Legendary Investor Bill Gurley on Investing Rules, Insights from Jeff Bezos, Must-Read Books, & More

1. 0:00 – 1:19

   Start

   1. TFTim Ferriss0:00

      [upbeat music] Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to deconstruct world-class performers across many, many disciplines. My guest today, I'm so happy to have him, is Bill Gurley. You can find him on Twitter at bgurley, that's G-U-R-L-E-Y. Bill 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, which you can find at abovethecrowd.com. Over his venture career, he has worked with such companies as GrubHub, Nextdoor, OpenTable, Stitch Fix, Uber, and Zillow, among many others. Bill has a BS in computer science from the University of Florida and an MBA from the University of Texas. He's 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. Bill, nice to see you. Thanks for making the time.

   2. BGBill Gurley1:18

      Thanks for having me.

2. 1:19 – 3:03

   The book Bill calls “the most efficient short-form MBA one can find.”

   1. TFTim Ferriss1:19

      All right. So I wanted to start with a number of things that I've seen pop up repeatedly in various forms in doing prep for this conversation, and the first I wanted to get your take on and expansion on is Michael Porter's book, Competitive Strategy, subtitled Techniques for Analyzing Industries and Competitors, which you have described, I believe, as the most efficient short-form MBA that one can find. Could you please explain what this book is and if you still hold that opinion, why you hold that opinion?

   2. BGBill Gurley1:54

      Yeah, I mean, this is... If, if you do go to get an MBA, like in the first semester or whatever, they usually make you take a corporate strategy course and it's the first book assigned.

   3. TFTim Ferriss2:04

      Mm-hmm.

   4. BGBill Gurley2:04

      It's like-

   5. TFTim Ferriss2:04

      Mm-hmm

   6. BGBill Gurley2:05

      ... extremely well-known business book.

   7. TFTim Ferriss2:07

      Mm-hmm.

   8. BGBill Gurley2:07

      There's a belief in Silicon Valley that, that an MBA is worthless, and the- people shit on it all the time.

   9. TFTim Ferriss2:17

      Yeah [laughs] , right.

   10. BGBill Gurley2:18

       And yet, I would say 80 or 90% of the entrepreneurs I meet would benefit greatly by reading the first three chapters of this book.

   11. TFTim Ferriss2:29

       Hmm.

   12. BGBill Gurley2:29

       And it's really just about trying to understand the dynamics of industry. One, one of the most common mistakes entrepreneurs make is they come up with some kinda technological breakthrough in their own mind, but they don't spend any time analyzing the industry structure or whether the go-to-market is gonna be possible or not.

   13. TFTim Ferriss2:51

       Mm-hmm.

   14. BGBill Gurley2:51

       And the book just has a wonderful framework for thinking about the competitive dynamics of an industry and whether or not you'd be able to break in or be successful or maintain success.

   15. TFTim Ferriss3:02

       Hmm.

3. 3:03 – 5:20

   Sell-side analysts vs. buy-side analysts.

   1. TFTim Ferriss3:04

      This actually makes me think more broadly of frameworks and recipes, as it were, [laughs] for making decisions. So back in the day, you were a sell-side analyst, and I would love for you to define what that is and also just define buy side versus sell side. And at that time, at one point at least, the top three analysts covering the PC industry retired, and I'm reading from a transcript on Medium. Dan Benton, David Chorus, if I'm correctly pronouncing that-

   2. BGBill Gurley3:36

      That's right

   3. TFTim Ferriss3:36

      ... and Charlie Wolf, and then Charlie became the advisor for young analysts, so you got to work with him. Here's the part that's of interest to me. So Dan and David became friends, so they both gave me all of their financial models, and I'm curious what they gave you. What were those models?

   4. BGBill Gurley3:52

      Yeah.

   5. TFTim Ferriss3:53

      And do you still use any of those models?

   6. BGBill Gurley3:56

      [laughs] No. No, no.

   7. TFTim Ferriss3:57

      No.

   8. BGBill Gurley3:57

      So they were company-specific. But let me, let me start with the sell versus buy. So... And the industry's changed over the years, but a sell-side analyst is someone who does research on behalf of an investment bank that is presumably gonna make money from trading on their trading desk that someone sends your way because they valued the research. So you're providing research to help sell stocks, like that's how you're gonna get paid.

   9. TFTim Ferriss4:24

      Mm-hmm.

   10. BGBill Gurley4:24

       The buy side is anyone at a mutual fund who's trading for their own account. So if you're a, if you're a buy-side analyst, you don't publish, like it doesn't get public-

   11. TFTim Ferriss4:33

       Mm-hmm

   12. BGBill Gurley4:33

       ... because you're using that as proprietary information. The, the sell side stuff gets broadcast broadly, and usually when someone changes estimates or you hear about a ratings change, that's usually a sell-side analyst that has made-

   13. TFTim Ferriss4:47

       Mm-hmm

   14. BGBill Gurley4:48

       ... made a decision to change something, and that's what ends up on CNBC.

   15. TFTim Ferriss4:52

       And so a sell-side analyst... This is gonna sound very naive, but a sell-side [laughs] analyst could make a recommendation to buy, right? They could make a recommendation like a strong buy recommendation or a strong sell or somewhere in between the two.

   16. BGBill Gurley5:03

       Yeah.

   17. TFTim Ferriss5:03

       That's, I think, where, where my Long Island brain was, was having trouble grasping-

   18. BGBill Gurley5:07

       Yeah, there's controversy-

   19. TFTim Ferriss5:08

       ... the basics

   20. BGBill Gurley5:08

       ... about that 'cause the bank makes money in multiple ways and they question whether people are biased or not, and then you had the whole Henry Blodget thing from the 2000 period.

   21. TFTim Ferriss5:19

       Mm-hmm.

   22. BGBill Gurley5:19

       So it's complicated.

4. 5:20 – 13:34

   Financial models, rules of thumb, and making (sometimes wrong) decisions.

   1. TFTim Ferriss5:21

      And could you describe... I know that you don't at this point use them any longer, but the company-specific models. What were the models that they provided?

   2. BGBill Gurley5:28

      I was super fortunate my entire career by being in places where windows opened up that, that I was able to take advantage of. But the situation you described, I landed on Wall Street very fortunately, started covering an industry, and there's a magazine called Institutional Investor that polls the buy side and ranks the analyst. And the top three analysts in the category I entered all retired within one year, and they all became friends. Partially from my own networking, like I was reaching out to them, but the models they shared-

   3. TFTim Ferriss6:01

      Mm-hmm

   4. BGBill Gurley6:01

      ... were the models they had built on the companies we all covered.

   5. TFTim Ferriss6:04

      Mm-hmm.

   6. BGBill Gurley6:05

      So their own particular version of Dell's financials or Compaq or-

   7. TFTim Ferriss6:09

      Mm-hmm

   8. BGBill Gurley6:09

      ... Microsoft. And so it just helped me have a better understanding. I could see what they did, that kind of thing.

   9. TFTim Ferriss6:16

      Got it. What I'm trying to unpack also through the course of this conversation is just y- how you think about models and making decisions. I find that interesting. So this is hopping around a little bit, but, uh, you did not pursue Google as an investment in 2002, and you had some investing rules of thumb in place, and I, I suppose what I'm wondering is how you think about rules as an investor in the sense that it seems like perhaps to be consistently great, you need rules, but if you have rules, you're inevitably gonna miss some great opportunities, but perhaps that's okay. How do you think about rules? Like, was, was missing Google the result of a flaw in the set of rules that you had at the time or was it just sort of a, a, a collateral miss?

   10. BGBill Gurley7:08

       Let me work my way back to it 'cause it's clearly the biggest mistake of my career, so I... It's something-

   11. TFTim Ferriss7:12

       [laughs]

   12. BGBill Gurley7:12

       ... I've thought about a lot.

   13. TFTim Ferriss7:14

       Yeah.

   14. BGBill Gurley7:15

       So I think any investor starts with just building bedrock, and that comes from reading, and there's-

   15. TFTim Ferriss7:23

       Mm-hmm

   16. BGBill Gurley7:23

       ... a ton of books and history you can read. You can go through, you know, all the Buffett letters as an example. You know, you can read Peter Lynch's One Up On Wall Street. There's my good friend Mike Mauboussin has put out some amazing books that are a lot more nuanced about stock prices, that kinda thing, A Random Walk Down Wall Street by Burton Malkiel. And, and then you build your bedrock, and then, you know, you're out there, and you're looking for an opportunity. So I think public stocks are a little different than venture, but there's some overlap. But you're looking for, you know, a reality that you think's gonna emerge that's not priced into the stock. So that requires you both to know or to think you know where the world's going and also to know what the expectations are currently embedded in the stock. Because if you just have the same opinion that's already embedded, you're not gonna make any money.

   17. TFTim Ferriss8:16

       Mm-hmm.

   18. BGBill Gurley8:16

       There's a, a great piece by Howard Marks where he talks about you have to be ac- you have to be right and contrarian, you know?

   19. TFTim Ferriss8:24

       Yeah.

   20. BGBill Gurley8:24

       You can't just be right. You have to be right and contrarian, and that's more difficult. There's a famous saying that I'm sure has been uttered on your podcast before, the kind of strong opinions loosely held, and-

   21. TFTim Ferriss8:36

       Yes

   22. BGBill Gurley8:37

       ... I think, I think all investors have to work within that framework because things change. There's many, many variables. None of them are constant. They're all dynamic. And the minute you set a very hard rule, then you might be setting yourself up for a mistake. And venture, I have found, is a world where that happens frequently. And so-

   23. TFTim Ferriss9:02

       Mm-hmm

   24. BGBill Gurley9:02

       ... the, the Google example, you know, and, and it's really important to say that we didn't lay chase. Like, they presented... There were 25 employees. Larry and Sergey presented. They presented to, I'm sure, a whole bunch of firms, and we didn't lay chase. We should have laid chase, but we didn't. You know, at the time, Yahoo was at $10 down from, like, 80. Excite was-

   25. TFTim Ferriss9:23

       Mm-hmm

   26. BGBill Gurley9:23

       ... going bankrupt, so search didn't look that exciting from an external m- viewpoint. You had two PhD founders who had never been a CEO before and were insistent they were gonna be good as a CEO. Normally, that's a red flag, you know?

   27. TFTim Ferriss9:39

       Yeah.

   28. BGBill Gurley9:39

       Two PhD founders. And there was, there was just a number of things where you would make a list and say, "Oops, you know, this probably isn't, isn't what you wanna do." Now-

   29. TFTim Ferriss9:48

       Mm-hmm

   30. BGBill Gurley9:48

       ... I'd like to highlight, and I always do, the two best venture capitalists in the world at the time, John Doerr and Mike Moritz, kinda locked hands and said yes, right? And so-
5. 13:34 – 15:42

   Howard Marks and Stan Druckenmiller.

   1. TFTim Ferriss13:34

      Yeah. So you mentioned Howard Marks, Oaktree Capital, who's been on the podcast twice. Very, very impressive fellow. So y- I've seen you mention two investors, and I'm sure you've mentioned more, but two have come up repeatedly in various interviews and so on, Howard Marks and Stan Druckenmiller. Could you please speak to what makes them impressive or interesting to you?

   2. BGBill Gurley13:58

      Sometime in the last four or five years when interest rates wouldn't get away from zero for so long, I told myself I have to learn more about macro because I just know nothing, and it's causing all kind of problems in my industry. I had been reading Howard's work for years. One, one of the things I just love about people like Howard, and Buffett does it, but like people who, who archive their thought process just as part of their own process. But it's quite kind if you're, if you're a learner in the field to have someone of that capability that insist upon, you know, writing these letters and making them public-

   3. TFTim Ferriss14:39

      Mm-hmm

   4. BGBill Gurley14:39

      ... which they've done. I started reading Howard's work when I was on the sell side 25 years ago, and I've gotten to know him now, and he, he's, he's... In addition to being very, very bright, he's also just a, a wonderful human and fun to interact with. There aren't many people, if you study financial history, if you ta- most people, and Buffett included, will tell you macro is impossible. Like, you shouldn't even try.

   5. TFTim Ferriss15:05

      Mm-hmm. Yep.

   6. BGBill Gurley15:05

      And the two, the two individuals you mentioned are, are two of the only ones that are known for being successful in macro investing. Howard mostly by being one of the most successful and, and longest tenured investor in the bond market, and Stan for taking more kind of single individual bets-

   7. TFTim Ferriss15:25

      Mm-hmm

   8. BGBill Gurley15:25

      ... that are macro in nature. Going back to his success with Soros, he's become kind of re-famous in the past 12 months for predicting the inflation situation we're in and being very loud about it.

6. 15:42 – 16:57

   Micro vs. macro investing.

   1. TFTim Ferriss15:42

      Could you, if you don't mind, just give a definition, it could be simple, of macro investing for people who may not know that term?

   2. BGBill Gurley15:48

      If you go to, to business school, there's two economic classes you can take, microeconomics and macroeconomics. Microeconomics is a lot about what's discussed in competitive strategy, the Michael Porter book. So it's, it's about the interaction between firms within an industry pricing that kind of thing, competitive dynamics. Macro is the study of economies, you know, writ large and-

   3. TFTim Ferriss16:14

      Mm-hmm

   4. BGBill Gurley16:15

      ... I'm fascinated with complex systems. Our economy is certainly one of those things, as is weather and whatnot, which is why I've gotten involved with the Santa Fe Institute. But they're nearly impossible to predict and-

   5. TFTim Ferriss16:29

      Yeah

   6. BGBill Gurley16:29

      ... it's where you get into real, real trouble. There might be a variable you're not tracking that has never flipped from zero to one, and when it does-

   7. TFTim Ferriss16:39

      Mm-hmm

   8. BGBill Gurley16:39

      ... flip from zero to one, all your models, all your planning, you know, are out the window because this other thing's different this time. And you can-

   9. TFTim Ferriss16:47

      Mm.

