writer of financial books. We started at First Boston — he'd been there a year or two ahead of me — so I was fortunate to land in the same place, and we've been lifelong friends since. He introduced me to Bill Miller, who ran Legg Mason and had a 15-year run of beating the S&P, one of the most famous investors of all time. He claimed to be a value investor, and he was the largest shareholder of Amazon for a very long time. What he would say — getting back to your question — is that value just means the asset is underpriced relative to what you think it will be worth in the future. I spent a lot of time talking with Bill about network effects. If you believe in that, then Amazon might be able to grow at an unreasonable growth rate for a very long time, which he believed. That's how you get there. I've often thought that many of the VCs in Silicon Valley would benefit from a better understanding of finance.

Bill Gurley

One other answer to your question about how it becomes valuable: I've always thought of Wall Street as the buyer of the product that venture capitalists create, because the eventual liquidity is either an M&A or an IPO. The price is set by that group and that institution. So if I know what they value, even if we're starting at a very early place — two people in a PowerPoint — you're still thinking about whether, when this thing grows up, it's going to be something they're excited about.

Bill Gurley

That's where you're going to end. That's the output at the end of the day.

Bill Gurley

I'm going to tell you a story. My partner at Benchmark, Alex Balkanski, would go to a charity auction that Andre Agassi ran in Vegas. One year he bought a dinner with John Lasseter, the creative genius behind Pixar. We go to John's house and he serves us in his viewing room a ten-course meal, and each piece of the meal is tied to a classic cartoon he believed was important to understanding animation. He'd show it and talk through it and explain it. You see that and you think, this guy knows more about the history than anyone. Here's another data point I love: there's a world chess tournament, they take a break and run a trivia contest, and Magnus Carlsen wins the trivia contest, and it's all about the history of chess. We do live in a world where information is really cut up, but we also live in a world where you can access more information than ever, and that's even more true now with LLMs. You have an hour drive, you could sit there and talk to OpenAI and learn about anything you want. I think more people would benefit by studying the history of whatever field they're in.

Bill Gurley

Another one we mentioned: Picasso was a wildly successful realist painter by the time he was 14. If you go to the Barcelona museum you can see that, and I don't think anyone who looks at his cubist paintings would intuit that was true. And one last thing, broadly applicable to almost anyone in any career: imagine you're interviewing for a job at P&G or Pepsi out of college, there are 20 people there, and you're the one who understands the masters of marketing more than the others and can bring that up in the interview. Isn't that wildly differentiating?

Bill Gurley

It infers passion, to want to know that. And the other part — if that sounds tedious, it's probably not the right lane. If it's tedious to learn that, this isn't a passion, and you're not in the right lane.

Bill Gurley

I don't know if the history is a common trait. A more common, related trait in the entrepreneurial world is obsessive learning — constant learning — because the disruptions that allow technology waves, that allow companies to be disruptive and take market share from an incumbent, are all tied to something dynamic happening on the edge. Every entrepreneur exploiting that — it's AI right now — is going home at night and reading everything they possibly can, because the edge is moving and they need to be a top-one-percentile person who understands this new thing. Today it's AI, but that was true of the mobile wave. When the mobile phone came out, there were no engineers who'd written apps for mobile phones. A few people got on that edge and figured out what it meant. That requires obsessive learning on the edge.

Bill Gurley

Anybody in any field should want to be curious about the bleeding edge. As a venture capitalist, we're always afraid some new app is going to pop up in the app store that we haven't seen, so everything that comes up, I play with, I roll around. Right now I have about five premium AI accounts because I just don't want to miss something, and you get trained that way. It's an interesting contrast: I'm suggesting you should understand the really old stuff, the history, because it's differentiating and shows passion and gives you a great frame of mind — but you also want to really understand the new edge. If you do both, you're a power player in your field. The second one is a great way for young people to differentiate in an interview. If you're applying for that marketing job and you understand all the legends and the history, but you also really get TikTok, that's a very differentiated skill going into those companies.

Bill Gurley

You often underestimate how much it can do. You might ask it to identify the top 10 of something, then take those 10 and go study them. But you can say: identify the top 10, list their pros and cons, then rank-order them on this dimension, then rank-order them again on another. Stuff you would have done later, you can just build into the prompt, and it can do more of the work earlier. Early on I would often ask it for numbers and then go add them up, and I'm like — oh, you can just tell it to do that part too.

