“The minute you set a very hard rule, you might be setting yourself up for a mistake. And venture, I have found, is a world where that happens frequently.”— Bill Gurley
Bill Gurley (@bgurley) has spent more than 20 years as a general partner at Benchmark. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at Credit Suisse First Boston.
Bill also maintains a blog on the evolution and economics of high-technology businesses called Above the Crowd.
Over his venture career, he has worked with such companies as GrubHub, Nextdoor, OpenTable, Stitch Fix, Uber, and Zillow.
Bill has a BS in computer science from the University of Florida and an MBA from the University of Texas. He is also a chartered financial analyst. Bill is a board trustee at the Santa Fe Institute, a research and education center focused on the study and understanding of complex adaptive systems.
The transcript of this episode can be found here. Transcripts of all episodes can be found here.
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Want to hear another podcast episode with a world-class investor? Have a listen to my most recent conversation with Oaktree Capital Management’s co-founder Howard Marks, in which we discussed navigating unprecedented uncertainties, crowded versus uncrowded opportunities, the state of the American economy, finding higher-signal sources of information, and much more.
What was your favorite quote or lesson from this episode? Please let me know in the comments.
SCROLL BELOW FOR LINKS AND SHOW NOTES…
SELECTED LINKS FROM THE EPISODE
- Connect with Bill Gurley:
- Above the Crowd
- Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael E. Porter | Amazon
- An Interview with Venture Capitalist Bill Gurley, MBA ’93 by Texas McCombs | Medium
- Buy-Side vs. Sell-Side Analysts: What’s the Difference? | Investopedia
- ‘Buy!’ Was Cry, as Stock Bubble Burst | The New York Times
- Institutional Investor
- One Up On Wall Street: How To Use What You Already Know To Make Money In The Market by Peter Lynch | Amazon
- A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel | Amazon
- I Beg to Differ by Howard Marks | Oaktree Capital
- Strong Opinions, Weakly Held: Wisdom as the Courage to Act On Your Knowledge and the Humility to Doubt What You Know | Psychology Today
- The Rational Optimist: How Prosperity Evolves by Matt Ridley | Amazon
- Oaktree Capital Management
- Microeconomics vs. Macroeconomics Investments
- Santa Fe Institute
- The 2022 All-America Research Team | Institutional Investor
- The Rise, Fall, and Rebirth of Palm | Fast Company
- The Home for Great Writing | Substack
- Return on Invested Capital: What Is It, Formula and Calculation, and Example | Investopedia
- The Stern Stewart Institute
- Valuation: Measuring and Managing the Value of Companies by Tim Koller, Marc Goedhart, and David Wessels | Amazon
- Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin | Amazon
- Warren Buffett’s Shareholder Letters | Berkshire Hathaway
- Myers–Briggs Type Indicator | Wikipedia
- Full Transcript: Benchmark General Partner Bill Gurley on Recode Decode | Vox
- Increasing Returns and the New World of Business by W. Brian Arthur | HBR
- What Are Network Effects? | HBS Online
- OpenTable By the Numbers: From Launch to $2.6 Billion | Eater
- The Rising Impact of Open Source | Above the Crowd
- Google Redefines Disruption: The “Less Than Free” Business Model | Above the Crowd
- The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton M. Christensen | Amazon
- Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers by Geoffrey A. Moore | Amazon
- Sheryl Sandberg: We’ve Paid Hackers Millions to Find Security Bugs | Fortune MPW
- General Magic (Documentary) | Prime Video
- Startup: A Silicon Valley Adventure by Jerry Kaplan | Amazon
- Jodorowsky’s Dune | Prime Video
- Alien | Prime Video
- Aliens | Prime Video
- Tony Fadell — On Building the iPod, iPhone, Nest, and a Life of Curiosity | The Tim Ferriss Show #403
- Build: An Unorthodox Guide to Making Things Worth Making by Tony Fadell | Amazon
- Shoe Dog: A Memoir by the Creator of Nike by Phil Knight | Amazon
- Open: An Autobiography by Andre Agassi | Amazon
- Spare by Prince Harry The Duke of Sussex | Amazon
- How Innovation Works: And Why It Flourishes in Freedom by Matt Ridley | Amazon
- Can Xi Jinping Live Up to the Legacy of China’s Greatest Modern Reformer, Deng Xiaoping? | Quartz
- How Lee Kuan Yew Engineered Singapore’s Economic Miracle | BBC News
- We Are Passionate about Making the Web a Better Place | Automattic
- The Cathedral & the Bazaar: Musings on Linux and Open Source by an Accidental Revolutionary by Eric S. Raymond | Amazon
- History of the Temple | Sagrada Família
- The Developer Data Platform | MongoDB