   10. BGBill Gurley16:47

       I mean, it's why no one can predict the weather more than five days in, in front of us, right? Because-

   11. TFTim Ferriss16:52

       Mm-hmm

   12. BGBill Gurley16:53

       ... they're, it's just too dynamic and too complex, and most people feel that way

7. 16:57 – 21:00

   Institutional Investor’s All-America Research Team.

   1. BGBill Gurley16:57

      about, about macro.

   2. TFTim Ferriss16:59

      Hmm. Let me go back in time a little bit, [laughs] revisiting the, the sell-side analyst side of things. So I believe at one point, and I could be getting the terminology wrong, but you were an institutional investor, which you already mentioned, institutional investor All-American or All-America Research Team.

   3. BGBill Gurley17:16

      Partly because those three people left the field, but yes. [laughs]

   4. TFTim Ferriss17:20

      What allows someone to land on that list?

   5. BGBill Gurley17:25

      So it's a poll of your customers. It's a poll of the buy side. So they literally-

   6. TFTim Ferriss17:30

      Mm-hmm

   7. BGBill Gurley17:30

      ... poll the buy side in each industry and say who was most helpful.

   8. TFTim Ferriss17:35

      Mm-hmm.

   9. BGBill Gurley17:35

      I will tell you that, uh, and I don't know if this probably came from some book I read in business school, but when I showed up, and this is, this is a framework someone could use, but when I showed up on, on Wall Street, in one of the very first weekly meetings, they introduced us to the s- to the sales force. The sales force is the individual at your firm responsible for that account, for Fidelity, for Wellington, for teachers, you know, of Texas or whatever and, and they own the relationship. And somewhere in my youthful wisdom, I decided to ask each salesperson, is there one client that will spend 30 to 45 minutes with me as a new analyst and just tell me what they want? Like, I'm just gonna ask them questions. I'm not, I'm not gonna have anything for them. I just wanna know how I can serve them best. And I did like 20 of those interviews. Before I had started the job

   10. TFTim Ferriss18:35

       Mm-hmm

   11. BGBill Gurley18:35

       That's a roundabout answer to how do you get on the list, 'cause I knew what they were looking for-

   12. TFTim Ferriss18:40

       Mm-hmm

   13. BGBill Gurley18:40

       ... at that point in time.

   14. TFTim Ferriss18:42

       What made you a good analyst? And let me explain why I'm asking. I'm asking because one of the advantages that you bring to a board, which you've already discussed, right, the, to a board of a startup in the art of company building is your in-depth understanding of how the public markets work. And if a company is aiming for going public and so on, you have knowledge that scares a lot of other folks who might [laughs] intimidates or befuddles a lot of folks who might otherwise wanna be on the board. So I'm curious to know what made you a good analyst.

   15. BGBill Gurley19:14

       The thing I learned in those interviews, both in terms of the... 'Cause I would also ask them who does a really good job of this, and then i- if I could, I'd try and befriend that person. But what I heard frequently back was, "Look," and this is a little different from what the world perceives, "you know, I don't really need you to make this buy or sell recommendation. Like, that's not what I, what I would really get a huge benefit from is if you provide a point of view or a piece of analysis that causes us to think differently about a particular company or industry." Like-

   16. TFTim Ferriss19:52

       Mm

   17. BGBill Gurley19:52

       ... can you go off and do some work that, that other people haven't thought of, that causes us to question, that makes us wanna talk to you and, and hear what you're thinking?

   18. TFTim Ferriss20:03

       Mm-hmm.

   19. BGBill Gurley20:03

       And so that became really the essence of, of what I was focused on. And, and partially from listening to them and partially from m- mimicking and copying David Corris, who you mentioned-

   20. TFTim Ferriss20:15

       Mm-hmm

   21. BGBill Gurley20:15

       ... I started doing a weekly fax at the time.

   22. TFTim Ferriss20:21

       [laughs]

   23. BGBill Gurley20:22

       And David was doing that before he quit, and so I started-

   24. TFTim Ferriss20:27

       Mm-hmm

   25. BGBill Gurley20:27

       ... doing it, too. And interestingly, the Wall Street firm tries to keep your content closed within their customer set.

   26. TFTim Ferriss20:38

       Yeah.

   27. BGBill Gurley20:38

       And this is not very loyal to my firm, but it, it became very obvious-

   28. TFTim Ferriss20:42

       [laughs]

   29. BGBill Gurley20:42

       ... to me that a sell-side analyst that was more well-known was more powerful, more impactful. And so-

   30. TFTim Ferriss20:52

       Mm-hmm
8. 21:00 – 24:07

   Expanding distribution.

   1. BGBill Gurley21:00

      I could.

   2. TFTim Ferriss21:01

      How did you expand that distribution?

   3. BGBill Gurley21:03

      I would leverage the sales force and get them to give me fax numbers. You know, that's how... That's where I started. I then, you know, started developing industry relationships, which is important because you're covering these companies. You start going to investor days. The buy side is talking to these companies as well, and so I started getting some of them on board. And then probably the most successful hack of my career-

   4. TFTim Ferriss21:31

      [laughs]

   5. BGBill Gurley21:33

      ... happened when I was invited to attend Stewart Alsop's Agenda conference, which I think was in-

   6. TFTim Ferriss21:42

      Mm

   7. BGBill Gurley21:42

      ... Phoenix at the time, and used to be it was the conference everyone went to. So Gates would be in the front row. Ellison would be there. They would stay for the whole thing. You could walk up and talk to them.

   8. TFTim Ferriss21:53

      Mm.

   9. BGBill Gurley21:53

      Michael Dell was there. Like, everyone was there.

   10. TFTim Ferriss21:56

       How many analysts were invited to such an event?

   11. BGBill Gurley21:59

       I don't know. Charlie had been invited, and Charlie got me in.

   12. TFTim Ferriss22:03

       Mm.

   13. BGBill Gurley22:03

       And I don't even remember. You know, Rick Sherlund was probably there. He, he's a famous-

   14. TFTim Ferriss22:08

       Mm-hmm

   15. BGBill Gurley22:08

       ... Microsoft analyst. And, you know, it's kinda what Code is today, but the-

   16. TFTim Ferriss22:13

       Yeah

   17. BGBill Gurley22:13

       ... difference back then, way back then was the most famous founder CEOs sat through the whole thing and were available the whole time. Today-

   18. TFTim Ferriss22:23

       Mm

   19. BGBill Gurley22:23

       ... if one of them speaking, they come in the back door, they go on stage, they leave. Like, they're not around.

   20. TFTim Ferriss22:28

       Mm-hmm.

   21. BGBill Gurley22:28

       You know?

   22. TFTim Ferriss22:29

       Right.

   23. BGBill Gurley22:29

       So it was pretty cool.

   24. TFTim Ferriss22:30

       Mm-hmm. What was the hack at the conference?

   25. BGBill Gurley22:33

       So this was around the time where the PalmPilot launched. And so in the-

   26. TFTim Ferriss22:38

       Mm

   27. BGBill Gurley22:38

       ... lobby of the conference was they were selling them. They, they weren't free. They were selling a PalmPilot. And I think it was like $200, $300, I can't remember, but they had put the contact information for every attendee at the conference-

   28. TFTim Ferriss22:53

       [laughs]

   29. BGBill Gurley22:54

       ... in the PalmPilot.

   30. TFTim Ferriss22:55

       [laughs]
9. 24:07 – 30:30

   Return On Invested Capital (ROIC).

   1. TFTim Ferriss24:07

      So let's come back to the, the point you made of helping your clients think differently.

   2. BGBill Gurley24:14

      Yeah.

   3. TFTim Ferriss24:14

      Right? Presenting them with something that helps them to think differently. And I'd like to connect that to a story I'd love you to tell, which is about what you learned from a food analyst, and the question that might come before that is how did you meet the food analyst? Like, why were you even having a conversation?

   4. BGBill Gurley24:32

      Well, first of all, all the analysts share a floor, so we're all- Physically proximate. So the person that covers-

   5. TFTim Ferriss24:38

      Yeah

   6. BGBill Gurley24:38

      ... food or, or telcos or electric utilities were all in the same group. And-

   7. TFTim Ferriss24:44

      Mm-hmm

   8. BGBill Gurley24:44

      ... the firm had efforts underway, which Charlie Wolf ended up running, to try and educate the analyst in a common framework or whatever so that we would all be better at what we do and that kind of thing. And for reasons that I... I mean, I guess birds of a feather flock together. D- for reasons I don't remember, me and Michael Mauboussin, the food analyst, started spending a lot of time together.

   9. TFTim Ferriss25:12

      Mm-hmm.

   10. BGBill Gurley25:12

       And we're still close friends today. He's involved at Santa Fe and, and I see him frequently. And he's done amazing things himself and released several books and, and he's quite well-known. Yeah, so we started hanging out together. He had just read a bunch of books on a framework called Return On Invested Capital, which-

   11. TFTim Ferriss25:34

       Mm-hmm

   12. BGBill Gurley25:34

       ... Stern Stewart had published on. McKinsey had a book called Valuation, they still do, that uses this type of analysis. And he was, he was spreading it. Was the word proselytizing?

   13. TFTim Ferriss25:47

       Yeah [laughs]

   14. BGBill Gurley25:47

       Through, through, through the analyst group. And, you know, I was a sponge at that point in time, so I said, "Sure." So I took the framework and ran it on all of my companies. It turned out just by happenstance that Dell stood out like a sore thumb with ridiculously high ROIC numbers versus the rest of the industry. Like night and day.

   15. TFTim Ferriss26:11

       Mm-hmm.

   16. BGBill Gurley26:11

       Like 20 to one. Wasn't even close.

   17. TFTim Ferriss26:13

       Mm.

   18. BGBill Gurley26:14

       And in fact, it was so ridiculous, like the first time I showed him, he didn't... Michael didn't believe it was true. And so we got-

   19. TFTim Ferriss26:21

       Mm

   20. BGBill Gurley26:21

       ... in the numbers and that kind of thing. And there's probably like 10 super lucky things that happened in my life, but him giving me that framework. And then at the exact same time, Dell as a company had made two stumbles. They had a options trade that went bad, and their laptops had caught on fire. And so the stock was in, in the ditch. It was trading at six times earnings.

   21. TFTim Ferriss26:44

       Mm-hmm.

   22. BGBill Gurley26:44

       And we had discovered [laughs] if you will, through this framework-

   23. TFTim Ferriss26:48

       [laughs]

   24. BGBill Gurley26:48

       ... that they had a massive competitive advantage because of this return on invested capital thing. And so we went to a strong buy on a broken stock, and it went up 100X in the public markets from there.

   25. TFTim Ferriss27:03

       [laughs]

   26. BGBill Gurley27:03

       And I became close friends with Michael and, and Tom Meredith, who was CFO at the time. They did all the work. I, I was just along for the ride.

   27. TFTim Ferriss27:12

       Mm.

   28. BGBill Gurley27:12

       But it was very-

   29. TFTim Ferriss27:13

       Yeah

   30. BGBill Gurley27:13

       ... fortunate.
10. 30:30 – 34:40

    Repurposing good ideas for alternative applications.

    1. TFTim Ferriss30:30

       So I wanna read something from, I think this was a Vox interview, and, uh, you can't believe everything you read on the internet, but it would make sense. So this is related to OpenTable. So having come out of OpenTable being successful, this is quoting you, "I was trying to think of other industries where if you put a network on top of it-" It would absorb waste and make it more efficient and more usable. And this is within the context of, of looking for something that would basically appear like Uber, right? So not working within the taxi framework, but with black cars. And I'm just curious where else you've applied that type of translation where you see a case study or a, a successful proof, right, of a network being laid on top of something and then applying it to something else. Are there other examples of translating in that way?

    2. BGBill Gurley31:20

       Absolutely. And by the way, our impetus to do OpenTable was based upon something like that. So in 1996, Brian Arthur, who was at the Santa Fe Institute back then, published an, an article in Harvard Business Review called Increasing Returns in the Two Worlds of Business, and it was really the first piece that talked about network effects. Of course, Microsoft was already starting to really take off, but this idea of network effects is that, you know, some industries are gonna be structured where you get winner take most, and the more successful you are, you get locked in.

    3. TFTim Ferriss31:55

       Yeah.

    4. BGBill Gurley31:56

       And Brian talked about things just like the Microsoft UIs, like you know how Word works. You get comfortable with how it works, and then like switching-

    5. TFTim Ferriss32:03

       Mm-hmm

    6. BGBill Gurley32:04

       ... has cost and those kind of things, and sharing documents, collaboration, and, you know, Zoom obviously has massive network effects. So we started looking for those things because they tend to cause outlier outcomes.

    7. TFTim Ferriss32:20

       Mm-hmm.

    8. BGBill Gurley32:20

       So I can remember, and this gets into back to your rule stuff, when I met with Chuck Temkin, the founder of OpenTable, you know, and he had three restaurants. You had to believe a lot to get from that point to the global phenomena that it became.

    9. TFTim Ferriss32:35

       Yeah.

