Invest Like The Best
Episode 137 All Things Business and Investing
Invest Like The Best

Episode 137: All Things Business and Investing

Invest Like The Best

Episode 137

All Things Business and Investing

Bill Gurley is a general partner at Benchmark Capital. We cover the current venture capital landscape, the marketplace model, and user generated content businesses.

[00:01:13] – (First Question) – The idea of increasing returns

[00:04:35] – Markers that could be a sign of network effect in a company

[00:06:27] – The opportunities for companies to capture network effect

[00:08:46] – Are there certain teams/leaders that are more conducive to leading a network effect company

[00:11:55] – Liquidity quality

[00:13:35] – How important is the revenue model at the beginning

[00:15:59] – Fascination with Nextdoor

[00:18:39] – Finding opportunities

[00:20:17] – Potential marketplaces and assets that could be commoditized

[00:21:39] – Usage yield on the world’s assets

[00:23:50] – Has technology changed the world of value investing

[00:26:28] – Hyper niche marketplaces

[00:27:52] – Challenges of labor marketplaces

[00:30:12] – User generated content businesses

[00:32:44] – People who are capable of building UGC businesses

[00:33:16] – His interest in Discord

[00:34:31] – Factors of a healthy marketplace

[00:37:57] – Fools’ gold in marketplace businesses

[00:39:04] – How influx of cash is impacting the marketplace business landscape

[00:43:20] – How does the influx of money into the space impact him

[00:46:44] – Spending money to attack top brands

[00:50:32] – Regulatory capture

[00:53:36] – His thoughts on the IPO market

[00:57:49] – How did he realize this was his passion

[01:00:42] – Qualifying his passion

[01:01:52] – Favorite thing about working with entrepreneurs

[01:02:48] – Honing your craft

[01:04:33] – Making yourself a good mentor

[01:05:56] – Kindest thing anyone has done for him

All Things Business and Investing

Introduction

Patrick
My guest this week is Bill Gurley, a general partner at Benchmark Capital and one of my favorite investment thinkers. As you'll hear, despite enormous success through his career, Bill is clearly still in love with business and investing. Where many might discuss past glories, I've been incredibly impressed with how much Bill and his partners emphasize the current portfolio and market landscape. I'm thankful to have had the chance to speak with him in this format. I hope you enjoy our conversation.

Increasing Returns to Scale

So Bill, and as I just said, I'm totally ashamed that until this morning I had never heard the name Brian Arthur and never read his 1996 piece on increasing returns in business. And so I thought since it's fresh on my mind and I know it was influential for you that we'd start there with this idea of increasing returns, which really at the time flew in the face of much of economics, which was based on diminishing returns. Maybe you could talk about how you stumbled across this and the influence that it's had on your thinking.

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