Bill Gurley Is Blogging Again

If you asked me who my inspirations were when I started to blog, they would have been:

Seth Godin – because his blog was my favorite read at the time (and still is in my top 10)
Dave Winer – because Scripting News was the first blog I ever read (when it was an email newsletter)
Stewart Alsop – because his weekly PC Letter was my favorite read when I got started in the VC business
Jim Cramer – because he defined the kind of blogging I wanted to do
Bill Gurley – because he was the first VC to write regularly on the business in his Above The Crowd newsletter

Bill Gurley is the only one of these people who hasn’t been actively blogging in the past couple years. (Many people will say that Jim Cramer doesn’t blog, but he does, you just have to pay to read it).

Bill has just returned to blogging and right away he contributes to the conversation about the IPO drought. Bill argues that it’s not really a demand problem. He says it’s a supply problem.

If you went back to say 1995 and asked any entrepreneur or tech executive, “what is your one key goal for your company?,” they would all say – “IPO”. This overwhelming desire to be a part of a company that achieved a public offering was universal. It mirrored an athlete going to the Olympics, or perhaps playing in the pros. This passionate desire to be public is completely gone in Silicon Valley. For
reasons you could easily list – Sarbanes Oxley; 12b1 trading rules;
shareholder litigation; option pricing scandals; personal liability on
10-Q filing signatures – it is simply not much fun being a public

The Benchmark portfolio current has over 15 companies north of $50MM in revenues, and they are all private. This would have never happened in 1995 (even pre-bubble) where most of these companies would ALREADY BE public.

I don’t think we have a demand problem, we have a supply problem. No one wants to manage a public company.

I am mostly with Bill on this one. In the short run, we may have a demand problem as wall street is not in a good mood right now. But long term, its a supply problem for sure.

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Comments (Archived):

  1. tmarman

    Awesome – subscribed.

  2. stone

    I think Bill is right. My last company did significantly north of $50M in revenues but we never seriously considered an IPO because of the work, liability and costs. A private sale to a public company was the only route and we took it.

  3. kidmercury

    it’s a dollar problem. it’s curtains for the economy as we know it, people are grossly underestimating the problem and the “journalists”, if you want to call them that, aren’t talking about the real issues. the best we can hope for is a slow collapse, like what we’ve been experiencing, but if overt war with iran starts, then oh boy, are things are going to fall apart rather quickly.

  4. ariel

    it works OK for VC, founders and key management who can cash out something in each incremental round or even sell their shares privately, however for the employees who are looking to cash out where is the liquidity event for them… will they lose interest and motivation if the liquidity event is many many years into the future or will this create an opportunity for private share marketplaces?

    1. stone

      I think something has to happen to address these problems. This is another reason why we sold. I began to sense fatigue on the part of employees that had been with us for several years. We worked everyone hard and it began to effect them. It’s a very hard problem that I’d love to see someone credibly take on.

  5. Aruni S. Gunasegaram

    Small online world! Bill was one of the judges at the MOOT Corp business plan competition here in Austin where I presented my first venture out of the MBA school. We launched that company and raised venture financing. It’s still operating but sold after the dot com crash in 01/02. I haven’t seen him in years and I’m not even sure he would remember me, but I’m off to go check out his blog right now.