    10. BGBill Gurley32:36

        And the bet that we talked about making when we said, "Okay, let's go do this thing," is if we get enough, if we get enough restaurants on this thing, then the consumers will come. And if the consumers come-

    11. TFTim Ferriss32:50

        Mm

    12. BGBill Gurley32:50

        ... then people will have to get on.

    13. TFTim Ferriss32:51

        Yeah.

    14. BGBill Gurley32:51

        And that's what happened, but you had to believe it, 'cause otherwise, you know, at the time, we were selling PCs to restaurant owners, and guess what?

    15. TFTim Ferriss33:00

        [laughs]

    16. BGBill Gurley33:00

        They didn't, they didn't have connectivity at the time. So we had to partner with someone to get like broadband installed, which wasn't easy. I mean, it was all bad.

    17. TFTim Ferriss33:11

        [laughs]

    18. BGBill Gurley33:11

        So your normal rule set, we're putting a piece of hardware in a small to medium business that didn't have a lot of money, and we had-

    19. TFTim Ferriss33:20

        Yeah

    20. BGBill Gurley33:20

        ... to provision a broadband. So you would normally go, "Don't do that." But I remember my, my favorite proof point of that network effect, and then I'll get to some of the other models. At one point, we were reviewing the Salesforce productivity and, and our model when we scaled up the business that we had, our each salesperson had to close four restaurants a month. And at the time, we were up to 7.7, so we were feeling pretty good. Things were starting to break our way. And in the board meeting, they laid out the list of all the salespeople, and one of them had done 35, 35 restaurants in a month.

    21. TFTim Ferriss34:00

        [laughs]

    22. BGBill Gurley34:01

        And so I asked the question, "Who is that salesperson?" And, you know, we started... OpenTable started in San Francisco, and we, we played local game. We didn't go everywhere at once. We built liquidity city by city. Anyway, that salesperson was the one salesperson left in San Francisco where we had 90% penetration.

    23. TFTim Ferriss34:21

        Hmm. Wow.

    24. BGBill Gurley34:21

        And so the 35 came, were coming out of that last 10, and that individual-

    25. TFTim Ferriss34:27

        Mm-hmm

    26. BGBill Gurley34:27

        ... was basically taking orders, and-

    27. TFTim Ferriss34:29

        [laughs]

    28. BGBill Gurley34:29

        ... that to me was like, "Oh, yeah, the network effect's really working here."

    29. TFTim Ferriss34:35

        Yeah.

    30. BGBill Gurley34:36

        And so anyway, we looked for that. Some other frameworks,

11. 34:40 – 36:42

    The conviction of network effects.

    1. BGBill Gurley34:40

       SaaS-

    2. TFTim Ferriss34:41

       Could I actually pause for one second before you get to SaaS? So you talked about you have to believe, you mentioned you have to believe a lot of things can go right in order to invest in a business like OpenTable at the time. I would love to know what contributed to your ability to have conviction. I mean, how much of it was potential network effects versus total addressable market versus founder versus other stuff?

    3. BGBill Gurley35:06

       I would say in some of these verticals, both OpenTable and Uber, there were years and years and years where everyone thought the TAM was too small.

    4. TFTim Ferriss35:14

       Yep.

    5. BGBill Gurley35:15

       In fact, oh, here's a great story. This was in '99, so this is a 23-year-old story, but I had successfully recruited a CFO from a public company, which you could do back in those glory days-

    6. TFTim Ferriss35:27

       [laughs]

    7. BGBill Gurley35:28

       ... to come into OpenTable. And one day I showed up early for a board meeting and, and the CFO comes to me and he says, "Bill, I'm, I'm gonna quit." And I said, "Okay." I go, "Why are you gonna quit?" And he goes, "This business will never work." And I said, "Okay, why will it never work?" And he says, "Well, my model says it'll never work." So I said, "Show me your model." So we look at the model and I dive in, and he has frozen penetration in each city at 17%. And he had come from a retail business, and I, I go, "Why'd you freeze it at 17%?" And he said, "Oh, no one gets more than 17% market share, all the businesses I've worked with." Because I believed in network effects, I was like, "We're gonna get 99. Like, we're not stopping at 17, we're gonna get 99%. You don't understand how this is gonna work." [laughs] And you know, that's because I believed in network effects, and he didn't.

    8. TFTim Ferriss36:24

       Yeah.

    9. BGBill Gurley36:25

       And when we filed the S1, I really wanted to FedEx it to him.

    10. TFTim Ferriss36:28

        Did he stay or did he leave?

    11. BGBill Gurley36:29

        But no, he left. He quit.

    12. TFTim Ferriss36:31

        [laughs]

    13. BGBill Gurley36:32

        And I decided not to FedEx him the S1. I figured he had seen it by-

    14. TFTim Ferriss36:36

        [laughs]

    15. BGBill Gurley36:36

        ... by then we were kicking off, you know, massive cash flow each quarter.

    16. TFTim Ferriss36:41

        Yeah, yeah.

    17. BGBill Gurley36:41

        So.

12. 36:42 – 38:51

    SaaS and open source.

    1. TFTim Ferriss36:42

       So you were talking about models and I interrupted you. You were gonna jump to SaaS.

    2. BGBill Gurley36:47

       Yeah, I was just gonna mention a bunch of them.

    3. TFTim Ferriss36:48

       Yeah, please.

    4. BGBill Gurley36:50

       I did my first SaaS deal in '99, and that, that category of companies is still bearing fruit. Like, people have made tons of money, you know. And now it's common, but, but at the time it wasn't, and you transformed an entire industry. Open source, you know, Benchmark's probably had, I don't know, eight or nine successful open source companies where, where you've used that model to attack a industry that's preexisting but where someone has proprietary technology. Social networks, I mean, we were fortunate to be in Twitter, Snapchat, Instagram, and Matt Cohler, who is a partner at Benchmark, developed kind of a sixth sense on what a breakout social network looks like. And we've had a few that missed too, I mean, but the outsized nature of the wins are so high.

    5. TFTim Ferriss37:39

       Yeah.

    6. BGBill Gurley37:40

       So there's like four or five different ones, right, that we look for, network effects, you know-

    7. TFTim Ferriss37:45

       Mm-hmm

    8. BGBill Gurley37:45

       ... open source. Like, and you get good at it. You start to understand what works, what doesn't, what leads to success, what doesn't. I mean, there's nuances, right? Like in open source with that business model which is you're basically packaging support and reliability, 'cause someone could just download it for free, so how do you charge?

    9. TFTim Ferriss38:06

       Mm-hmm.

    10. BGBill Gurley38:06

        If you [laughs] and this goes back to Michael Porter, but if you have a very consolidated industry of big companies, they don't pay. They just hire the people that know how to use the product. So we were in-

    11. TFTim Ferriss38:17

        Mm-hmm

    12. BGBill Gurley38:17

        ... MySQL as an example. Google and Yahoo were two of the biggest customers, never paid us a penny. You need that product-

    13. TFTim Ferriss38:24

        [laughs]

    14. BGBill Gurley38:25

        ... to go into the corporate world where people want that kind of hand-holding, and that's where you get paid.

    15. TFTim Ferriss38:30

        Mm-hmm.

    16. BGBill Gurley38:30

        So you can't just be, "Oh, I love open source," 'cause then you get into something where it's serving a much more finite set of customers, and then you can't make the model work. So you have to learn the-

    17. TFTim Ferriss38:42

        Mm-hmm

    18. BGBill Gurley38:42

        ... the esoteric nuances. But anyway, yeah, there are many veins in venture that get mined over and over and over again if they're

13. 38:51 – 40:21

    Bet sizing.

    1. BGBill Gurley38:51

       big enough.

    2. TFTim Ferriss38:52

       Mm-hmm. This is maybe a, a novice question, but I'm curious. What rules did you guys have around bet sizing, right? To use a sort of [laughs]

    3. BGBill Gurley39:01

       Yeah

    4. TFTim Ferriss39:02

       ... maybe a poker analogy. How do you think about the parameters around the size of the check that you cut just in terms of long-term strategy and-

    5. BGBill Gurley39:12

       Benchmark's a very particular firm. We've wandered off course a, a couple times, but we've always come back to our kinda home base and we've, we've remained committed and focused to very early stage investing and we're pretty much market takers on what that first check size is.

    6. TFTim Ferriss39:31

       What do you mean by that?

    7. BGBill Gurley39:33

       There's a competitive dynamic in the industry that kinda defines what a series A check looks like or sometimes series B. And if we thought something was gonna be an outsized winner, we wouldn't miss it because market was saying that had to be 15 or five. It's more like a ticket, right? We're buying a ticket.

    8. TFTim Ferriss39:52

       15 or five, you're talking about-

    9. BGBill Gurley39:53

       A million dollars

    10. TFTim Ferriss39:53

        ... 15 or five million?

    11. BGBill Gurley39:55

        Yeah.

    12. TFTim Ferriss39:55

        Right. So would the guiding principle in, in a case like that be the percentage of ownership that you would end up with?

    13. BGBill Gurley40:01

        Yeah, something we care way more about than the size of the check.

    14. TFTim Ferriss40:04

        Yeah.

    15. BGBill Gurley40:05

        And we're not the only one. A lot of venture firms operate that way.

    16. TFTim Ferriss40:08

        Yeah. Yeah, sure.

    17. BGBill Gurley40:09

        So board seat is the constraint, and then ownership is the optimization variable.

    18. TFTim Ferriss40:15

        Mm-hmm.

    19. BGBill Gurley40:16

        Whatever the math is that follows out of that [laughs] is, is what you take.

14. 40:21 – 46:54

    Equal partnership over hierarchy.

    1. TFTim Ferriss40:21

       So to be right and contrarian, I mean, I guess sometimes in venture ... I'm not sure if ... I'm curious how you cultivate that in partner meetings. Like what do those ... What is the format of a successful partner meeting when someone's getting up and saying-

    2. BGBill Gurley40:37

       Well, one thing I would-

    3. TFTim Ferriss40:38

       ... "Here's my deal"

    4. BGBill Gurley40:39

       ... offer as a preamble to at least our process is the founding partners of Benchmark did something that was not, hadn't been done before in venture, which is they created an equal partnership. And most-

    5. TFTim Ferriss40:53

       Mm-hmm

    6. BGBill Gurley40:53

       ... business partnerships, and this includes private equity and, and law firms and, and real estate firms, there's a hierarchy and the people that have been there the longest sit at the very top and they take an outsized amount. And some of our founding partners had worked at those firms and felt like the young people did more of the work and therefore, you know, it wasn't conducive to the right type of internal behavior, and so they created this notion of a equal partnership. And even today when we go hire a new partner, they come in and they have a equal seat at the table. We just divide the pie-

    7. TFTim Ferriss41:29

       Mm-hmm

    8. BGBill Gurley41:30

       ... which is very different. The reason I think that's important to any discussion about our own processes is I think that has a number of dynamics that kind of emerge from being equal. I think everyone's voice is heard, whereas if you had a hierarchical firm and the big boss walked in and said, "Blah, blah, blah," like that would carry so much more weight, right?

    9. TFTim Ferriss41:55

       Yeah.

    10. BGBill Gurley41:55

        So you feel like your voice is heard when you come in. I think we root for one another. If I'm at a hierarchical firm that's upper out, I'm kinda competing with my peers.

    11. TFTim Ferriss42:06

        Yep.

    12. BGBill Gurley42:06

        Here, because we're gonna divide it equally, I want our new partners to be as successful as I possibly can. And I felt that on the way in, and I feel the desire to do it on the way out. Those are just natural emergent properties.

    13. TFTim Ferriss42:20

        Mm-hmm.

    14. BGBill Gurley42:21

        So then to come around to your question, like how do you be contrarian? How do you have ... Well, I mentioned like we, we have this phrase, "What could go right?" Like you're just constantly thinking devil's advocate in your mind, right? And devil's advocate-

    15. TFTim Ferriss42:35

        Mm-hmm

    16. BGBill Gurley42:36

        ... on the positive side. Like what would it take for this thing to break out? Like are we making a mistake? Could this, could you imagine this being really, really big? And what would have to happen-

    17. TFTim Ferriss42:46

        Mm-hmm

    18. BGBill Gurley42:46

        ... for that to happen? When someone new comes along, you'd be surprised, I have specific memories of new partners coming in and we'll just tell them, "Bring All the companies you meet in, like just bring them in, and those companies will present and then we talk about them afterwards, and that's where-

    19. TFTim Ferriss43:04

        Into the partner meeting?

    20. BGBill Gurley43:05

        Yeah. And that's where the-

    21. TFTim Ferriss43:07

        Mm-hmm

    22. BGBill Gurley43:07

        ... learning process gets passed down. [laughs] I'm sure just like storytelling in a tribe 300 years ago or 400 years ago, right?

    23. TFTim Ferriss43:16

        Yeah.

    24. BGBill Gurley43:16

        Like that, that is that dynamic. And it's where the... You know, a lot of people say venture is, at, at the end of the day, a pattern recognition job.

    25. TFTim Ferriss43:27

        Mm-hmm.

    26. BGBill Gurley43:27

        But we also talked about those rules can get you in trouble, so you're trying to create this kinda loose pattern recognition so that you can be helpful and identify things, and then you wanna pass those along, and then you gotta constantly check it, you know, because of what we said about how you can miss something. But when that new partner comes in and those are happening, I can remember, and I'll leave the names out, but one of the new partners like he brought in company one, no, company two, no. He was like, he was very frustrated. And then company 10 he brought in, we were like, "Try and close that immediately." [laughs] Like, like just the complete opposite.

    27. TFTim Ferriss44:03

        [laughs]

    28. BGBill Gurley44:04

        And he remembers that too, but it like you- you're starting to learn, you're starting to pick up the collective wisdom of the group.

