E81: All-In Summit: Bill Gurley & Brad Gerstner on markets, downturns & investment cycles
Jason Calacanis (host), David Sacks (host), Chamath Palihapitiya (host), Brad Gerstner (guest), Bill Gurley (guest), David Friedberg (host), Narrator, Host (All-In Podcast) (host), Host (All-In Podcast) (host), Host (All-In Podcast) (host), Host (All-In Podcast) (host), Host (All-In Podcast) (host), Host (All-In Podcast) (host), Host (All-In Podcast) (host)
In this episode of All-In Podcast, featuring Jason Calacanis and David Sacks, E81: All-In Summit: Bill Gurley & Brad Gerstner on markets, downturns & investment cycles explores venture veterans dissect boom, bust, valuations and the next investment vintage Bill Gurley and Brad Gerstner unpack the structural cyclicality of venture capital, arguing that risk builds slowly over years and then unwinds abruptly, creating painful but necessary resets. They link the recent tech crash mainly to rising interest rates and the end of ultra-cheap money, emphasizing how this reprices all assets, especially long-duration growth stocks and late-stage venture. Both contend that hyperinflation fears are likely overstated, and that as inflation data rolls over, markets should gravitate back toward long-term valuation trends. They see early‑stage venture and selected public tech stocks becoming attractive again, while warning investors and founders to abandon pandemic-era price anchors, focus on fundamentals, and expect deep dispersion between true winners and everyone else.
Venture veterans dissect boom, bust, valuations and the next investment vintage
Bill Gurley and Brad Gerstner unpack the structural cyclicality of venture capital, arguing that risk builds slowly over years and then unwinds abruptly, creating painful but necessary resets. They link the recent tech crash mainly to rising interest rates and the end of ultra-cheap money, emphasizing how this reprices all assets, especially long-duration growth stocks and late-stage venture. Both contend that hyperinflation fears are likely overstated, and that as inflation data rolls over, markets should gravitate back toward long-term valuation trends. They see early‑stage venture and selected public tech stocks becoming attractive again, while warning investors and founders to abandon pandemic-era price anchors, focus on fundamentals, and expect deep dispersion between true winners and everyone else.
Key Takeaways
Venture is structurally boom‑bust; prepare for abrupt risk-off turns.
Gurley describes venture as a “sawtooth,” where risk appetite builds slowly over many years then collapses in months, forcing rapid mental and portfolio adjustment; firms cannot reliably time the top, so they must enjoy the upside but be ready to pivot quickly when the turn comes.
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Rising rates mathematically compress multiples; stop anchoring to 2020–2021 prices.
Gerster notes the “iron law of investing” that a 1% rate move can cut valuation multiples by 15–20%, so with the cost of capital normalizing, the extreme multiples of the past 18 months are unlikely to return; investors and founders should re-underwrite to 5–10 year averages, not peak-pandemic comps.
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Hyperinflation narratives are likely wrong; leading indicators show cooling.
By deconstructing CPI components (used cars, housing, airfares) and combining that with collapsing consumer confidence and bond market breakevens, Gerstner argues that demand destruction is already underway and inflation is rolling over, even though backward-looking headline data still looks scary.
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The upcoming venture vintage could be excellent—if investors stay disciplined.
Both believe capital raised but not yet called will be deployed much more selectively, with many GPs slowing or skipping calls rather than forcing money into bad vintages, while PE buyers feast on bargains; early-stage founders may benefit from cheaper talent and less distorted competition.
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Fundamentals, not revenue multiples alone, will drive software valuations.
Gurley stresses that price-to-revenue is a crude tool; public investors are now laser-focused on net dollar retention, long-term margins, free cash flow, and stock-based comp, and the history of software shows only a tiny handful ever exceed $1–2B in revenue—making 100x ARR valuations for niche apps indefensible.
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Most ‘grow-at-all-costs’ negative-unit-economics plays will fail.
Using Uber, Lyft, DoorDash, and Instacart as examples, they argue that subsidized growth only works in rare cases where a company can later pull back subsidies and has near-monopoly dynamics; for the vast majority of founders, betting on future pricing power after years of losses is a low-probability strategy.
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For funds, distribute public winners; don’t hero-trade with LPs’ money.
Both Gurley and Gerstner recount painful experiences holding newly public winners (e. ...