Bill Gurley

I like the project structure, and I'm being sucked into the memory element — it knows who I am and things about me. For restaurants and things I've been using Gemini, because it has all the Google review data. You don't just ask which restaurants are good; you can ask what three plates people rave about and what people warn against — go deep into the menu, which I do all the time. The coding people swear by Claude.

Bill Gurley

I think it's highly dependent on how things play out. In certain verticals, especially coding — probably the largest vertical right now — people have swapped out models. Cursor even lets the user pick the model they're using. As we move towards optimisation and price optimisation, which isn't really the objective function right now but will be in a few years, you may see more people try those swaps. The thing that could cut against that: if the regulation gets extremely difficult, mundane and expensive, that could lead to more oligopoly, and some of the players know that and are begging for regulation.

Bill Gurley

It pulls up the bar, especially against the Chinese open-source models.

Bill Gurley

This has come up especially around copyright. If our models all have to adhere to some special rule — and there have already been settlements — and the Chinese open-source models don't, that could have an effect. I'm very uncertain how the EU might rule in that type of situation.

Bill Gurley

This is a great question to talk more about systems thinking. They have something like ten open-source models. You have a situation where the competitive dynamic in China is more intense, because everyone's chosen to go open source, and that creates a system that in my mind is capable of innovating far faster than the competitive system we have here. All the models learn from one another — you can have a model train another model or test another model. Here's a simple metaphor. Imagine two agricultural societies. In one, when all the farmers come to market they just sell each other goods and then go back. In the other, when the farmers come to market they're forced to share best practices with all the other farmers. Which one is going to evolve faster? Open source lets me see what they're doing and how they're doing it.

Bill Gurley

Yes, and a lot of them are publishing how they figured it out — new techniques and things like that. So it's way more dynamic.

Bill Gurley

There's an irony that a lot of the startups are forking those models — and this would be a question of how regulation plays out, whether someone tries to stomp those out. It's kind of a quiet secret, just because I haven't read it on the front page of the Journal, that from a volume standpoint, companies are using these models all over Silicon Valley.

Bill Gurley

That question is up for grabs, and it's a hot discussion. If you believe these models become near-sentient, then there'll be no need for a vertical model, because this one model will just do everything. I probably come down on the other side. I think there are workflows and data moats. Take the three or four legal startups in the AI space — they're spending so much more time making sure they ingest all the case law and really understand the processes and principles, then they implement with the user and write things on your behalf and build new databases out of that. I don't know that you then switch that to ChatGPT as they climb up the stack. But I'll flip to the other side: the big labs have talked in their product groups about going after verticals. People point to Microsoft — starting with the OS, then there was Lotus 1-2-3, WordPerfect — they eventually moved up the stack. That could happen. We're going to see how it goes.

Bill Gurley

I do think there's a valid argument that we might be running out of data — I call it painting in the corners, we've filled in everything right now. One of the most powerful solutions to improving the models is hiring experts, literally for thousands of dollars an hour, to sit in and fine-tune and ask very hard questions. There's got to be a limit to that — where's the edge of human knowledge? So it's a big question: do we run into asymptotes or not? Part of it goes back to whether you believe these things can become superintelligent, at which point they start solving things we've never imagined. There's a lot of debate about that.

Bill Gurley

That's an argument some people have made. I don't know that I believe it.

Bill Gurley

Rather than me stand on that hill — Yann LeCun makes the point that the next version of AI isn't an LLM, it's outside of and broader than LLMs, and that we're going to run into an asymptote with these because they're language-based, and there's a limit to what you can capture with language. That's part of why they're not specifically great with maths and numbers. There are much better people to talk about this than me, but people point to that famous game where Google's AlphaGo eventually came up with a move that was shocking to all humans — a famous move number, whatever it was — and that's proof they can innovate beyond what they're taught. The people who take the other side say that's a very constrained game and environment. The computers can search a field of possibilities that's impossible for a human to search, because there are just too many, and that gives it the ability to find that move we didn't know about. But in the real world it's not constrained enough where you can tell it to walk all the possible paths. There's an infinite number of paths in a big complex system. And by the way, those AI models aren't LLM-based — AlphaGo is not LLM-based, it's an AI model trained to a very specific constraint system.

Bill Gurley

Yeah, exactly. Even FSD at Tesla is a constrained environment — the outputs are the brake, the steering wheel and the gas pedal, and the inputs are all the visual data. It's scary good. I was telling someone the other day, I'd be comfortable sitting in the back seat at this point with full self-driving. I don't feel a need to drive anymore.

