Fireside Chat With Bill Gurley (Benchmark) | Disrupt NY 2013 | Summary and Q&A

Summary

In this video, Benchmark Capital founder Bill Gurley and TechCrunch founder Michael Arrington discuss the state of the venture capital industry, the differences between New York and Silicon Valley, and their thoughts on various companies including Uber and Twitter. They also touch on topics like the impact of macroeconomic forces on the venture community, the challenges of building iconic companies in New York, and the unique approach Benchmark Capital takes in its partnership structure.

Questions & Answers

Q: What are Bill Gurley's thoughts on the New York startup scene?

Bill Gurley agrees that there are many entrepreneurs and engineers in New York, but believes that the city needs more iconic companies that can stand the test of time.

Q: Why does Bill Gurley feel that New York needs more iconic companies?

Bill Gurley explains that iconic companies provide leadership and set the standard for others to follow. Without these precedents, it is harder for other companies to become successful and iconic.

Q: Is Zillow considered an iconic company?

Bill Gurley believes that Zillow has the potential to become an iconic company, but acknowledges that it may not be at the same level as Microsoft and Amazon currently.

Q: What does Bill Gurley think about the anti-IPO sentiment in the venture industry?

Bill Gurley believes that the venture industry has an anti-IPO attitude, which he thinks is a problem. He believes that it hinders companies from achieving long-term success.

Q: What are the concerns of the venture capital industry?

Bill Gurley shares that the venture capital industry relies on huge homeruns in their portfolio, and if the system dynamics prevent companies from reaching that potential, it becomes a concern.

Q: Does Bill Gurley think that system dynamics in New York stop companies from becoming iconic?

Bill Gurley points out that New York lacks the precedent of iconic companies, and he believes that the Wall Street culture, with its focus on cash and lack of loyalty, can hinder the growth of iconic companies.

Q: Does the current macroeconomic environment affect the venture community?

Bill Gurley acknowledges that the macroeconomic environment can be concerning, but he believes that trying to predict macroeconomics is a waste of time. He points out that interest rates being low is currently propping up US equities.

Q: What impact would higher interest rates have on the venture community?

Bill Gurley thinks that higher interest rates would have a negative impact on the venture community. He explains that the venture community has historically been a trailing indicator to the Nasdaq, and higher interest rates would affect the performance of equities.

Q: How has the memory of past market crashes affected entrepreneurs and venture capitalists?

Bill Gurley shares that the younger generation of entrepreneurs who did not experience the crash of 1999 does not have the same institutional memory. He believes that it can be positive because they bring fresh perspectives but also warns that it could lead to risky behavior.

Q: How did venture capitalists react to past market crashes?

Bill Gurley comments that venture capitalists tend to panic during market crashes and focus on preserving their capital, which leads to a downturn in investments. However, younger venture capitalists are not influenced by past crashes in the same way.

Q: What drives Bill Gurley in his work?

Bill Gurley says that he appreciates disruption and enjoys seeing new companies build something out of nothing. For him, the economics of venture capital are a way to measure success, and he loves working with entrepreneurs and contributing to their success.

Q: What does Bill Gurley think of Uber?

Bill Gurley believes that Uber is one of the fastest-growing companies he has ever been involved with. He praises the business model and the commitment to user experience. He also notes that Uber had a business model from day one, unlike many consumer internet companies.

Q: Does Bill Gurley think Twitter will become an iconic company or be acquired by Google?

Bill Gurley doesn't speak for Twitter or Google, but he highlights Twitter's incredible growth and success in recent years. He considers Twitter to be in a good position and believes it could become an iconic brand.

Q: What does Bill Gurley think about Nextdoor and its potential?

Bill Gurley is excited about Nextdoor, a social network for neighborhoods. He believes that the company has a long-term orientation and a good vision. He mentions the high-quality content and the unique position Nextdoor has created for itself.

Q: Is the hyperlocal space a difficult area to succeed in?

Bill Gurley admits that the hyperlocal space has had its challenges, but he believes that Nextdoor has the right team and approach to overcome those challenges. He mentions the value of quality and the difficulties in building successful user-generated content communities.

Q: Is there too much or too little money in the venture capital industry?

Bill Gurley acknowledges that there was an influx of angel money a few years ago, leading to a series A crunch. However, he clarifies that the actual amount of venture capital going into series A funding hasn't changed significantly.

Q: What is Benchmark Capital's unique approach to partnership and why do they do it?

Bill Gurley explains that Benchmark Capital has a fully equal partnership, which means that all partners have the same management fee and carry. He believes this creates a better team environment and eliminates political dynamics that can hinder collaboration in hierarchical structures.

Q: Why don't other venture firms adopt Benchmark Capital's partnership structure?

Bill Gurley suggests that other firms may be hesitant to adopt a fully equal partnership because it eliminates the negotiation process when raising new funds. However, he believes that the team orientation and lack of politics in their structure outweigh any negatives.

Q: What is the driving force behind Bill Gurley's commitment to venture capital despite his financial success?

Bill Gurley expresses his passion for disruption and building something out of nothing. He finds joy in helping entrepreneurs and views the economics as an efficient scorecard for success. He sees the venture capital industry as a way to be a part of something that he personally couldn't do.