E81: All-In Summit: Bill Gurley & Brad Gerstner on markets, downturns & investment cycles
- May 22, 2022
- 51:32
- Full Episode
This conversation was recorded LIVE at the All-In Summit in Miami!
0:00 Bill Gurley & Brad Gerstner break down the state and historical significance of 2022's market downturn 12:27 How VCs will handle capital commitments from LPs, underwriting startups in the new reality 24:14 Bull run mistakes, why VCs don't underwrite lower valuations, handling distributions 33:52 Gurley's take on WeCrashed & Super Pumped TV series, how sophisticated investors got "gaslit" by the market, influx of capital creating consumer-surplus businesses 47:54 Brad predicts the market for next year, Bill gives post-Benchmark plans
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Brief Summary
Gurley and Gerstner discuss economic cycles, venture capital challenges, and market predictions amid rising inflation and interest rates.
Key points
- Cyclical Collapse. Bill discusses the inherent cyclical nature of the venture capital industry.
- Interest Rates and Valuations. The conversation shifts to how interest rates dramatically affect business valuations.
- Consumer Confidence Decline. Consumer confidence is at its lowest in a decade, signaling economic slowdown.
- Dispersion Returns to Markets. The market is shifting back to valuing companies based on performance, not hype.
- Investing Lessons from the Past. Reflecting on past mistakes, investors discuss the importance of timing and decision-making.
- Understanding Market Trends. Investors analyze the current market conditions and the impact of inflation on tech companies.
Episode highlights
- Cyclical CollapseBill discusses the inherent cyclical nature of the venture capital industry.“Cyclical collapse is built into the structure.”1:36May 22, 2022
- Interest Rates and ValuationsThe conversation shifts to how interest rates dramatically affect business valuations.“A one percent change in rates leads to a 15 or 20 change in a multiple.”5:33May 22, 2022
- Consumer Confidence DeclineConsumer confidence is at its lowest in a decade, signaling economic slowdown.“Consumer confidence is a leading indicator of slowing down.”9:00May 22, 2022
- Dispersion Returns to MarketsThe market is shifting back to valuing companies based on performance, not hype.“Some shit's going to be really great and the rest is going to be below the mean”23:22May 22, 2022
- Investing Lessons from the PastReflecting on past mistakes, investors discuss the importance of timing and decision-making.“I took a 50% loss trying to be a hero.”30:40May 22, 2022
- Understanding Market TrendsInvestors analyze the current market conditions and the impact of inflation on tech companies.“The trends that existed for 20 years still exist; they were interrupted temporarily.”39:40May 22, 2022
- The Future of InstacartA discussion on Instacart's valuation and its potential reset.“What do you think about something like Instacart?”46:10May 22, 2022
- Market PredictionsPredictions on growth stocks and market trends for the next year.“We will be higher for growth stocks this time next year.”48:01May 22, 2022
