#651: Legendary Investor Bill Gurley on Investing Rules, Finding Outliers, Insights from Jeff Bezos and Howard Marks, Must-Read Books, Creating True Competitive Advantages, Open-Source Strategies, Adapting Mental Models to New Realities, and More

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Bill Gurley (@bgurley) has spent more than 20 years as a general partner at Benchmark. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at Credit Suisse First Boston.

Bill also maintains a blog on the evolution and economics of high technology businesses called Above the Crowd.

Over his venture career, he has worked with such companies as GrubHub, Nextdoor, OpenTable, Stitch Fix, Uber, and Zillow.

Bill has a BS in computer science from the University of Florida and an MBA from the University of Texas. He is also a chartered financial analyst. Bill is a board trustee at the Santa Fe Institute, a research and education center focused on the study and understanding of complex adaptive systems.

Please enjoy!

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[05:51] The book Bill calls "the most efficient short-form MBA one can find."

[07:31] Sell-side analysts vs. buy-side analysts.

[09:45] Financial models, rules of thumb, and making (sometimes wrong) decisions.

[17:28] Howard Marks and Stan Druckenmiller.

[19:26] Micro vs. macro investing.

[20:40] Institutional Investor's All-America Research Team.

[24:16] Expanding distribution.

[27:04] Return On Invested Capital (ROIC).

[33:10] Repurposing good ideas for alternative applications.

[37:01] The conviction of network effects.

[38:58] SaaS and open source.

[42:40] Bet sizing.

[44:04] Equal partnership over hierarchy.

[50:08] Lessons learned from partners.

[52:57] Recommended resources.

[58:46] Problems open source can solve.

[1:09:28] Building a better network with the interest graph.

[1:13:42] Dissecting Bill's Twitter thread about risks and sudden valuation resets.

[1:23:50] The Metaverse.

[1:29:00] Revenue and earnings quality matter.

[1:31:02] Undervalued competitive advantages.

[1:35:02] Jeff Bezos: corporate mad scientist?

[1:40:42] The counterintuitive condemnation of company camaraderie.

[1:45:37] Tobi Lütke.

[1:48:51] Books Bill has gifted frequently.

[1:52:29] The Santa Fe Institute.

[1:54:35] Bill's board.

[1:56:32] Cultivating anti-tribalism.

[1:58:13] Twitter: what is it good for?

[2:01:14] Newsletters and other resources Bill relies on.

[2:03:05] Bill's book in progress.

[2:04:12] Regulatory capture.

[2:09:10] Predicting what America will look like in 10-20 years.

[2:10:50] Parting thoughts.

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