Bill Gurley

The corner cases are impossible to fathom right now. Maybe at some point. I certainly think if you were in a geographic area where all the cars were autonomous, it'd be easier to go into that mindset.

Bill Gurley

I was talking to Rory Sutherland. He's like, you can just have fun with this, they're going to stop, you don't even have to look both ways now. What are the consequences of that?

Bill Gurley

Having spent a ton of time in China over the past 20 years, it's hard for me to adopt the mindset of vilification that's heavy amongst many in Washington, and now many in Silicon Valley. The US is like three, four, five percent of the global population. American exceptionalism — when people utter that phrase, I always wonder what the other 95% of the planet thinks when they hear it. That's probably a non-consensus viewpoint.

Bill Gurley

It's such a hard question to know. If you'd told me five years ago that the Magnificent Seven would become worth $3 trillion and then turn around and take their free cash flow from 50 to 100 billion a year down near zero because they were going to spend it all on capex, I'd have said no way. So from a certain standpoint I'm shocked the money's this big. But the venture capital community — we talked earlier about increasing returns, what other people call power laws — when startups become important in an ecosystem and prove they can grow, and that growth is a function of their size or footprint or users, they end up being worth way more than anyone thought. That includes everyone from Google to Amazon to Meta. The investor community writ large has slowly become aware of, and believes strongly in, increasing returns and power laws. So over time, if they all believe that, they're going to be more willing to invest on the come and take risk. Someone forwarded me a chart this morning of the losses of the leading company in a field prior to going cash-flow positive. For Amazon it was like two or three billion. For Uber it was like 15 billion. And now for these companies it's going to be way bigger than that. So the venture capital community as a whole is getting more risk-seeking because of their knowledge of how things played out in the past.

Bill Gurley

It depends. Yes, but if you look at what happened with the dotcom crash, there was a three- or four-year lull before the Amazons of the world started climbing out again. It was like a nuclear winter. Right now there's so much optimism and belief in AI. Some of these quote-unquote circular deals people are talking about enhance the probability that we'll have a correction, but also extend the time before we have one.

Bill Gurley

Yesterday at the DealBook conference, Dario was asked about circular deals, and he goes, well, maybe people just don't understand, let me explain how this works. Imagine you're a cloud service provider and you notice that this company, Anthropic, wants to develop a model. It's going to cost maybe $5 billion, but they don't have that money. So you give them that money so they can spend it. And I'm like — well, if you didn't give it to them, they wouldn't spend it. The growth of everything is enhanced by the fact that you're giving money to companies to spend back on your services, which they wouldn't have otherwise. If you were in a more constrained environment where you didn't do that, things wouldn't be growing as fast. You inflate what's happening.

Bill Gurley

Yes.

Bill Gurley

Look, first of all, if a company's successful, someone will knock on your door and try to give you more money. Almost every round is pre-emptive for successful companies. And when you take that much money — $300 million — the only way to spend it is to take your burn rate up. I always thought of burn rate as a measure of risk. Ten years ago it was super risky to burn a million a month. Today these companies are burning five billion a year — you're burning a hundred million a month or more. It's really hard — and this goes back to financial bedrock — it's really hard to know what your unit economics are when you're being that aggressive financially.

Bill Gurley

First of all, there is zero lack of fund availability right now. That's not the bottleneck. This has kind of played out in the public markets. Look at stocks like GameStop, but I think most people believe Palantir is a stock retail investors really love and take to a valuation it's very hard for institutional investors to get their head around. There's a risk with tokenisation, especially if it happens on assets that don't have regulation around financial disclosure — you get a ton of speculation and even worse, manipulation.

Bill Gurley

It would. One of the reasons they're staying private is so you don't have that dynamic — they have more control over the market-cap pricing when they do liquidity events for their employees. They sit down with a handful of investors they trust and negotiate a price on a one-off basis. Going back to financial bedrock, the underlying asset probably does move around a lot, it just never gets recorded, so you don't see it. From the operator's standpoint that's a benefit. If any public company CEO's stock moves around a lot, it creates chaos for the employees who are owners and wondering what it means. This is already starting to play out — Robinhood announced they were going to do what you just said, and the companies threw up a strong argument that it would be illegal, that you don't have a right to do that. So we'll see.

