The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Bill Gurley and Michael Eisenberg on The First Signs of an Impending Bust, What Happens with a Market Crash, How Do Public Markets Impact Private Valuations & The Biggest Lessons from 20 Years Investing in Venture

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Dec 6, 2021

Join venture capital legends Bill Gurley and Michael Eisenberg as they dissect the current market landscape and its eerie similarities to the dot-com bubble. Bill shares insights on price discipline and how it shapes investor relationships, while Michael delves into navigating today's capital deployment challenges. They explore the dynamic between public and private valuations and reflect on significant investing lessons from their extensive careers. Their engaging conversation is packed with wisdom on what it really means to invest wisely in turbulent times.

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INSIGHT

Market Crash Dynamics

Market crashes often begin subtly, with corrections in specific sectors being dismissed.
Capital scarcity, a hallmark of previous crashes, is uncertain due to the Fed's interventions.

INSIGHT

Public vs. Private Valuations

There seems to be a permanent inversion of public versus private valuations.
Several unicorn and decacorn companies are currently raising large rounds.

INSIGHT

Late-Stage Funding Dynamics

Late-stage funding, driven by Tiger Global's aggressive strategy, is becoming increasingly valuation-agnostic.
The shift in late-stage funding models, from evergreen to venture structures, contributes to this trend.

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Bill Gurley is a General Partner @ Benchmark, one of the most successful funds of the last decade with a portfolio including Uber, Twitter, Dropbox, Modern Treasury, Snapchat, StitchFix, and many more. As for Bill, widely recognized as one of the greats in venture having worked with GrubHub, NextDoor, Uber, OpenTable, Stitch Fix, and Zillow. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners.

Michael Eisenberg spent 15 years as a General Partner @ Benchmark working alongside Bill and the Benchmark partnership. Following Benchmark, Michael co-founded Aleph, one of the leading Israeli venture funds of the last decade with a portfolio including Lemonade, Melio, and HoneyBook, just to name a couple of Aleph's unicorns.

In Today's Episode with Bill Gurley and Michael Eisenberg You Will Learn:

1.) How does the current market activity in venture today compare to the dot com bubble? What elements are different? What elements are the same? What were the ramifications of the dot com bubble? Would Bill and Michael expect to see the same again? Is there anything good that comes from bubbles? How did the prior bubble impact Michael and Bill's investing mindset?

2.) Does Bill Gurley agree that Benchmark are the only firm to have retained price discipline in this crazy market? How do Bill and Michael think about their own relationship to price today? How does Bill try and answer the question, "what could go right?" when he meets entrepreneurs today? On reflection, what have been Michael and Bill's biggest miss? How did it change their approach?

3.) How does one compete in a world of Tiger and crossover funds? When it comes to capital deployment and pacing, do Michael and Bill agree with the suggestion of "playing the game on the field"? What are the nuances to this statement? What companies does Bill believe capital can be a moat for? What companies is capital not a moat and they should be conservative with raising and pre-emptive rounds?

4.) Do Bill and Michael believe that ownership still matters today with outcomes being larger than ever? How do Bill and Michael feel about the importance of temporal diversification today in a world of compressed deployment cycles? What investing lesson learned over 25 years in the business do Bill and Michael wish they had known when they started?

Item's Mentioned In Today's Episode with Bill Gurley and Michael Eisenberg

Bill's Favourite Book: The Storytelling Animal: How Stories Make Us Human