    29. TFTim Ferriss44:13

        Mm-hmm.

    30. BGBill Gurley44:14

        And it is a bit of an art form because in that window between when you meet a company and when you might try and close the investment, I bet you the average is under 60 days.
15. 46:54 – 49:58

    Lessons learned from partners.

    1. TFTim Ferriss46:55

       So you've mentioned a number of your partners, Matt Cohler, who was, was also very helpful for the [laughs] for Uber. He seems to be very good at using himself as the guinea pig. Very smart guy. Uh, what are some of the lessons you've learned from your partners? And that could be anyone, Fenton, Laski, Cohler. We don't even necessarily have to mention names. I'm just curious-

    2. BGBill Gurley47:18

       Yeah

    3. TFTim Ferriss47:18

       ... what their superpowers are or what you have adapted, learned from them.

    4. BGBill Gurley47:25

       I'd probably go back to some of the founding partners 'cause those were the ones that I learned from.

    5. TFTim Ferriss47:29

       Yeah, let's do it.

    6. BGBill Gurley47:31

       One of them I'd say from Bruce Dunlevie is just have a really big tent. Like we're in a networking business-

    7. TFTim Ferriss47:37

       Mm-hmm

    8. BGBill Gurley47:37

       ... where you're trying to look under every rock for the next possible deal. And-

    9. TFTim Ferriss47:42

       Mm-hmm

    10. BGBill Gurley47:42

        ... cutting off avenues of information or flow is just a really stupid idea. And so it, it ties in with what could go right, but just be super open-minded. And so Bruce had been involved with a company that I think was in a software tool space, the name escapes me, but we could look it up, and had developed a lot of friendships with down the organizational chart at the company. And one day one of the engineers from that company comes to him and says, "I'm working on this marketplace thing called eBay."

    11. TFTim Ferriss48:17

        Mm-hmm.

    12. BGBill Gurley48:17

        And he was from a different industry, but because he had developed that relationship, that came in. Now it turned out that Bob Kagle was much more excited about eBay than Bruce was, and so Bruce made that intro. Because we're equal partnership, that's all cool, and Bob ends up doing the deal and, you know, becomes the number one ranked VC in the land. But it all came from that relationship. So big tent.

    13. TFTim Ferriss48:43

        Mm-hmm.

    14. BGBill Gurley48:43

        The older I get I just take the time, be kind, you know, be available. It pays off. At least in our industry-

    15. TFTim Ferriss48:51

        Mm-hmm

    16. BGBill Gurley48:51

        ... it pays off big time. So that's one.

    17. TFTim Ferriss48:54

        Mm-hmm.

    18. BGBill Gurley48:54

        Another one is just, and this is more specific to venture, but unless you're super lucky... There were two VCs I know that were Very fortunate. Kohler and Roloff, it's quite-

    19. TFTim Ferriss49:08

        Mm-hmm

    20. BGBill Gurley49:08

        ... Roloff with YouTube and Matt with Instagram, where they had a hit like two years in. But-

    21. TFTim Ferriss49:15

        Yeah

    22. BGBill Gurley49:15

        ... for the vast majority of venture capitalists, they don't have a liquidity event till year eight or nine. And so-

    23. TFTim Ferriss49:22

        Mm-hmm

    24. BGBill Gurley49:22

        ... it's easy to doubt yourself. And three years in, people like to use the child age analogy. You've got-

    25. TFTim Ferriss49:30

        [laughs]

    26. BGBill Gurley49:30

        ... 12-year-olds becoming 13-year-olds, and your whole portfolio's like that, with acne all over their face. And-

    27. TFTim Ferriss49:37

        [laughs]

    28. BGBill Gurley49:37

        ... you can really lose confidence. And so one thing that a lot of my partners did was just like, "It's gonna be okay. Get back out there. You're doing fine." You know, that kind of thing-

    29. TFTim Ferriss49:49

        Mm-hmm

    30. BGBill Gurley49:50

        ... which was way more helpful than you could possibly imagine, 'cause the anxiety-
16. 49:58 – 55:56

    Recommended resources.

    1. TFTim Ferriss49:58

       I wanna come back to open source in a minute, but first, I'm wondering, you've mentioned a number of books that are sort of broadly applicable to entrepreneurship and some I'm sure translate to, as you mentioned, investing in a number of capacities. If you were advising someone or just mentoring someone who wanted to learn how to be a good angel investor or venture capitalist in tech, what might you suggest to them in terms of approach or resources, books, anything?

    2. BGBill Gurley50:29

       I'll give you a few more books. And then obviously the world's different today, the content consumption-

    3. TFTim Ferriss50:33

       Yeah

    4. BGBill Gurley50:34

       ... is, is so different. But there's a book I love called Startup by Kaplan, I think.

    5. TFTim Ferriss50:41

       Yeah. I bought that when I first moved to Silicon Valley in '99. That was one of the very first books.

    6. BGBill Gurley50:47

       Yeah, it's just fantastic. And he-

    7. TFTim Ferriss50:50

       Yeah

    8. BGBill Gurley50:50

       ... was in the... What do they call that world? 'Cause it's where General Magic was. It was like the first portable computers, like every one of them failed.

    9. TFTim Ferriss51:00

       Yeah.

    10. BGBill Gurley51:00

        Every one of them.

    11. TFTim Ferriss51:01

        Yeah.

    12. BGBill Gurley51:01

        But they all raised massive amounts of money. He, on his ride home every day, had a cassette tape and left like an archive or a diary, which makes the book-

    13. TFTim Ferriss51:13

        Yeah

    14. BGBill Gurley51:13

        ... so good, 'cause the detail's fantastic.

    15. TFTim Ferriss51:16

        Mm-hmm.

    16. BGBill Gurley51:16

        But they had the best venture capitalists, they had the best advisors, they had the best executives. And the executives that were in, this was Go Corp I think they were there-

    17. TFTim Ferriss51:27

        Mm-hmm

    18. BGBill Gurley51:27

        ... all went on to do amazing things, but this company failed hard.

    19. TFTim Ferriss51:32

        [laughs]

    20. BGBill Gurley51:32

        Failed hard. And-

    21. TFTim Ferriss51:34

        Mm-hmm

    22. BGBill Gurley51:34

        ... I think it's nice to combine a book of failure with all the books of success.

    23. TFTim Ferriss51:38

        [laughs] Yeah.

    24. BGBill Gurley51:40

        I just think it's super educational. Interestingly, if you read that, you should probably also simultaneously watch the General Magic documentary.

    25. TFTim Ferriss51:49

        It's so good, yeah.

    26. BGBill Gurley51:50

        'Cause they were a competitor with Go, and the same story. And the people there-

    27. TFTim Ferriss51:55

        Yeah

    28. BGBill Gurley51:55

        ... all went on to, to wild success.

    29. TFTim Ferriss51:59

        Yeah. It's like the, Jodorowsky's Dune where Giger, who went on to create the iconic design for Alien and Aliens, I mean, they're just these, these failures that contain an all-star team and fail for any number of factors. But General Magic, I just wanna second that recommendation and-

    30. BGBill Gurley52:18

        Yeah, it's fantastic
17. 55:56 – 1:07:05

    Problems open source can solve.

    1. BGBill Gurley55:56

       information.

    2. TFTim Ferriss55:57

       Let's segue to open source. What else do you think open source might be able to solve? And I've had some reasonably direct experience with watching, I suppose, one example of what you described, which is Automattic, and very good friend, Matt Mullenweg.

    3. BGBill Gurley56:12

       Yeah.

    4. TFTim Ferriss56:12

       I'm an advisor to Automattic. And for those who don't know, Matt, who's been on the show multiple times, was a lead developer of WordPress, very familiar with open source, and then has built a sort of services and enterprise-grade secure, stable solution for, for many different businesses and people in the form of Automattic. So I'm deeply interested in this, and I know you are as well. You're a big fan of open source. What else do you think open source could be applied to or might be applied to?

    5. BGBill Gurley56:44

       First of all, I think people are relatively familiar with the big individual software projects, Linux being-

    6. TFTim Ferriss56:51

       Yeah

    7. BGBill Gurley56:52

       ... the most well-known. It's over 20 years old now. It's clearly the most used operating system in the world. And what people might not know about it is a lot of scientists believe it's the most secure, and that's kinda counterintuitive. Oh, all the code's public, how could it be the most secure? But it gets beat up the most, you know, because it's-

    8. TFTim Ferriss57:17

       Yeah

    9. BGBill Gurley57:17

       ... used the most. There's a great piece of writing, an incredible piece of writing called "The Cathedral & the Bazaar" that was-

    10. TFTim Ferriss57:27

        Mm

    11. BGBill Gurley57:27

        ... the first kinda magnum opus on why this open source thing might work. And another thing people don't get is "The Cathedral & the Bazaar" compared, are you trying to build up like the Gaudi church or, or a bazaar which is super flat and wide-

    12. TFTim Ferriss57:48

        Mm-hmm

    13. BGBill Gurley57:49

        ... and obviously built by lots of people. And the thing is, like open source is way better at complex problems than simple problems, and it's the very complex problems that it'd be hard for a single company to do. And so if you're building-

    14. TFTim Ferriss58:05

        Mm-hmm

    15. BGBill Gurley58:05

        ... an operating system, it might have all kind of edges on how it integrates with other systems, you know, different drivers you might need, and the world is a- is able to build that, whereas an individual company, it would be very difficult. And so we started to see that in MySQL, and there have been others like MongoDB, and we're in one called Elastic, and like there's been a lot of successful companies around single software frameworks. Something started happening about 10 to 15 years ago, which is people started using open source in more complex ways and in sometimes using it defensively rather than offensively. So the most well-known is probably Android, right? So Apple had come out with this smartphone. You could only get it on AT&T. It scared the shit out of everybody, not just Google.

    16. TFTim Ferriss58:59

        [laughs]

    17. BGBill Gurley59:00

        But it scared the shit out of all the other telcos. It scared the shit out of all the other handset manufacturers. And so Google did this clever thing. They said, "Oh, we're gonna create a competitor, but it's gonna be open source so you can trust us." Now, there's different versions of how open something is and, and Android's-

    18. TFTim Ferriss59:18

        [laughs]

    19. BGBill Gurley59:18

        ... not very open. But at the time, compared to the threat of Apple, it seemed like-

    20. TFTim Ferriss59:24

        Yeah

    21. BGBill Gurley59:24

        ... a much better trade. And so they got the world behind them on this thing-

    22. TFTim Ferriss59:29

        Yeah

    23. BGBill Gurley59:30

        ... and it took off. Since then, that model's been, been repeated in s- in some esoteric ways. There's-- Facebook has something called the Open Compute Project, and if you want your hardware to go into the Facebook data server room, it has to be compatible with their open source framework. And what that means is no one can have an IP claim against Facebook because you've basically sworn off your IP. So they're commoditizing the stuff they're gonna purchase. Since then, AT&T and China Mobile have worked with the Linux Foundation to do the same thing for the wireless and wireline equipment stack. So they're defining open standards for their next gen products, and if you're a-

    24. TFTim Ferriss1:00:17

        Mm

    25. BGBill Gurley1:00:17

        ... supplier that wants to sell to them, you have to agree to those standards and once again you're, you're out of the IP game so they don't get held up. It's very clever stuff.

    26. TFTim Ferriss1:00:28

        Would you mind expanding on that a little bit, the IP piece?

    27. BGBill Gurley1:00:31

        Well, let's go to the Facebook one 'cause it's more understandable. It's called the Open Compute Foundation. It's, it's managed by the... The Linux Foundation acts as a steward, much in the way [laughs] that the crypto world thinks a DAO manages this loose federation. The Linux Foundation does that. Linux has been a DAO for 25 years. It's, it's-

    28. TFTim Ferriss1:00:52

        [laughs]

    29. BGBill Gurley1:00:52

        ... super interesting. And so that group helps... They're like a nonprofit-

    30. TFTim Ferriss1:00:59

        Mm-hmm
18. 1:07:05 – 1:11:36

    Building a better network with the interest graph.

    1. BGBill Gurley1:07:05

       possible to me.

    2. TFTim Ferriss1:07:06

       Are there any companies that are on a short list of companies you would love to see exist or types of companies? Like, anything that's just kind of a bee in your bonnet or has been for- Any period of time

    3. BGBill Gurley1:07:17

       Yeah, I can give you a few. So one, and this one's kind of well-known in the venture industry, but everybody s- talks about something called the interest graph. And they-

    4. TFTim Ferriss1:07:26

       Mm

    5. BGBill Gurley1:07:26

       ... they wonder why there isn't a internet website that links everyone that is tied to a specific interest. And there are-

    6. TFTim Ferriss1:07:35

       Mm

    7. BGBill Gurley1:07:35

       ... companies that people talk about as being close, like Pinterest or Quora or Twitter, you know? But I don't think any of them have really pulled it off.

    8. TFTim Ferriss1:07:46

       Would Reddit fall anywhere into that matrix?

    9. BGBill Gurley1:07:48

       Sure. I think especially with some of the subreddits, they're getting close.

    10. TFTim Ferriss1:07:52

        Yep.

    11. BGBill Gurley1:07:52

        You know?

    12. TFTim Ferriss1:07:53

        Yep.

    13. BGBill Gurley1:07:53

        And people have talked about kind of like a holy grail, but there's not anyone that's, I think, just really nailed it. Really, really nailed it.

    14. TFTim Ferriss1:08:06

        Mm-hmm.