Bill Gurley

I've been outspoken on this, particularly around the IPO process. I think it is insanely unfair to companies the way they're forced to go through this process, where the bankers pick the price and pick the shareholders. There's no need to do that. If you took a freshman computer science student and a freshman finance student and said, imagine how a company should go public, they would match supply and demand anonymously, like you would in any auction — exactly the way an ICO works. With tokenisation, no one would invent this thing where you cherry-pick your best customers and give them a sweetheart price. No one would do that. Wall Street just can't let go of this greedy power grab they have around the IPO. We pushed direct listings for a while, which use this auction mechanism, and they could have embraced that but didn't. They've gone back to this kind of controlled oligopoly. I think that's an area where tokenisation — just getting to first base on how the share should be allocated — could be very disruptive.

Bill Gurley

Stablecoins could be very disruptive too, to credit cards.

Bill Gurley

In most of the rest of the developed world, governments established the ability to do instant transfer from bank account to bank account, and from a bank account to a partner or retailer. UK Faster Payments did this 20 years ago. Recently Argentina did it, and it quickly became 60, 70% of transactions — and precisely because of regulatory capture, the banks have kept our government from doing that. The government wanted to; they have something called FedNow, but there's massive pushback in the finance committee in Washington, so it never happens. As a result, we have credit cards that charge two, two and a half percent, and a whole ecosystem of companies that live under that umbrella. If you have a Coinbase account, you can put your money in a USDC stablecoin and earn 4%, and within seconds transfer money to someone else for pennies.

Bill Gurley

It's a cryptocurrency where, if the company is following the regulation — and I believe USDC is in fact doing that — they've created a dollar-for-dollar holding in US treasuries for each stablecoin that's represented.

Bill Gurley

Yes. But because it's on the crypto rails, which are now quite proven, fast, global and immediate, it gives me the ability to give you — or a company to give a company or anyone — a dollar immediately.

Bill Gurley

No one's taking a physical cash dollar — it's all digital anyway. In America, if I want to send you 50 bucks digitally, I've got to go through ACH, which is three-day settlement, and that's part of this regulatory capture. In Argentina now it's immediate because of Pix.

Bill Gurley

I can wire to you same day, but it costs me $25, I have to fill out a page of forms, and I might have to do a verbal commit with my bank.

Bill Gurley

Yes, and credit cards, which cost two and a half percent — there's no reason it should. These other countries, including the UK, Australia, India, China and Argentina, have all done this, but we never did, and probably won't. At this point I think stablecoins will get there faster than the government will be able to.

Bill Gurley

I think they'll be heavily threatened by this. Those two companies have two of the highest operating margins in the history of business — like 60% operating margins — and they're duopolies, and they were created by the banks. The banks have a stake in it, so the whole industry is stuck in a world where they make a lot of money because it is this way. But there's zero reason it should cost 2 or 3%. It changed in China because they had this digital immediate transfer. Alibaba and Tencent were able to very quickly build digital wallets people carry around. If you walk around China and want to buy a hat from a street vendor, or a car in a Huawei store, you use WeChat Pay and Alipay for everything. You scan a QR code. You check out of a restaurant — there's a QR code on the table, you scan it with WeChat Pay or Alipay and you're done, one click. They've innovated their entire payment system way further than we have, because of the government's decision to make money transfer easy.

Bill Gurley

That's true. I just think because they waited so long in the US — this FedNow project's been out there forever — the threat becomes this new thing, and especially with the crypto momentum in Washington, that could change with a new administration.

Bill Gurley

I think Moody's power comes from the fact that it's a standard, and everybody trusts it as a standard. So even if they used AI on the back end, they're still the watermark. Someone could pop up, though. There's been a lot of talk about companies like ISS that tell shareholders how to vote. That came up yesterday at the DealBook conference — whether AI could solve that problem as well. It's possible. I think everything's up for grabs.

Bill Gurley

In the US it's gotten to a really bad place, because of the rise of the index funds. The index funds — this is why they were asking Larry Fink about it at BlackRock — don't have the time to truly evaluate what the vote should be in these situations, so they rely on these services. But these services have been built to play a game that's not particularly settling. They score you, but they score you with a black box — they don't tell you how they score you.

Bill Gurley

You hire them.

Bill Gurley

So they get paid on both sides. It's more of a heist than anything else. They got focused on issues that weren't in shareholders' interest — what they should really care about is what's best for shareholders — and they got away from that. The Tesla case is a great example, that type of package they did for Elon. I've said this publicly: I would agree to that type of package for every company I've ever worked with, and most CEOs wouldn't take it. It basically says you don't make money unless the stock goes way up, and if the stock goes way up, you make an obscene amount of money. I'd do that deal over and over again. None of these ISS-type evaluators agree with that — in fact they take the opposite view and say we should vote against it.

