This week, we speak with Bill Gurley, the legendary venture capital investor at Benchmark. His investments include GrubHub, Nextdoor, OpenTable, Zillow and (most famously) Uber. He is a member of the Board of Trustees of the Santa Fe Institute, and is widely considered one of most influential dealmakers in technology. He was named TechCrunch’s VC of the Year in 2016.
Early in his career as an engineer at Compaq, he began trading stocks. He recalls how he “knocked on doors” looking for a job on Wall Street while attending the University of Texas McCombs School of Business Business. Credit Suisse First Boston offered him a job — the only firm to do so. Eventually, he moved to the buy side, joining Frank Quattrone at Deutsche Morgan Grenfell (DMG) in Silicon Valley, ending up as the lead analyst of the Amazon.com’s 1997 IPO.
Gurley explains why the IPO system is broken, and why direct listings are a superior method for bringing a company public. The current system works well for the institutional buyers, who gain access at a substantial discount to actual value. But Gurley argues the system hurts ordinary investors, as well as the company going public itself. He observes that direct listings allow more information to be shared pre-listing, lets firms to capture more of their own value when listing publicly, and is fairer to all involved.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Gary Chropuvka, President of World Quant. The firm was spun out of Millennium Management in 2007, and manages about $7 billion dollars. Previously, Chropuvka was co-head of the Quantitative Investment Strategies (QIS) team at Goldman Sachs Asset Management (GSAM).
Bill Gurley’s Favorite Books
Complexity: The Emerging Science at the Edge of Order and Chaos by M. Mitchell Waldrop
Valuation: Measuring and Managing the Value of Companies by Tom Koller, Marc Goedhart, David Wessels
EVA: The Real Key to Creating Wealth by Al Ehrbar
Books Barry Mentioned
Chaos: Making a New Science by James Gleick