    15. BGBill Gurley1:08:07

        And if you did, you would have this combination of really cool unlock for people because if you were into quilting, you'd be immediately connected with everyone else, you know, that's on your level-

    16. TFTim Ferriss1:08:20

        Mm

    17. BGBill Gurley1:08:20

        ... and you could imagine that kind of thing. But then the advertising performance would just be off the charts-

    18. TFTim Ferriss1:08:26

        Yeah

    19. BGBill Gurley1:08:26

        ... because you've kind of bucketed everyone into these places.

    20. TFTim Ferriss1:08:29

        Mm-hmm.

    21. BGBill Gurley1:08:30

        I actually think Twitter still has a huge opportunity on this front, but it'd have to build a top-down version of Twitter rather than this feed thing, which is super hard for a lot of people.

    22. TFTim Ferriss1:08:40

        What do you mean by top-down?

    23. BGBill Gurley1:08:42

        I think you could take all of the information that's flowing in Twitter and all of the influencers that are in there and build an algorithm that would score who's smart about certain things.

    24. TFTim Ferriss1:08:54

        Hmm.

    25. BGBill Gurley1:08:55

        Let's make it super simple to convey the point. If you look at stocks, so they already have a UID-

    26. TFTim Ferriss1:09:01

        Mm

    27. BGBill Gurley1:09:01

        ... unique individual identifier for each stock with the dollar symbol thing. But right now-

    28. TFTim Ferriss1:09:08

        Mm

    29. BGBill Gurley1:09:08

        ... the only way you can kind of... You could do a search, but there's a ton of noise. What if you had a page where for each stock you had a list of the top stories of the day, and that-

    30. TFTim Ferriss1:09:20

        Mm-hmm
19. 1:11:36 – 1:22:06

    Dissecting Bill’s Twitter thread about risks and sudden valuation resets.

    1. TFTim Ferriss1:11:37

       Yeah. Let's talk about Twitter, specifically a tweet thread. And feel free to amend this, but I, I'd love to have you walk me through this particular thread. This is from spring of 2022, so not that long ago. And here it goes. So there are four points under an intro, and I'll just read it if you don't mind. So an entire generation of entrepreneurs and tech investors built their entire perspectives on valuation during the second half of a 13-year amazing bull market run. The, quote-unquote, "unlearning process could be painful, surprising, and unsettling to many. I anticipate denial." [laughs] Number one, and maybe we could just do these point by point. We don't have to. I'll do two at a time. Number one, previous all-time highs are completely irrelevant. It's not, quote-unquote, "cheap" because it is down 70%. Forget those prices happened. Yeah, I got... I screwed myself [laughs] on that first one. Second one, valuation multiples are always a hack proxy, dangerous to use. If you insist, 10X should be considered amazing and an upper limit. Over that, silly. So let's sit on those two for a second. Would you mind just expanding on either or both of those?

    2. BGBill Gurley1:12:49

       There's an unfortunate reality in the venture world that really became very crystal clear to me through a conversation with Howard Marks, actually, but it's structurally set up. You know, people talk about boom-bust and cycles, but this is set up more like a sawtooth. So risk on happens very slowly, almost like the rollercoaster nak, nak, nak, nak, nak, nak going up.

    3. TFTim Ferriss1:13:16

       Yeah, yeah. [laughs]

    4. BGBill Gurley1:13:17

       But when it crashes, and if it's interesting to you, I- ... explain or do my best job of explaining why it's structured this way. When it crashes-

    5. TFTim Ferriss1:13:25

       Sure

    6. BGBill Gurley1:13:25

       ... it happens all at once. So it's more like a sawtooth like than a sine wave.

    7. TFTim Ferriss1:13:31

       Mm-hmm.

    8. BGBill Gurley1:13:31

       And it just crashes and it's painful. And that just happened and it happens ... It looks like it happens every 7 to 15 years, you know? And-

    9. TFTim Ferriss1:13:44

       Mm

    10. BGBill Gurley1:13:44

        ... I thought this was gonna happen six years ago. I even wrote some things. I was way early. It took six more years and it got ridiculously crazy. But it took so long from '09, which was the last kinda... And '09 wasn't as hard a reset as '01. But from '09 to 2013, because so many entrepreneurs are young, you know, you had people grow up that had never seen a reset and-

    11. TFTim Ferriss1:14:11

        Yeah

    12. BGBill Gurley1:14:11

        ... risk on is a lot like the boiled frog. Like you don't know it's happening.

    13. TFTim Ferriss1:14:16

        Would you mind just quickly defining risk on for people listening? What do you mean by that?

    14. BGBill Gurley1:14:21

        So the community as a whole takes on more risk gradually without realizing they're doing it and their mental-

    15. TFTim Ferriss1:14:29

        Yeah

    16. BGBill Gurley1:14:29

        ... models and their frameworks adjust daily to what's happening and so their thought about how the world works is really a window of five years or maybe three years-

    17. TFTim Ferriss1:14:42

        Mm-hmm

    18. BGBill Gurley1:14:42

        ... not 30 years.

    19. TFTim Ferriss1:14:44

        Yep.

    20. BGBill Gurley1:14:45

        'Cause for many of them they don't have the 30-year perspective and when the going gets good, greed takes over and-

    21. TFTim Ferriss1:14:54

        [laughs]

    22. BGBill Gurley1:14:54

        ... you weigh the data points that feel good to you and are gonna make you the most-

    23. TFTim Ferriss1:14:59

        Yeah, there's a lot of confirmation bias. Yeah

    24. BGBill Gurley1:15:01

        ... Oh, like crazy. And so then you've shortened your window to the last 12 months. You know, this is how the world works and because things got so sloppy with interest rates being near zero, speculation so high, money everywhere, we taught a lot of people not only valuation things that will never be true again, but like growth at all costs. Spend as much money as you can. You can raise money every nine months if you want to, 'cause you could. You know, the failure rate-

    25. TFTim Ferriss1:15:32

        Yeah

    26. BGBill Gurley1:15:32

        ... of companies in the five years prior to this reset is probably like super low, probably the lowest it's ever been, failure rate of startups-

    27. TFTim Ferriss1:15:40

        Mm

    28. BGBill Gurley1:15:40

        ... just 'cause it was so easy to raise money. And so-

    29. TFTim Ferriss1:15:43

        Mm-hmm

    30. BGBill Gurley1:15:43

        ... you develop mental models and then the world shifts dramatically, 180 degrees, whatever you wanna say. Like it couldn't be more dramatic how fast-
20. 1:22:06 – 1:27:30

    The Metaverse.

    1. TFTim Ferriss1:22:06

       Since you mentioned Meta, what do you think of... I mean, on one level I really have to admire the just doubling down on the metaverse. [laughs] What is your take on this sort of direction?

    2. BGBill Gurley1:22:20

       So years ago, you know, I read Snow Crash when it came out.

    3. TFTim Ferriss1:22:24

       Oh, so good.

    4. BGBill Gurley1:22:25

       Thought it was the best thing-

    5. TFTim Ferriss1:22:27

       Yeah

    6. BGBill Gurley1:22:27

       ... that I had ever consumed, and I'm... I was in hook, line, and sinker. And so when-

    7. TFTim Ferriss1:22:32

       Yeah

    8. BGBill Gurley1:22:32

       ... Philip Rosedale started Second Life, I was knocking on his door. I served on that board for 12 years. I have-

    9. TFTim Ferriss1:22:40

       Mm-hmm

    10. BGBill Gurley1:22:40

        ... immense knowledge on this kind of immersive stuff. And-

    11. TFTim Ferriss1:22:46

        Mm-hmm

    12. BGBill Gurley1:22:46

        ... Philip and I actually did a, a postmortem podcast recently, which is... I would point people to.

    13. TFTim Ferriss1:22:51

        Oh, cool.

    14. BGBill Gurley1:22:52

        But what we found is I think there's a difference between the kinda gaming stuff and this idea that people want to live experiences like they do in the real world in this virtual world. And-

    15. TFTim Ferriss1:23:10

        Mm-hmm

    16. BGBill Gurley1:23:10

        ... what we learned in that second category... You know, I see this in the Facebook demos and stuff, like, "Oh, we're gonna do a board meeting in world or whatever," is-

    17. TFTim Ferriss1:23:20

        Yeah

    18. BGBill Gurley1:23:20

        ... that that doesn't make a lot of sense.

    19. TFTim Ferriss1:23:23

        Mm-hmm.

    20. BGBill Gurley1:23:24

        The number of people that love escapism, first of all, young people-

    21. TFTim Ferriss1:23:29

        Yeah

    22. BGBill Gurley1:23:29

        ... do. Like, young-

    23. TFTim Ferriss1:23:30

        Yeah, you don't wanna wait in line at the postal office in your [laughs] second life.

    24. BGBill Gurley1:23:35

        Right. But young people do it. They role play a lot.

    25. TFTim Ferriss1:23:38

        Yeah.

    26. BGBill Gurley1:23:38

        And so-

    27. TFTim Ferriss1:23:39

        Yeah

    28. BGBill Gurley1:23:39

        ... that makes sense. And then a handful of adults do it. They, they have wooden swords in the park or... Burning Man is that experience.

    29. TFTim Ferriss1:23:49

        Sure.

    30. BGBill Gurley1:23:50

        But it's not a high percentage of humans. And-
21. 1:27:30 – 1:29:41

    Revenue and earnings quality matter.

    1. TFTim Ferriss1:27:30

       All right, let's hop to number four. So revenue and earnings quality matter. Could you please explain the word quality in this-

    2. BGBill Gurley1:27:39

       Yeah, it's interesting. That's like a nuanced thing. Like if you talk to someone who'd been investing on Wall Street for, for 15 years, you could talk about revenue or earnings quality, and they would, they would know exactly what you were talking about.

    3. TFTim Ferriss1:27:52

       Mm-hmm.

    4. BGBill Gurley1:27:53

       But it's not something the average person would know, and if that blog post, again, that I wrote called The Keys to the 10X Revenue Club, I go through like 12 different things that signify quality, but-

    5. TFTim Ferriss1:28:07

       Okay. And we'll link to that in the show notes. Yeah.

    6. BGBill Gurley1:28:09

       Yeah, so I mean, a simple one is margins. Like, if you are reselling used cars and your revenue is the price of the cars you're selling, but you're only making 10% on a car, that's really low revenue quality compared to a SaaS vendor with 90% gross margins.

    7. TFTim Ferriss1:28:28

       Mm-hmm.

    8. BGBill Gurley1:28:28

       Their incremental dollar of revenue creates 90 cents of gross margin. Yours creates seven cents of gross margin. You can't-

    9. TFTim Ferriss1:28:36

       Mm-hmm

    10. BGBill Gurley1:28:37

        ... value those companies both on price to revenue. Like, they're very different.

    11. TFTim Ferriss1:28:41

        Yeah.

    12. BGBill Gurley1:28:42

        So that would be revenue quality. Earnings qualities typically relates to cashflow. So you might have really good GAAP earnings, but because of different factors in your business, your, your cash flows may not be nearly as good. It could be timing differences, those kind of things.

    13. TFTim Ferriss1:28:59

        Mm-hmm.

    14. BGBill Gurley1:28:59

        But anyway, you go through the posts that I wrote, but they're just-

    15. TFTim Ferriss1:29:02

        Yeah

    16. BGBill Gurley1:29:02

        ... elements of, you know, whether or not you have a competitive advantage, whether or not you have churn in your business. Like, is this customer gonna stay around forever or they might leave tomorrow? One of the reasons-

    17. TFTim Ferriss1:29:13

        Mm-hmm

    18. BGBill Gurley1:29:13

        ... Coca-Cola trades at a high multiple is everyone imagines Coke will still be here 50 years from now. They have no reason-

    19. TFTim Ferriss1:29:22

        Mm-hmm

    20. BGBill Gurley1:29:22

        ... not to believe that.

    21. TFTim Ferriss1:29:23

        Yep.

    22. BGBill Gurley1:29:24

        Whereas some of these tech companies, you know, why is Facebook at 14? They don't know.

    23. TFTim Ferriss1:29:29

        Yeah.

    24. BGBill Gurley1:29:30

        Could TikTok take away their business and then they're done overnight? Those become bigger risks for tech companies sometimes 'cause they look like they might be disruptable.

22. 1:29:41 – 1:33:52

    Undervalued competitive advantages.

    1. TFTim Ferriss1:29:41

       Mm-hmm. You mentioned, and you also write about and speak about competitive advantage a lot. What are some lesser-known or undervalued competitive advantages?

    2. BGBill Gurley1:29:50

       I mean, we already talked about network effect. Like, that's one that just comes to mind-

    3. TFTim Ferriss1:29:54

       Mm-hmm

    4. BGBill Gurley1:29:54

       ... right away. Lock-in we had hinted at. Is there reasons why switching costs, which is also a, you know, back in... It's in the Porter book. Like, are there switching costs that make it hard to leave, for a customer to leave? You know, how many substitutes are there for your product? How unique is it, right? That's a competitive advantage.

    5. TFTim Ferriss1:30:14

       Mm-hmm.

    6. BGBill Gurley1:30:14

       Like, are you an N of 1? And some of the network effect companies become that way. Like, I could create an Instagram competitor, but I don't have everyone on it. So the user experience is a function of everyone being on it, so it's hard, right-

    7. TFTim Ferriss1:30:27

       Mm-hmm

    8. BGBill Gurley1:30:27

       ... to compete with that thing. So you have, you have a strong-

    9. TFTim Ferriss1:30:30

       Yeah

    10. BGBill Gurley1:30:30

        ... competitive advantage. It could be performance. Like in an enterprise product, you know, s- you look at something like Snowflake, people, you know, just say this database does things no other database will do. And so then that becomes a competitive advantage.

