Invest Like the Best with Patrick O'Shaughnessy

Bill Gurley & Michael Mauboussin - Putting Theory into Practice - [Invest Like the Best, EP.370]

Apr 23, 2024

01:32:27

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Bill Gurley and Michael Mauboussin discuss increasing returns, regulatory capture, AI, and hardware in a wide-ranging conversation. They explore open source innovation, venture capital challenges, and the impact of regulatory red tape. The conversation also touches on collaborating with geniuses and the value of teaching for personal growth.

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Quick takeaways

Venture capital industry challenges include high competition and cyclicality impacting returns.

Regulatory capture hampers innovation by favoring incumbents and distorting outcomes.

Shrinking public company count raises concerns about market health and impacts entrepreneurial spirit.

Bill Gurley's strategic rigor and focus on core principles drive successful investments in the venture capital landscape.

Deep dives

Venture Capital Landscape Analysis

The venture capital market, although fueling innovation, faces challenges like high competition, low barriers to entry, and high barriers to exit. With massive sums raised and lengthy fund life cycles, cyclicality in the industry impacts returns. Moreover, the shrinking public company count raises concerns about investors missing out on opportunities, leading to potential regulatory interventions that may not effectively address the underlying issues.

Value Based Strategy Framework and Business Value Creation

02:09

Pattern Recognition as Intuitive Expertise and the half life of patterns

01:45

Exploring the Future of Machine Learning and AI Integration in Business

03:28

Approach to Evaluating Young Companies

01:40

Introduction

2min

Exploring AI, Investment, and Increasing Returns

29min

The Impact of Open Source Innovation

8min

Exploring Regulatory Capture and Bureaucratic Red Tape

5min

Challenges and Opportunities in Venture Capital Landscape

22min

Navigating the Evolving Landscape of Venture Capital

14min

Collaborating with Geniuses

9min

The Value of Teaching and Sharing Knowledge for Personal Growth and Success

4min

My guests today are Bill Gurley and Michael Mauboussin. Bill is a General Partner at Benchmark, and Michael is the Head of Consilient Research for Counterpoint Global. While they are longtime friends with one another, I’d never heard them appear somewhere together so it was a real treat to be able to do this with the two of them. They are two of the leading minds in their fields, and we combined their decades of expertise into one wide-ranging conversation. We discuss the different kinds of increasing returns to scale, the issue of regulatory capture, AI, and hardware. Please enjoy this great conversation with Bill Gurley and Michael Mauboussin.

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For the full show notes, transcript, and links to mentioned content, check out the episode page here.

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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.

Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).

Show Notes:

(00:00:00) Welcome to Invest Like the Best

(00:03:38) Dissecting the Dynamics of AI, LLMs, and Market Disruption

(00:05:06) The World of AI Investments and Market Trends

(00:08:13) Integration of New Technologies in Business

(00:15:27) The Power of Increasing Returns and Strategic Investments

(00:22:26) Unpacking the Role of Intangibles in Scaling and Innovation

(00:28:54) Transformative Potential of Open Source and Idea Recombination

(00:34:42) The Complex Landscape of Regulation and Innovation

(00:43:17) Today’s Venture Capital Ecosystem

(00:47:08) Impact of Fewer IPOs and Private Market Dynamics

(00:50:38) Capital Allocation in Zero Interest Rate Environments

(00:54:44) The Evolution of Venture Capital and High-Stakes Investment Games

(00:57:21) Exploring New Frontiers: AI, Energy, and Physical World Innovations

(01:01:14) The Power of Learning by Doing

(01:17:49) Working with Genius

(01:26:47) The Value of Teaching, Writing, and Sharing Knowledge

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