- Creators of Elasticsearch & Kibana | Elastic
- Android History: The Evolution of the Biggest Mobile OS in the World | Android Authority
- The Open Compute Project (OCP)
- Linux Foundation Claims 5G NFV First, Based on China Mobile Code | Rethink
- Amazon’s AWS Strategy Becomes Clearer Every Day | Above the Crowd
- Production-Grade Container Orchestration | Kubernetes
- What is a Container? | Docker
- Humanitarian OpenStreetMap Team
- Matt Ridley: When Ideas Have Sex | TEDGlobal 2010
- RISC-V International
- Open Source for Autonomous Driving | The Autoware Foundation
- Matt Suppes: Open Source Nuclear Fusion | Life Conference
- Interest Graph | Wikipedia
- “An Entire Generation…” | Bill Gurley, Twitter
- “Forget Those Prices Happened.” | Bill Gurley, Twitter
- All Revenue is Not Created Equal: The Keys to the 10X Revenue Club | Above the Crowd
- Discounted Cash Flow (DCF) Explained with Formula and Examples | Investopedia
- R.I.P. Good Times | Sequoia
- GAAP vs. Non-GAAP: What’s the Difference? | Investopedia
- Snow Crash by Neal Stephenson | Amazon
- Explore. Discover. Create. | Second Life
- Bill Gurley, Philip Rosedale: Back to the Future | Invest Like the Best
- The Metaverse is the Future of Digital Connection | Meta
- What Is LARPing? (Live Action Role Playing) | Insider
- Burning Man
- Ready Player One: A Novel by Ernest Cline | Amazon
- The Metaverse in 2040 | Pew Research Center
- One Platform to Connect | Zoom
- Microsoft to Invest $10 Billion in OpenAI, the Creator of ChatGPT | The New York Times
- How India Runs on Meta’s WhatsApp Message App | Vox
- Tencent’s WeChat App Keeps Growing Despite Beijing Crackdown | Bloomberg
- Mark Zuckerberg on Long-Term Strategy, Business and Parenting Principles, Personal Energy Management, Building the Metaverse, Seeking Awe, the Role of Religion, Solving Deep Technical Challenges (e.g., AR), and More | The Tim Ferriss Show #582
- The Sunk Cost Fallacy | The Decision Lab
- Quality of Earnings: Definition, Analysis, and Why It’s Important | Investopedia
- The Data Cloud | Snowflake
- The History of Uber – Uber’s Timeline | Uber Newsroom
- Uber Isn’t Worth $17 Billion | FiveThirtyEight
- How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size | Above the Crowd
- What is Total Addressable Market (TAM)? | Divestopedia
- What Is eSports? A Look at an Explosive, Billion-Dollar Industry | CNN
- How Amazon Same-Day Delivery Works | HowStuffWorks
- Amazon CEO Jeff Bezos’ Letters to Shareholders | Peter Fisk
- The No-Stats All-Star | The New York Times Magazine
- Shane Battier: The No-Stats All-Star | Invest Like the Best
- Jonathan Haidt — The Coddling of the American Mind, How to Become Intellectually Antifragile, and How to Lose Anger by Studying Morality | The Tim Ferriss Show #644
- Brian Armstrong, CEO of Coinbase — The Art of Relentless Focus, Preparing for Full-Contact Entrepreneurship, Critical Forks in the Path, Handling Haters, The Wisdom of Paul Graham, Epigenetic Reprogramming, and Much More | The Tim Ferriss Show #627
- Tobi Lütke — From Snowboard Shop to Billion-Dollar Company | The Tim Ferriss Show #359
- Business-to-Business (B2B) | Investopedia
- Complexity: The Emerging Science at the Edge of Order and Chaos by M. Mitchell Waldrop | Amazon
- Mr. China: A Memoir by Tim Clissold | Amazon
- Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice by Bill Browder | Amazon
- Range: Why Generalists Triumph in a Specialized World by David Epstein | Amazon
- Far-Out Thinking | Psychological Science
- The Sports Gene: Inside the Science of Extraordinary Athletic Performance by David Epstein | Amazon
- Legg Mason | Wikipedia
- Events: The Complexity of Sustainability: Beyond the Power Grid | Santa Fe Institute
- Thinking, Fast and Slow by Daniel Kahneman | Amazon
- 20 Cognitive Biases That Affect Your Decisions | Mental Floss
- James Clear, Atomic Habits — Simple Strategies for Building (and Breaking) Habits, Questions for Personal Mastery and Growth, Tactics for Writing and Launching a Mega-Bestseller, Finding Leverage, and More | The Tim Ferriss Show #648
- Eric Newcomer | Substack
- Runnin’ Down a Dream: How to Succeed and Thrive in a Career You Love by Bill Gurley | McCombs School, University of Texas
- Regulatory Capture Definition With Examples | Investopedia
- Obama’s Surprising Answer on Which Part of Obamacare Has Disappointed Him the Most | Vox
- Citizens United Explained | Brennan Center for Justice
- Instant Payment | Wikipedia
- Fed Now Service | Federal Reserve
- [05:51] The book Bill calls “the most efficient short-form MBA one can find.”
- [07:31] Sell-side analysts vs. buy-side analysts.
- [09:45] Financial models, rules of thumb, and making (sometimes wrong) decisions.
- [17:28] Howard Marks and Stan Druckenmiller.