    11. TFTim Ferriss1:30:44

        Mm-hmm.

    12. BGBill Gurley1:30:45

        How hard is it for someone to find an alternative to you and trade you out-

    13. TFTim Ferriss1:30:51

        Mm-hmm

    14. BGBill Gurley1:30:51

        ... is a easy way of saying it.

    15. TFTim Ferriss1:30:53

        This is not directly related to competitive advantage, but I wanted to just revisit the total addressable market and your OpenTable story with this, [laughs] with the spreadsheet or the model that had been capped at 17%, and you're like-

    16. BGBill Gurley1:31:07

        Okay

    17. TFTim Ferriss1:31:07

        ... "We're going to 99%. It's not 17%." Just to reflect back also on Uber, since you and I were both [laughs] along for that ride-

    18. BGBill Gurley1:31:18

        Yeah

    19. TFTim Ferriss1:31:19

        ... uh, pun intended. And in the early days, you know, there were three black cars, two or three black cars in the very, very early days, sort of prototyping, and I remember sitting with, uh, Garrett and looking at some of the potential market sizes, but the assumption always was that the pie- Could grow and should grow if Uber's functioning effectively, and that's what ended up happening. So you can't say, you know, there are 700 black cars in San Francisco, what percentage of those will use Uber? And the, the upper limit is 700 because then in the matter of a handful of years you have 1,000 plus-

    20. BGBill Gurley1:31:58

        Yeah

    21. TFTim Ferriss1:31:58

        ... black cars because of the rider demand. So I just wanted to, to mention that since you, you'd also mentioned it earlier.

    22. BGBill Gurley1:32:06

        Yeah, I wrote a very long piece on this because there's a famous, I think NYU Professor Aswath... His, his last name's not coming to me right now, but he's famous for valuation work. He's always on CNBC. And he, he wrote a piece that said Uber wouldn't be worth more than, I don't know if it was $2 or $3 billion. And I wrote a reply called How to Miss by a Mile.

    23. TFTim Ferriss1:32:31

        [laughs] Aswath Damodaran, I believe it is. Mm-hmm.

    24. BGBill Gurley1:32:35

        Yeah, he's wonderful. I called him before I published it just 'cause I like to tell him it was coming, but-

    25. TFTim Ferriss1:32:41

        [laughs]

    26. BGBill Gurley1:32:42

        ... it was a classic mistake. He basically took the taxi market and said, "That's the upper limit."

    27. TFTim Ferriss1:32:48

        Yep.

    28. BGBill Gurley1:32:48

        And that's just the wrong math. Like Travis and the team made this thing so convenient and so available that it was a product that's 10X better than the taxi market. And so the usage-

    29. TFTim Ferriss1:33:01

        Yeah

    30. BGBill Gurley1:33:01

        ... and I, by the time I wrote that, I already knew that Uber in San Francisco was 20X bigger than the taxi market in San Francisco.
23. 1:33:52 – 1:40:21

    Jeff Bezos: corporate mad scientist?

    1. BGBill Gurley1:33:52

       so-

    2. TFTim Ferriss1:33:52

       Yeah. It makes me think of esports versus any comparable you might use with, I don't know, live viewership of sports or whatever. It's just not, it's just not the same thing. So that was the one through four points. Jeff Bezos I think re- retweeted or replied to that tweet thread and was very complimentary. You have spent time with Jeff. What do you think are some of the most underappreciated aspects related to Jeff in any capacity?

    3. BGBill Gurley1:34:29

       He's probably the best entrepreneur that I've ever been around or got to know. Like, it's remarkable.

    4. TFTim Ferriss1:34:38

       Yeah.

    5. BGBill Gurley1:34:39

       And it's multifaceted. Here's one that I think is not well-discussed. So he has a bunch of traits that make him a great entrepreneur. The company today is at such a radical scale that there's no way... And he's not e- I mean, he's in the chairman role. Like, he's not touching all the decisions. He's not touching all the product decisions, all... Like, he has built a organizational framework to take what Jeff Bezos believes and run the whole company that way, and that's not well dissected, not well understood.

    6. TFTim Ferriss1:35:18

       Mm-hmm.

    7. BGBill Gurley1:35:19

       Here's a great story. I'm riding in an Uber. This is about eight years ago, maybe seven, and I always talk to them. I always talk to the drivers 'cause I'm a shareholder and like always talk to the drivers.

    8. TFTim Ferriss1:35:31

       Yeah.

    9. BGBill Gurley1:35:32

       And I'm asking him, you know, something about whether we can stop. He goes, "Well, I gotta get back down to San Jose by 2:30." And I'm like, "What happens at 2:30?" He goes, "I have to meet at the Amazon warehouse at 2:30." And I go, "What's going on?" He goes, "Oh, they got this new program they're running where you show up at 2:30, and they have all these burner phones, and they load your car with packages and give you a manifest, and then they book the ride over Uber." And so this was the early days of same-day delivery.

    10. TFTim Ferriss1:36:07

        Yeah, that's cool.

    11. BGBill Gurley1:36:08

        This is a company that's worth hundred billions of dollars that is running an experiment on top of Uber. And-

    12. TFTim Ferriss1:36:18

        Yeah

    13. BGBill Gurley1:36:19

        ... I know for a fact that most of the companies I've worked with that have gotten over 20 or 30 million in revenue would not run that experiment 'cause someone would say, "Oh, we won't know how to do the accounting. We can't... Like, that's too much of a hack." Like, whatever. But this large-

    14. TFTim Ferriss1:36:36

        Mm-hmm

    15. BGBill Gurley1:36:36

        ... company was m- super comfortable running this kinda hack experiment on this other company.

    16. TFTim Ferriss1:36:43

        Yeah.

    17. BGBill Gurley1:36:43

        And he showed me the manifest. I looked at all this stuff. Of course, I called Uber immediately thereafter and briefed them that we were being used in this way.

    18. TFTim Ferriss1:36:52

        [laughs]

    19. BGBill Gurley1:36:52

        But unbelievable, right? I mean, just unbelievable.

    20. TFTim Ferriss1:36:56

        Yeah.

    21. BGBill Gurley1:36:56

        No other large company would do that project. None. Zero.

    22. TFTim Ferriss1:37:00

        Mm.

    23. BGBill Gurley1:37:00

        And so somehow he's institutionalized this kind of experimentation and risk-seeking, and he's talked about it. There's a great interview-

    24. TFTim Ferriss1:37:09

        Mm-hmm

    25. BGBill Gurley1:37:09

        ... with him from Code that you should try and find for the show notes from four or five years ago. And-

    26. TFTim Ferriss1:37:15

        Mm-hmm

    27. BGBill Gurley1:37:16

        ... I could watch it over and over and over. It's like the Eagles documentary. I could just watch it again and that'd [laughs] be okay.

    28. TFTim Ferriss1:37:24

        [laughs]

    29. BGBill Gurley1:37:24

        But it's fascinating. They ask him, "When does a internal experiment get killed?" And he said, "When the last person with good judgment gives up."

    30. TFTim Ferriss1:37:33

        [laughs]
24. 1:40:21 – 1:45:06

    The counterintuitive condemnation of company camaraderie.

    1. BGBill Gurley1:40:21

       It was interesting. I was listening the other day to a podcast with Shane Battier, who I've been fortunate enough to meet.

    2. TFTim Ferriss1:40:30

       I don't know who that is.

    3. BGBill Gurley1:40:31

       Oh, he was famously outlined by Michael Lewis as the no-stat All-Star in The New York Times magazine.

    4. TFTim Ferriss1:40:37

       Oh.

    5. BGBill Gurley1:40:37

       He's a NBA player-

    6. TFTim Ferriss1:40:38

       Mm-hmm

    7. BGBill Gurley1:40:38

       ... really successful-

    8. TFTim Ferriss1:40:40

       Got it

    9. BGBill Gurley1:40:41

       ... that kinda rode the analytics craze and did things that-

    10. TFTim Ferriss1:40:45

        Mm-hmm

    11. BGBill Gurley1:40:45

        ... most people don't do, but when you ran all the numbers, like he's always winning and that kinda thing. He played at Duke-

    12. TFTim Ferriss1:40:51

        Mm-hmm

    13. BGBill Gurley1:40:52

        ... and, and has a ring, you know, from the NBA. And anyway, he's now starting to dip his toe into the corporate world, and so he did this podcast, kind of a crossover. But he's, he was talking about Krzyzewski and how Krzyzewski... You know, he spent four years there, and, and so he had a lot of stories. But I was listening and nodding 'cause, you know, you've had great coaches on, right? You've had great-

    14. TFTim Ferriss1:41:17

        Mm-hmm

    15. BGBill Gurley1:41:17

        ... players on-

    16. TFTim Ferriss1:41:18

        Yeah

    17. BGBill Gurley1:41:18

        ... that have played for great coaches, and these, these learnings can be translated, right? And so he's saying-

    18. TFTim Ferriss1:41:25

        Mm-hmm

    19. BGBill Gurley1:41:25

        ... "Oh, you know, Coach K told us that he expected the very most out of us. Each individual had to perform at their highest level." He said, "It's always team first. If you need to be an individual, you don't need to be here." And Shane was talking about how people remember the winners more than they remember whether you were the third or fourth scorer on a team. Like, they remember the winners, and I think that's true in, in startup world as well.

    20. TFTim Ferriss1:41:51

        Mm.

    21. BGBill Gurley1:41:51

        And then he said there's a singular goal for this organization, and it's to win the national championship. And like those three tenets-

    22. TFTim Ferriss1:41:58

        Mm

    23. BGBill Gurley1:41:58

        ... you know, he's talking about relative to Coach K. And I'm like in the middle of nodding, and I was writing stuff down. I'm like, "Oh, I'll go talk to people. I'll go forward this podcast." And then I stopped cold and I realized in 2020, 2021, if an internet entrepreneur stood up and said those things out loud about what he wanted from his company, he might get canceled. Like-

    24. TFTim Ferriss1:42:24

        Yeah

    25. BGBill Gurley1:42:24

        ... company first, you know, you have to perform at your absolute best, and the only goal here is the one goal of, you know, the corporation. We're all on a team together.

    26. TFTim Ferriss1:42:33

        Mm-hmm.

    27. BGBill Gurley1:42:34

        We wandered to a place that's very different than that.

    28. TFTim Ferriss1:42:37

        Mm.

    29. BGBill Gurley1:42:38

        And on your recent podcast with Jonathan Haidt, he started to talk about, I think you were using the word anti-fragility-

    30. TFTim Ferriss1:42:45

        Mm-hmm
25. 1:45:06 – 1:48:34

    Tobi Lütke.

    1. BGBill Gurley1:45:06

       we are.

    2. TFTim Ferriss1:45:07

       Mm-hmm. What do you think the future of... And this may not be... You- you tell me if this is a [laughs] a question with some there there or not, but what do you think the future of e-commerce looks like? And since you mentioned Tobi, I'm a huge fan of Tobi. I mean, I was an advisor to Shopify super early when they had about 10 employees.

    3. BGBill Gurley1:45:25

       Mm.

    4. TFTim Ferriss1:45:25

       And I just think he's one of the most incredible humans out there. But where do you think Shopify fits in or doesn't fit into that? It seems like with some of the Apple privacy changes and all these various things-

    5. BGBill Gurley1:45:37

       That hit, yeah

    6. TFTim Ferriss1:45:37

       ... the landscape has changed super dramatically. You know, if you try to look into your experience/crystal ball to look forward at what e-commerce looks like.

    7. BGBill Gurley1:45:47

       Well, one, I'm a huge Tobi fan, too, and at the end of this I'll tell a quick Tobi story that I think is-

    8. TFTim Ferriss1:45:52

       Yeah

    9. BGBill Gurley1:45:53

       ... a wonderful tool that people can use, and he, he gave me permission to share it. So I thought what they did with the Shop app was super cool. So the previous Christmas, I started noticing websites I'd never been to before knew who I was and allowed one-click checkout. And-

    10. TFTim Ferriss1:46:14

        Mm-hmm

    11. BGBill Gurley1:46:14

        ... very few companies can make their business as a B2B company and then have this crossover product which has a consumer network effect. And, and they did that with that app, and I thought it was just super cool that they-

    12. TFTim Ferriss1:46:31

        Mm

    13. BGBill Gurley1:46:31

        ... pulled that off. And so look, he is one of the truly greats. And you've interviewed enough of these people. Like, when you're with a Bezos or a Tobi, you kinda know it, right?

    14. TFTim Ferriss1:46:44

        Yeah, it's, it's different. And Tobi's been on the podcast. I recommend people check it out. Yeah, it- it's just a different feeling [laughs] .

    15. BGBill Gurley1:46:49

        Yeah. And they're hyper curious, they have their own mental models, they're willing to learn new ones, they're constantly thinking, and they've built some type of organizational fabric that's scaling-

    16. TFTim Ferriss1:47:02

        Mm-hmm

    17. BGBill Gurley1:47:02

        ... which is another element of... Here's the one he shared which is one of my favorite ever. So he said, "Whenever we're dealing with a problem and we call a meeting to talk about the problem, I always start with this structure. We are here to solve a problem, so the one option that we know we're not gonna leave the room doing is the status quo. That is off the table. So whenever we finish this meeting, I wanna talk about what option we're taking, but it's not gonna be what we're currently doing." And I think-

    18. TFTim Ferriss1:47:37

        Mm

    19. BGBill Gurley1:47:37

        ... that is brilliant because-

    20. TFTim Ferriss1:47:39

        Mm

    21. BGBill Gurley1:47:39

        ... most of the companies that I've ever worked with, their default is, "Well, let's not change it." If we can't get the gumption to change something, don't mess with it.