Bill Gurley

Yeah. They started from a place of corporate governance where they were looking out for fraud — so risk mitigation rather than shareholder interest. When you come at it from that perspective, you think there should be rules, people should adhere to the rules, and when people get outside the rules, that's bad. I think that's their legacy.

Bill Gurley

This wouldn't be a problem were it not for the large number of shares held by the passive funds. One thing that would be really great is if they just wouldn't vote, because then the active shareholders would have more say in what happens with these companies. But they own such a large percentage.

Bill Gurley

If they didn't vote, that would happen naturally, because the vote would be more like how, unfortunately, voting works in America, where you only have a 20% turnout.

Bill Gurley

At first the public investors got really scared, because they were marked to the index, and they ended up doing what people call closet indexing to make sure they didn't lose out. When the Mag 7 took off, if you didn't own those, you had a bad year, so you're forced to closet-index. But they'd reached a point where they think the number of active investors is so few that the ability to get an edge has maybe increased as a result of the massive indexing.

Bill Gurley

I don't know. The buy side is a very hard job — to beat the S&P. Some people have highlighted that QQQ has probably outperformed 80 or 90% of venture funds.

Bill Gurley

Someone asked me the top three traits of successful founders and I put storytelling in there. Prior to business school I didn't read much, but some bit flipped when I was in business school. I started with business books most people know, got into personal development books — a lot of successful people have a moment where they roll through Dale Carnegie and Seven Habits — and then biographies. After that I fell in love with long-form non-fiction journalism that reads in an exciting way. Part of it was the wave that was Malcolm Gladwell and Michael Lewis and Jon Krakauer — books that read like fiction even though they're non-fiction. There are books written on that art — it's called the New Journalism and the New New Journalism, and I've read those books about that writing. I find it super powerful that someone can put together 20 pages that really impacts you a certain way. So I started studying the craft, studying Buffett and Howard Marks and seeing these successful investors putting their stuff out there.

Bill Gurley

Most of my most successful investments fall in a category people call marketplaces, and before there was a first marketplace, there wasn't a knowledge base. We crafted it along the way, codified it and wrote it down. In addition to helping you think through all the corner cases — this is exactly why Bezos has his six-page-letter concept at Amazon. He believes that if you have to write it out and make it stand alone and be cogent, you'll think through more of the problems, it'll be more cohesive, and you'll figure out the loose ends and tie them up. And in the venture world, for the founder who doesn't know you, when they see your knowledge on a subject or what you're talking about in their own business, they reach out to you. It becomes a calling card.

Bill Gurley

Yes. I'm not the only one who's done it — a lot of people have. Some people don't use that technique; there are other ways to get deal flow. But it's powerful if you do it right.

Bill Gurley

I have a fourth one too, I hope I can remember it. Product instincts is another one, which comes partially from understanding the new edge, which we already talked about. It probably took my whole career for me to fully understand how hard it is to hire someone who's not a product-first individual and then get them to be good at it. There are examples, but it's got to be 5% or less of the cases — super hard. And storytelling is so important because in the founder case, you're recruiting employees, recruiting executives, raising money, closing customers, closing partnerships — you're selling all the damn time. The best ones are just super effective at it. You can see it with Bezos, you can see it with Tobi at Shopify. Listen to any Tobi podcast you possibly can — of course the world's going to follow this guy, and Daniel Ek. They're just so gifted at describing what they're trying to do.

Bill Gurley

I once asked Jeff Bezos how he'd had such a successful angel portfolio when he has no free time. He said: when I meet an entrepreneur, there's only one thing I ask myself — is this person going to do this no matter what? Come hell or high water, they're doing this. They're already convinced it's so important they're not going to stop. That level of determination is present in all the great founders. They're just going at it full blast.

Bill Gurley

That's an easy one, because that exact phrase popped into my brain at the time. We were in a situation where most people investing in the category knew it had winner-take-all dynamics and network effects. As a result there was a determination that they were just going to fund it ad nauseam. You had a situation where the burn rates were — okay, someone's hands lift a billion dollars, then we get handed three billion — and the only way to compete in that world is to spend that money. So you have burn rates bigger than any public company would ever spend going after a new category, and that aggressive. I thought to myself: there is no HBS case study. You could take the board members from Walmart and Costco and GM and General Electric — the top 10 best companies — and they'd never have been in this situation before. There was no one to call, no mentor to go find, which was a bit horrifying to recognise. But now all the AI companies are in that situation, so I feel for them.