- [19:26] Micro vs. macro investing.
- [20:40] Institutional Investor’s All-America Research Team.
- [24:16] Expanding distribution.
- [27:04] Return On Invested Capital (ROIC).
- [33:10] Repurposing good ideas for alternative applications.
- [37:01] The conviction of network effects.
- [38:58] SaaS and open source.
- [42:40] Bet sizing.
- [44:04] Equal partnership over hierarchy.
- [50:08] Lessons learned from partners.
- [52:57] Recommended resources.
- [58:46] Problems open source can solve.
- [1:09:28] Building a better network with the interest graph.
- [1:13:42] Dissecting Bill’s Twitter thread about risks and sudden valuation resets.
- [1:23:50] The Metaverse.
- [1:29:00] Revenue and earnings quality matter.
- [1:31:02] Undervalued competitive advantages.
- [1:35:02] Jeff Bezos: corporate mad scientist?
- [1:40:42] The counterintuitive condemnation of company camaraderie.
- [1:45:37] Tobi Lütke.
- [1:48:51] Books Bill has gifted frequently.
- [1:52:29] The Santa Fe Institute.
- [1:54:35] Bill’s board.
- [1:56:32] Cultivating anti-tribalism.
- [1:58:13] Twitter: what is it good for?
- [2:01:14] Newsletters and other resources Bill relies on.
- [2:03:05] Bill’s book in progress.
- [2:04:12] Regulatory capture.
- [2:09:10] Predicting what America will look like in 10-20 years.
- [2:10:50] Parting thoughts.
MORE BILL GURLEY QUOTES FROM THE INTERVIEW
“The minute you set a very hard rule, you might be setting yourself up for a mistake. And venture, I have found, is a world where that happens frequently.”
— Bill Gurley
“The process through which you actually put the words to paper and structure the paragraphs, structure the argument, you get smarter. Sometimes you decide, ‘Oops, I was wrong.’ You learn by putting it all together.”
— Bill Gurley
“If you’re starting a company because you think it’s going to be a good lifestyle, holy shit. You’re in for a rude awakening.”
— Bill Gurley
“Open source is way better at complex problems than simple problems.”
— Bill Gurley
“Why do we use government dollars to fund stuff that becomes proprietary?”
— Bill Gurley
“Be less tribal.”
— Bill Gurley
- Michael E. Porter
- Dan Benton
- David Korus
- Charles Wolf Jr.
- Henry Blodget
- Peter Lynch
- Michael J. Mauboussin
- Burton Malkiel
- Howard Marks
- Larry Page
- Sergey Brin
- John Doerr
- Michael Moritz
- Bruce Dunlevie
- Matt Ridley
- Stanley Druckenmiller
- Warren Buffett
- George Soros
- Stewart Alsop
- Bill Gates
- Larry Ellison
- Michael Dell
- Rick Sherlund
- Tom Meredith
- Kevin Kelly
- W. Brian Arthur
- Chuck Templeton
- Sheryl Sandberg
- Matt Cohler
- Peter Fenton
- Mitch Lasky
- Bob Kagle
- Roelof Botha
- Jerry Kaplan
- Alejandro Jodorowsky
- H.R. Giger
- Tony Fadell
- Phil Knight
- Andre Agassi
- J.R. Moehringer
- Deng Xiaoping
- Lee Kuan Yew
- Matt Mullenweg
- Antoni Gaudí
- Jim Zemlin
- Philip Rosedale
- Mark Zuckerberg
- Garrett Camp
- Aswath Damodaran
- Travis Kalanick
- Jeff Bezos
- Shane Battier
- Michael Lewis
- Mike Krzyzewski
- Jonathan Haidt
- Brian Armstrong
- Tobias Lütke
- M. Mitchell Waldrop
- Josh Wolfe
- Tim Clissold
- Bill Browder
- David Epstein
- Malcolm Gladwell
- Roger Federer
- Keith Holyoak
- Bill Miller
- Daniel Kahneman
- George Floyd
- Derek Chauvin
- James Clear
- Eric Newcomer
- Gabe Rivera
- Bob Knight
- Bob Dylan
- Danny Meyer
- George J. Stigler
- Barack Obama
- Judy Faulkner
- Jerome H. Powell
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4 Replies to “Legendary Investor Bill Gurley on Investing Rules, Finding Outliers, Insights from Jeff Bezos and Howard Marks, Must-Read Books, Creating True Competitive Advantages, Open-Source Strategies, Adapting Mental Models to New Realities, and More (#651)”
Does it bother you that your guests are predominantly white males? What could be gained by including more women & minorities? Just a thought. Thanks.
Wow, what an informative interview, thanks Tim. My bookshelf just got a little bigger!
This is such a fascinating free flowing interview.
Hi Tim! Loved this episode. I really value the recommendations made during the episode and appreciate you and your team creating the list of links to different content / media. I’ve got an idea for how to make these recommendations more actionable. I’m going to put together an MVP and I’d love to show you how this works when ready. Cheers!