    22. TFTim Ferriss1:47:52

        Mm-hmm.

    23. BGBill Gurley1:47:52

        And I thought it was genius. I just thought it was genius.

    24. TFTim Ferriss1:47:57

        He's also not only a incredibly smart, effective human and leader, but, uh, very humble. And-

    25. BGBill Gurley1:48:08

        Yeah

    26. TFTim Ferriss1:48:08

        ... [laughs] I really just admire him so deeply, not just for the performance of the company, but for how he carries himself in the world. I think it's, it's just as impressive to me that he carries that much horsepower, but doesn't wield it in a overbearing way, which would be very easy to do. A lotta people do it. So-

    27. BGBill Gurley1:48:31

        I agree. I agree

    28. TFTim Ferriss1:48:31

        ... thank you, Tobi [laughs]

26. 1:48:34 – 1:52:17

    Books Bill has gifted frequently.

    1. TFTim Ferriss1:48:34

       . So just a few more questions, Bill, and, uh, if this goes nowhere, I'll take the blame for it.

    2. BGBill Gurley1:48:41

       [laughs]

    3. TFTim Ferriss1:48:42

       So aside from the books that you have mentioned, are there any books that you have gifted frequently to other people?

    4. BGBill Gurley1:48:49

       Yes. There's three books I would mention. So the first one that I've gifted the most is called Complexity by Mitchell Waldrop, which is about the rise of the Santa Fe Institute. And-

    5. TFTim Ferriss1:49:02

       Mm

    6. BGBill Gurley1:49:03

       ... you know, even when you were talking with Haidt, I think he mentioned, you know, certain things are complex adaptive systems. They're very hard to predict, they're very hard to analyze, they're very hard to understand, and that's what Santa Fe's all about.

    7. TFTim Ferriss1:49:16

       Mm-hmm.

    8. BGBill Gurley1:49:16

       That book introduced me to network effects. When I get to go there, I usually go a couple times a year, and Mike Mogensen's there, and, like, and Josh Wolfe's there from Loxton. I just love the learning of things I don't know and just, like, pushing my brain to go farther than I would with the normal stuff I consume.

    9. TFTim Ferriss1:49:37

       Mm-hmm.

    10. BGBill Gurley1:49:38

        And it's beautifully written. Great writer-

    11. TFTim Ferriss1:49:40

        Mm

    12. BGBill Gurley1:49:41

        ... Mitchell Waldrop. There's a book that I happen to have right here. Th- this book, Mr. China Is fantastic.

    13. TFTim Ferriss1:49:49

        [laughs]

    14. BGBill Gurley1:49:49

        He went to China in the mid-'90s and started a fund to privatize a bunch of industries. He's from London-

    15. TFTim Ferriss1:49:57

        Mm-hmm

    16. BGBill Gurley1:49:57

        ... and got his head handed to him. And-

    17. TFTim Ferriss1:49:59

        [laughs]

    18. BGBill Gurley1:50:00

        ... survived enough to write a humorous story about it, but holy shit.

    19. TFTim Ferriss1:50:04

        [laughs]

    20. BGBill Gurley1:50:06

        You know?

    21. TFTim Ferriss1:50:06

        It sounds kinda like the Red Notice by Bill Browder equivalent, but in China.

    22. BGBill Gurley1:50:12

        His life didn't end up getting threatened. He did go to jail, but like-

    23. TFTim Ferriss1:50:15

        Yeah

    24. BGBill Gurley1:50:15

        ... he didn't, he, it wasn't... I read Red Notice also.

    25. TFTim Ferriss1:50:17

        There was no death involved.

    26. BGBill Gurley1:50:18

        This is more of a business book and a know what you don't know and what can happen to you when you go into, you know, foreign lands.

    27. TFTim Ferriss1:50:27

        Yeah. [laughs] .

    28. BGBill Gurley1:50:29

        And then the book that I've been fascinated with the past five years, four or five years, is Epstein's Range.

    29. TFTim Ferriss1:50:37

        Hmm.

    30. BGBill Gurley1:50:37

        David Epstein wrote a book called Range, which was kind of a counterpunch to the 10,000-hour thing by Malcolm Gladwell-
27. 1:52:17 – 1:54:35

    The Santa Fe Institute.

    1. TFTim Ferriss1:52:17

       book. The Santa Fe Institute, let's talk about just for a second or maybe a minute or maybe more than a few minutes, why is that important? I mean, you've, I suppose, explained it in part, and what have you gleaned from your involvement? 'Cause it seems like such a prominent commitment on your part. Yeah.

    2. BGBill Gurley1:52:33

       Yeah, another individual that's been involved there for a long time and has, has been the biggest benefactor is a guy named Bill Miller, who was a very famous Wall Street investor, had one of the... He was at Legg Mason and had a 15-year run where he'd beat the S&P. And I think for Michael and Bill and myself [laughs] and Joshua, we, by listening and learning about analysis of these types of systems and seeing professors from all the... Another big thing about Santa Fe is that it's multidisciplinary, so they have biologists hanging ar- around with epidemiologists, hanging around with physicists, you know, and they all interact together. And Cormac McCarthy hangs out there too, which is kinda cool, but [laughs]

    3. TFTim Ferriss1:53:20

       Yeah. That is cool.

    4. BGBill Gurley1:53:21

       And just hearing and learning, you pick up things. Like, the network effect thing I picked up the first time I went there with Brian Arthur, and I applied that quite directly.

    5. TFTim Ferriss1:53:32

       Mm-hmm.

    6. BGBill Gurley1:53:32

       But there's other little things. There was a speech that was given three or four years ago about the electric grid problems that were happening in North America-

    7. TFTim Ferriss1:53:42

       Hmm

    8. BGBill Gurley1:53:42

       ... and the professor that presented it at the end said, "The best solution is smaller communities that are loosely coupled."

    9. TFTim Ferriss1:53:52

       Hmm.

    10. BGBill Gurley1:53:52

        And that is a really interesting... You could use that framework. Like, I walked up to her afterwards and I said, "You just explained why the euro's a bad idea, 'cause y- you tightly coupled-

    11. TFTim Ferriss1:54:04

        Hmm

    12. BGBill Gurley1:54:04

        ... this thing too much."

    13. TFTim Ferriss1:54:05

        Hmm.

    14. BGBill Gurley1:54:05

        And you can just imagine even, like, a computer system that's distributed, that learning could have other applications.

    15. TFTim Ferriss1:54:12

        Mm-hmm.

    16. BGBill Gurley1:54:13

        If it's too distributed, there's no scale, but if it's hyper-integrated, then you have this failure problem, this global failure problem.

    17. TFTim Ferriss1:54:20

        Right.

    18. BGBill Gurley1:54:21

        So anyway.

    19. TFTim Ferriss1:54:22

        Hmm.

    20. BGBill Gurley1:54:23

        It's kind of a-

    21. TFTim Ferriss1:54:23

        Yeah

    22. BGBill Gurley1:54:23

        ... an example.

    23. TFTim Ferriss1:54:25

        Do they have talks and so on online, or is it-

    24. BGBill Gurley1:54:28

        They do

    25. TFTim Ferriss1:54:28

        ... more of a closed room type of experience?

    26. BGBill Gurley1:54:29

        They do. There's lots of them online you can see, published books. There's lots of stuff online. It's cool.

28. 1:54:35 – 1:56:46

    Bill’s board.

    1. TFTim Ferriss1:54:35

       Okay, so last one or two questions. This one can go any number of directions, but if you could put anything on a billboard, this is metaphorically speaking, just to get a message, a question, a prompt, suggestion, image, anything out to billions of people, you know, just, let's just assume they would all understand it, what might you put on that billboard?

    2. BGBill Gurley1:55:00

       I think circa 2023 [laughs] and everything that's happened over the past five or six years, I would put be less tribal. Be less tribal.

    3. TFTim Ferriss1:55:10

       Hmm.

    4. BGBill Gurley1:55:11

       And-

    5. TFTim Ferriss1:55:12

       Hmm

    6. BGBill Gurley1:55:12

       ... I have friends on both sides of the political spectrum, and I can't imagine an activity that turns off more brain cells than tribal affiliation.

    7. TFTim Ferriss1:55:24

       [laughs]

    8. BGBill Gurley1:55:25

       Like, all the books that have wr- written on bias and all the, you know, Kahneman and Tversky and, and, like, Thinking Fast and Slow and all the Nobel Prizes for that stuff, I think political bias is stronger than confirmation bias, sunk cost, all those things. And-

    9. TFTim Ferriss1:55:45

       Mm-hmm

    10. BGBill Gurley1:55:45

        ... people are just turning off their brains, and it's both directions.

    11. TFTim Ferriss1:55:49

        Mm-hmm.

    12. BGBill Gurley1:55:49

        And it's not just the fringe. It's not just the populace. Like, it's people that just affiliate, and then they don't think-

    13. TFTim Ferriss1:55:57

        Hmm

    14. BGBill Gurley1:55:57

        ... they don't listen. And it's both sides. I mean, I'll give you an ex- example. Gerrymandering, horrible. They both do it. It's horrible.

    15. TFTim Ferriss1:56:04

        Yeah.

    16. BGBill Gurley1:56:04

        Like, just say it's horrible.

    17. TFTim Ferriss1:56:06

        Yeah.

    18. BGBill Gurley1:56:06

        But they don't. They say-

    19. TFTim Ferriss1:56:07

        [laughs]

    20. BGBill Gurley1:56:08

        ... oh look, those guys are horrible when they do it. Capture is-

    21. TFTim Ferriss1:56:11

        Mm

    22. BGBill Gurley1:56:11

        ... horrible. And on the Republican side, that's banks and big pharma, but on the, on the other side it's unions, the teachers union and the police union.

    23. TFTim Ferriss1:56:21

        Yeah.

    24. BGBill Gurley1:56:21

        George Floyd-

    25. TFTim Ferriss1:56:22

        So could you-

    26. BGBill Gurley1:56:23

        ... probably doesn't happen if the police union-

    27. TFTim Ferriss1:56:25

        Mm

    28. BGBill Gurley1:56:25

        ... doesn't have the power they did because Derek Chauvin would've been off the force, but-

    29. TFTim Ferriss1:56:31

        Mm-hmm

    30. BGBill Gurley1:56:31

        ... but the police union protected him. And if you're on the left, you can't say that. You can't make that statement. You can't be anti-union, and it's just stupid, like, for people to turn their brains off this much.
29. 1:56:46 – 1:58:36

    Cultivating anti-tribalism.

    1. TFTim Ferriss1:56:46

       how would you suggest... Let's just say you were teaching... You're a good teacher, and you've, you've spoken to students. If you were to give a presentation on cultivating anti-tribalism, probably have a sexier-

    2. BGBill Gurley1:57:02

       [laughs]

    3. TFTim Ferriss1:57:03

       ... headline to it, but what might that lecture or class contain, or blog post?

    4. BGBill Gurley1:57:10

       I think the first thing I would try and do is just highlight the fact that people are turning off their brains. The way that people have proven how confirmation bias works, how loss aversion works, like, there's 20 different cognitive biases that we're all aware of. So the first thing I would do is just-

    5. TFTim Ferriss1:57:30

       Yeah

    6. BGBill Gurley1:57:30

       ... run some... There've been stuff done, like-

    7. TFTim Ferriss1:57:33

       Yeah

    8. BGBill Gurley1:57:33

       ... and then I would just highl- like, why does anyone wanna be intellectually inconsistent? If you think it's an ends to a means, then you're just in a fight. You're just in a fight. Like, I don't even wanna have a discussion with someone if cheating on your spouse and philandering's okay when your side does it, but it's, oh, horrible when the other side does it. What's your-

    9. TFTim Ferriss1:57:56

       Right

    10. BGBill Gurley1:57:56

        ... principle? Like, I don't understand. And so I would try and get people in touch with the fact that they're doing it, and then-

    11. TFTim Ferriss1:58:03

        Mm-hmm

    12. BGBill Gurley1:58:03

        ... I, I would just highlight that our government's far from perfect. And so-

    13. TFTim Ferriss1:58:08

        Mm

    14. BGBill Gurley1:58:08

        ... most tribal people view their side as near perfect, and there's no sign of that anywhere.

    15. TFTim Ferriss1:58:15

        Mm-hmm.

    16. BGBill Gurley1:58:16

        By the way, there are a few orgs that I'm starting to learn about, nonprofits that, like, give money to centrist candidates-

    17. TFTim Ferriss1:58:25

        Mm

    18. BGBill Gurley1:58:25

        ... things like that. And I think the world, if you could go back 30 years, it was just more collegial-

    19. TFTim Ferriss1:58:33

        Yeah

    20. BGBill Gurley1:58:34

        ... like, across the aisle.

30. 1:58:36 – 2:02:05

    Twitter: what is it good for?

    1. TFTim Ferriss1:58:36

       I mean, [sighs] you've mentioned Twitter a number of times. I feel like Twitter incentivizes for polarization, just with the mechanisms at work. And you're a good writer. I wonder why you post so much on Twitter, which seems so impermanent compared to a blog post. Just the durability of the signal-

    2. BGBill Gurley1:58:59

       Yeah

    3. TFTim Ferriss1:59:00

       ... seems to wane so quickly. Why do you now post more of your thoughts to Twitter, say, than in longer form?