Bill Gurley

Amazon had a big burn rate, but Uber took it to a new level. And now they've added a zero.

Bill Gurley

I was very fortunate to get invited into Benchmark — I joined on the third fund, so I wasn't there early. The founders had been at hierarchical firms where they felt the senior partners were taking too much of the money and credit and not doing the work imperative for the firm's success. Most partnerships — think law or accounting partnerships — work in a way where the senior people have more power and take more of the economics, and the junior people work their way up over a long time. The founders decided at Benchmark they'd just make it equal — an equal partnership. There's no lead partner, no king, no president, just five equal partners.

Bill Gurley

There are a bunch, and most are positive. The first thing is it makes it very easy to recruit exceptional talent from other firms, because they're not in that situation. I was at a hierarchical firm, and even if you went back and said I'm going to leave for this equal partnership, and they said we'll make you equal — well, you did it because I was leaving, not because it works that way. The second is it really encourages development of the new people who come in, because I'm going to take an equal part of their success when they start delivering. I want them to be super successful, so I'll spend time supporting them. If you're in an up-or-out firm, I bet it feels kind of lonely — you're competing against the person over there. Are you going to share ideas with them? Maybe not. In an equal partnership, if one of my companies needs a new CFO and someone knows of one, they'll just give it to me right away. My company succeeding is no different from their company succeeding. And you don't spend any time annually on comp review and recutting the pie — it's always equal. That amount of political overhead just goes away.

Bill Gurley

There is one huge negative. It's almost impossible, because you don't have a CEO, to scale out or have new initiatives. The website was always a funny one — who's going to own the website? Are we going to hire someone? Who owns that responsibility? When Matt Cohler came in, he said, I'll take it on, I know exactly what we need. He created this super-complicated website with all the founders on it, connected to all the partners, and people started complaining because stuff wasn't right. One day he came in and said, you know what, I'm taking it all down and putting up a splash page. He did that maybe 15 years ago, and still today Benchmark has a single page — a result of this issue I'm describing.

Bill Gurley

I heard this example from a guy a couple of weeks ago: if I'm going to buy a sweater, I don't want to know your mission statement, I just want to buy a sweater. There's a little bit of bespoke confidence in just having a splash page. I'd add that there are plenty of highly successful venture firms that aren't structured this way, so I'm not saying it's the only way to do it. There are clearly many ways.

Bill Gurley

At a high level, if you're successful as a venture capitalist, people want to work with you. When I came in — the Mike Moritzes, the John Doerrs — they'd had so much success that not only is it likely they're great at what they do and know people who'll help your company succeed, but their stamp of approval on you carries weight in and of itself. Some people have said it's the only investing category where there are network effects, because once you have a reputation, you have an unfair advantage in deal flow. Underneath that, founders are particularly motivated to be around people who understand what they're doing and are excited about it. One reason young people can break into venture and be wildly successful is they're more likely to be the age of the founder and to understand these new technologies. If you're really into esports, it would be very easy to know more than the successful generalist venture capitalist in that category. The same could be true of YouTube video creation — it'd be very easy for a young venture capitalist to know more about what it takes to be successful on YouTube than John Doerr or Mike Moritz or me, because they could spend 100% of their time on that.

Bill Gurley

I think the whole industry bends towards youth for that reason, and because it's a hustle business — there's always a rock you haven't looked under. Age brings children and homes and other responsibilities you get tied to, and you're just not able to spend 80 hours a week studying YouTube. So it bends towards youth, which is great — it's a highly competitive industry, hard to get a job, but if you get one, there are reasons you can break in.

Bill Gurley

It's changed over time. When I look back on my venture capital career, I made a very specific decision to say, okay, I'm done. I don't think I would have done that if I felt there was work left to do. I reached a point where I felt there wasn't any work left to do. That was my dream job — I was thrilled to do it, loved every minute of it. I often said that if we lived in a socialist society and everyone had to work for free, I would still take that job. But that's now done. As I look forward, I was very moved by a book Arthur Brooks wrote called From Strength to Strength, where he talks about the next chapter in your life. I'd like to take some of the techniques I used to be successful as a venture capitalist — mostly around the blog, understanding problems and synthesising — and see if I can apply them to bigger, broader problems in society, and see if I can dent the universe a little bit that way.

Bill Gurley

Thanks for doing this. It's great.