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Notable Quotes
“Risk-on is a very slow process… and risk-off tends to be very abrupt.”
— Bill Gurley
“The biggest mistake we will all make is to anchor ourselves to prices that we saw in the world over the last 18 months. Pretend you never saw them.”
— Brad Gerstner
“Investing is really fucking hard. There’s a lot of ways you can lose.”
— Bill Gurley
“Some shit’s gonna be really great, and the rest is going to be below the mean.”
— Brad Gerstner
“If you told me you thought inflation was gonna be 5% for the next decade and the ten-year was going to 7%, I would say, ‘Short everything in the market and don’t invest a dollar in venture.’”
— Brad Gerstner
Questions Answered in This Episode
How should founders practically ‘re-underwrite’ their companies to five- or ten-year average multiples when their last round was at a peak valuation?
Bill Gurley and Brad Gerstner unpack the structural cyclicality of venture capital, arguing that risk builds slowly over years and then unwinds abruptly, creating painful but necessary resets. ...
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Given their skepticism about negative-unit-economics growth, what specific metrics or milestones would Gurley and Gerstner require before funding a subsidized marketplace or delivery business today?
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How can LPs better structure agreements to align with clear distribution policies and avoid being dragged into ‘permanent capital’ experiments they didn’t sign up for?
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In a world where only a few software companies ever exceed $1–2 billion in revenue, how should early-stage investors adjust their portfolio construction and ownership targets?
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If the current environment will produce a ‘great vintage’ for early-stage, which sectors (e.g., AI, climate, hard tech, infrastructure) do they believe are most mispriced or underfunded right now?
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Transcript Preview
BG Squared.
This is our BG Squared panel. Uh, everybody knows friends of the pod, Brad Gerstner and Bill Gurley. Give it up for our guests. (audience applauding)
What's going on?
Don't let your winner slide.
Rain Man, David Sacks. What's going on?
And I said- We open sourced it to the fans and they've just gone crazy with it.
Love you, besties.
Queen of quinoa. I'm going all in.
Bill, you predicted five of the last three recessions.
(laughs)
Uh...
(laughs)
(laughs)
(laughs)
A broken clock is still right twice a day. (laughs)
Let- I mean, here we are again, you- you've sounded the alarm bell. And of course, you're right, and, um, you've seen this movie before. For all of us younger capital allocators, um, who, uh, are experiencing it for the second or third time, but you've experienced it a couple more times, um-
Not that old.
How- how... I mean, it's pretty old. Um, how does it, how does this one measure up to Great Recession, dot-com bust, you know, '87 and the- and the many ones we've seen in between?
You know, one thing that I think's super important to put this into context, and I'll- I'll try and tell this quick. I had a meeting once with Howard Marks, who I'd wanted to meet for a long period of time. He's a famous bond investor that does a lot of writing. And for 15 minutes, he asked me questions about the vent- venture industry, a lot of structural questions. And I told him... Well, I answered as best I could. And he said, "Man, that's a really shitty industry." And I said, "Well, why do you say that? What do you mean?" He says, he says, "You know, cyclical collapse is built into the structure." And so we have funds that, you know, are taken, you know, committed to that have 10 to 15 year lives. So you have low barriers to entry, but you have very high barriers to exit. And so he- he felt that it was just systematically set up to- to rise and crash, rise and crash. Um, and one thing that- that I realized coming out of that is that it- it doesn't happen like a sine curve, which is what we all imagine when we think of a cyclical business. It's more like a sawtooth. It... Risk- risk-on is a very slow process, and it, and it's- it's reflexive, so it grows and grows and grows and grows, and then risk-off tends to be very abrupt. And we've seen that here, right? This- this cycle, risk-on was from '09-
That's well said.
... to five months ago.
That's really well said.
And risk-off is five months. And- and the thing that- that- that's really tough about that is it- it requires, uh, mental adjustment very quickly. Like, because it- it didn't gradually change, it abruptly changed. And so, you know, cap charts might have, you know, systematic issues that are stuck, uh, because too much lick pref relative to the new reality. Valuations have shifted. The cost of capital is radically different. You may have, you know... On- on the way up as risk got... people took more risk, you tried crazier things. You- you're willing to- to, uh, take- take... make investments in businesses you might not if the cost of capital is a lot lower.
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