    4. BGBill Gurley1:59:09

       Probably because I'm old and I don't have the concentration [laughs] that I used to have-

    5. TFTim Ferriss1:59:14

       [laughs]

    6. BGBill Gurley1:59:14

       ... to, to get the work done. So two... You brought up two subjects. I'll answer the second part first, and then we can talk about the tribal stuff. So I find Twitter f- just to be super fascinating as-

    7. TFTim Ferriss1:59:27

       Mm-hmm

    8. BGBill Gurley1:59:27

       ... like, your ability to get close to experts, leaders in your field.

    9. TFTim Ferriss1:59:33

       100% agree.

    10. BGBill Gurley1:59:34

        It's unbelievable.

    11. TFTim Ferriss1:59:36

        100%.

    12. BGBill Gurley1:59:36

        More so than LinkedIn. And there's a chance that some reply you give to them, they might like or they might follow you, and now you, you've developed a mentor or a peer partner. Like, it's really just shocking, amazing the amount of information-

    13. TFTim Ferriss1:59:50

        Yeah

    14. BGBill Gurley1:59:50

        ... you can take out of this thing if you use it properly.

    15. TFTim Ferriss1:59:54

        Yeah. I'd say a third of my podcast guests come from Twitter interactions, and then DM, we shoot to-

    16. BGBill Gurley1:59:59

        Oh, yeah. And that's, I mean, that's something you and I may feel that most people don't know, but if you've developed a massive following, DM becomes this magical place where-

    17. TFTim Ferriss2:00:11

        Yeah

    18. BGBill Gurley2:00:11

        ... about half the time someone asks me if I can help them recruit someone, that person follows me, so now I can just start talking to them, you know?

    19. TFTim Ferriss2:00:20

        Yeah.

    20. BGBill Gurley2:00:20

        Right out of the gate.

    21. TFTim Ferriss2:00:21

        There's a protection too for high-profile people in DM because there's no personal information that is exchanged, right? And they can always block you if they get-

    22. BGBill Gurley2:00:30

        Right

    23. TFTim Ferriss2:00:30

        ... sick of you. And therein lies the safety. So you can also, if you're trying to interact, and I don't do that that much, but interact with, say, A-list celebrities, it's like, okay, you can try to wade through this phalanx of, like-

    24. BGBill Gurley2:00:43

        Oh, yeah

    25. TFTim Ferriss2:00:43

        ... agents and managers and publicists, and just takes two years to try to get a message to someone, or you can just DM them [laughs] if, if that gate is open.

    26. BGBill Gurley2:00:54

        There's a book idea that I'm working on, and one of my core beliefs is that in this day and age, circa 2023, your ability to rise up in any industry or any particular endeavor is so much easier than it ever was before because your ability to get close to the mentors, leaders, best practitioners, and learn from them is unlike it's ever, ever been before. And add in-

    27. TFTim Ferriss2:01:22

        Mm

    28. BGBill Gurley2:01:22

        ... hybrid work. You m- maybe you can work for a company that's not even near you. Like, it's really awesome-

    29. TFTim Ferriss2:01:30

        Yeah

    30. BGBill Gurley2:01:30

        ... for people that wanna pull themselves up. On the tribal thing, you and Haight went deep on this, and he's way smarter-
31. 2:02:05 – 2:03:44

    Newsletters and other resources Bill relies on.

    1. TFTim Ferriss2:02:06

       Are there any newsletters, newsletters you subscribe to or read regularly or writers you follow regularly? Not in book form, but in more frequent form.

    2. BGBill Gurley2:02:17

       Yeah, Eric Newcomer does a venture capital Substack and so just being in the industry, that's something to follow. There's a website called Techmeme-

    3. TFTim Ferriss2:02:28

       Mm, yeah

    4. BGBill Gurley2:02:29

       ... where Gabe has this curated news rank including Twitter comments people have made about that article. It's just... It's a daily-

    5. TFTim Ferriss2:02:40

       Oh, that's cool. I haven't seen that integrated.

    6. BGBill Gurley2:02:42

       Oh, yeah.

    7. TFTim Ferriss2:02:42

       That's really cool.

    8. BGBill Gurley2:02:43

       It's great. He has leaderboards too.

    9. TFTim Ferriss2:02:44

       Gabe's a machine [laughs] .

    10. BGBill Gurley2:02:45

        Yeah, it, it's really well done. So in the industry, like, I go there. And between Techmeme and Twitter, I end up on a lot of Substacks and whatnot, but I don't have one where I read every single thing they post. Like, I've inverted... Everything's been inverted into this w- consumption world where the aggregator of Twitter or Techmeme is kind of funneling what I find and then, and then I-

    11. TFTim Ferriss2:03:12

        Yeah

    12. BGBill Gurley2:03:12

        ... go do those things. One of the things I think Twitter should do is define a long form bucket container, a podcast container, and a video container, and then-

    13. TFTim Ferriss2:03:24

        Mm-hmm

    14. BGBill Gurley2:03:24

        ... have pocket-like features where if you see something like that and you store it, and then it queues. I mean, that's one of the benefits of Spotify as a podcast listener is I, I think it queues and organizes easier than some of the others.

    15. TFTim Ferriss2:03:41

        Yeah, for sure.

    16. BGBill Gurley2:03:42

        But I discover things that

32. 2:03:44 – 2:04:56

    Bill’s book in progress.

    1. BGBill Gurley2:03:44

       way.

    2. TFTim Ferriss2:03:45

       If there's anything more you wanna say about the book or do you wanna keep that under wraps largely for now? Is there anything else you'd like to say about the work in progress?

    3. BGBill Gurley2:03:54

       There's a speech I gave at the University of Texas that you could put in the show notes 'cause it's out there and, and-

    4. TFTim Ferriss2:03:59

       Mm-hmm

    5. BGBill Gurley2:03:59

       ... it's talking about chasing your dream job and how to succeed and thrive at your dream job. And I've done some research since I gave the speech 'cause people have encouraged me to turn it into a book, and some of the polling we've done shows 70% of people have career regret. 70%, which is a huge number. And so we're doing some more work to better understand that and how people end up in that place. But the punchline, which I hinted at earlier, is I just don't think there's ever been a better time to have a self-determined job process if you want.

    6. TFTim Ferriss2:04:36

       Mm-hmm.

    7. BGBill Gurley2:04:37

       And the tools are better than they've ever been and there's way more detail in this thing, but it, it was built off of studying the biography of a very unusual set of people: Bobby Knight, Bob Dylan, and Danny Meyer, the restaurateur, and seeing similar patterns in how they attacked what they did.

    8. TFTim Ferriss2:04:55

       Mm-hmm.

33. 2:04:56 – 2:10:04

    Regulatory capture.

    1. TFTim Ferriss2:04:56

       Just out of curiosity, if you were invited to give and agreed to give a TED Talk but you couldn't give it on venture capital, couldn't do investing, couldn't do career advice-

    2. BGBill Gurley2:05:05

       [laughs]

    3. TFTim Ferriss2:05:07

       ... what might you give your TED Talk on?

    4. BGBill Gurley2:05:11

       Probably regulatory capture.

    5. TFTim Ferriss2:05:13

       Okay.

    6. BGBill Gurley2:05:14

       I have this core belief that capitalism and democracy will eventually destroy one another.

    7. TFTim Ferriss2:05:20

       Could you also just define regulatory capture at some point? You don't have to do it right now, but yeah.

    8. BGBill Gurley2:05:23

       Yeah, yeah, I'll do it. I mean, there's a Wikipedia entry for it.

    9. TFTim Ferriss2:05:26

       Just the basics for folks. Yeah.

    10. BGBill Gurley2:05:27

        But there's a famous professor from Chicago, and I forget his name, like 1958 that wrote this seminal report, but basically in a heavily regulated industry, the incumbents typically end up being the ones that write the legislation and typically-

    11. TFTim Ferriss2:05:44

        Yeah

    12. BGBill Gurley2:05:44

        ... lock themselves in. Build competitive advantage, build a moat, back to [laughs] Michael Porter-

    13. TFTim Ferriss2:05:50

        Yeah

    14. BGBill Gurley2:05:50

        ... through the use of legislation and make it harder for startups to break in.

    15. TFTim Ferriss2:05:55

        Mm-hmm.

    16. BGBill Gurley2:05:56

        One of my favorite examples, the Obama administration came up with this program where they spent $44 billion paying doctors to implement EHR systems. And the idea that you would pay someone to implement software when you need to do it on your own for your own competitive survival, but there was a healthcare advisory board, the CEO of Epic sat on that board, and they came up-

    17. TFTim Ferriss2:06:23

        Mm

    18. BGBill Gurley2:06:23

        ... with this program.

    19. TFTim Ferriss2:06:25

        What is Epic?

    20. BGBill Gurley2:06:27

        It's the leading provider of healthcare software.

    21. TFTim Ferriss2:06:31

        Bingo [laughs] .

    22. BGBill Gurley2:06:31

        Yeah, exactly.

    23. TFTim Ferriss2:06:32

        Yeah. [laughs]

    24. BGBill Gurley2:06:33

        It's not... But like once they came up with this program, the thing that you would obviously think is, "Well, what's wrong with paying someone to, to use software?" Well, they probably won't use it. So then they put up-

    25. TFTim Ferriss2:06:44

        Yeah

    26. BGBill Gurley2:06:44

        ... like another 20 billion for, for the second phase called Meaningful Use where if you proved you were using the software you got paid to implement, you get another check, and it's just-

    27. TFTim Ferriss2:06:55

        [laughs]

    28. BGBill Gurley2:06:56

        ... it's mind-numbing. And this stuff is everywhere in our government, like I said, both sides of the aisle, everywhere. And you know, Citizens United did not help. It, it made it way worse, and our government would be way better if you could somehow extract these powers from the government.

    29. TFTim Ferriss2:07:17

        So if you could wave a magic wand and get some things moving to, to act as some countervailing force to reduce regulatory capture, what would you do?

    30. BGBill Gurley2:07:29

        And by the way-
34. 2:10:04 – 2:11:48

    Predicting what America will look like in 10-20 years.

    1. TFTim Ferriss2:10:05

       So if democracy and capitalism are on this annihilation crash course, I mean [laughs] what do you think... Uh, and I, I know this is... Look, we're talking about very complex systems. [laughs]

    2. BGBill Gurley2:10:19

       Yeah.

    3. TFTim Ferriss2:10:19

       And all sorts of, uh, you know, tertiary effects to, to who the hell knows. But what do you think the US looks like in 10 or 20 years? And conversely, are there any countries that you would be really long on?

    4. BGBill Gurley2:10:30

       Yeah, that's where I'd go. I mean, despite their current situation that some people hold them against, I think the UK, which is much older than us, you know-

    5. TFTim Ferriss2:10:39

       Mm-hmm

    6. BGBill Gurley2:10:39

       ... has done a better job than we have.

    7. TFTim Ferriss2:10:42

       Mm-hmm.

    8. BGBill Gurley2:10:42

       One thing they have-

    9. TFTim Ferriss2:10:43

       With what? Just for clarity, what have they done a better job with?

    10. BGBill Gurley2:10:46

        I think less regulatory capture.

    11. TFTim Ferriss2:10:48

        Yeah.

    12. BGBill Gurley2:10:49

        And one particular thing they have that is super clever and will cause every lawyer in the world to hate me, they have something called-

    13. TFTim Ferriss2:10:57

        [laughs]

    14. BGBill Gurley2:10:57

        ... losing party pays.

    15. TFTim Ferriss2:10:59

        Oh, yes. Absolutely. I, I, I'm astonished that the US functions the way it does. But yeah, please continue.

    16. BGBill Gurley2:11:05

        And so we live in the United States of litigation, and a lot-

    17. TFTim Ferriss2:11:09

        [laughs]

    18. BGBill Gurley2:11:10

        ... of the friction that exists that slows down the gears and messes things up is because of the vigilante nature of our legal system. And losing party pays just makes the number of initial litigations filed drop by 10X.

    19. TFTim Ferriss2:11:30

        Yeah. Losing party pays. Yeah. And I mean, does the UK allow its barristers to have contingency fees, or they must have some type of-

    20. BGBill Gurley2:11:42

        I don't know

    21. TFTim Ferriss2:11:42

        ... upper limit on that that is much lower than the US.

    22. BGBill Gurley2:11:45

        Before I give my TED talk, I'll go a little deeper. [laughs]

35. 2:11:48 – 2:12:32

    Parting thoughts.

    1. TFTim Ferriss2:11:49

       [laughs] All right. Regulatory capture. Bill, is there anything else you'd like to say? Any closing comments, uh, recommendations, anything you'd like to point my audience to or ask them to do? Anything that comes to mind at all that you'd like to mention before we wind to a close?

    2. BGBill Gurley2:12:05

       I think I'm good, man. I think we hit on a lot-

    3. TFTim Ferriss2:12:07

       All right

    4. BGBill Gurley2:12:07

       ... of different things.

    5. TFTim Ferriss2:12:09

       Yeah, we did. We covered a lot. And, uh, thank you for the time, Bill.

    6. BGBill Gurley2:12:12

       Yeah, thank you.

    7. TFTim Ferriss2:12:12

       I really appreciate it. This was great. And for everybody listening, we will put together extensive show notes linking to everything we talked about, and you can find that as usual at tim.blog/podcast. And until next time, be just a bit kinder than is necessary and experiment, experiment, experiment. Thanks for tuning in

Episode duration: 2:12:54