Bill Gurley & Michael Mauboussin - Putting Theory into Practice

**Patrick O'Shaughnessy** (0:00)
This episode is brought to you by Tegus, the only investing research platform built for fundamental investors. Whether you're trying to get up to speed on a new market or keep tabs on a portfolio company, Tegus is the end-to-end investment research platform that you need. With Tegus, you can quickly understand a company's business model, drivers, benchmarks, and management quality. To monitor an entire market, download our pre-built financial models or update your own with the latest data using Tegus' new Excel add-in. Tegus gives you all of this and more, all bundled into a single software license. Find out why 95% of the top 20 global private equity firms are Tegus customers. Learn more and get your free trial at tegus.com/patrick.
You may have heard me reference the idea of maniacs on a mission and how much that idea excites me. Well, David Senra is my favorite maniac on one of my favorite missions with his weekly crafting of the Founders Podcast. Through studying the lives of legends, he weaves together insights across history to distill ideas that you can use in your work.
Founders reveals tried and true tactics, battle tested by the world's icons and has David's infectious energy to accompany them. With well over 300 episodes, your heroes are surely in the lineup and his recent episode on Oprah is particularly great. Founders is a movement that you don't want to miss. It's part of the Colossus Network and you can find your way to David's great podcast in the show notes.
Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:51)
Patrick O'Shaughnessy is the CEO of PositiveSum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum.
This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit p-s-u-m dot v-c.

**Patrick O'Shaughnessy** (2:20)
My guests today are Bill Gurley and Michael Mauboussin. Bill is a general partner at Benchmark Capital 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 experience into one wide ranging conversation.
We discussed the different kinds of increasing returns to scale, the issue of regulatory capture, AI and hardware, plus a lot more. Please enjoy this great conversation with Bill Gurley and Michael Mauboussin. Well guys, today's conversation is gonna be an excuse to do something that I personally wanted to hear for a long time, which is just the two of you and your longstanding friendship and mutual interest in markets, business, investing. Just to hear you talk together, I don't think I've ever heard you, at least on the record, discuss a bunch of interesting ideas. And I'm gonna view my role as cueing some things up and then letting you guys go.
I thought I would start with maybe the most obvious place, just because it's on everyone's mind and you both thought a lot about it. Maybe, Michael, I'll kick it to you to start.
What are your thoughts on artificial intelligence? We're recording this on April 15th in 2024, just to give people context, since it's all changing so fast. This seems like the most important thing maybe that's happened in a long time, but also quite hard to parse as an investor. What are your thoughts? What are you thinking about?

**Michael Mauboussin** (3:42)
I want to kick it over to Bill, because I'm sure he knows a lot more about all this topic than I do. A few of my kids are very involved in this from a professional point of view, so I try to glean some from them as well as I watch them do their thing. First of all, this is obviously very profound, it's very important. I don't understand all the details of how the technology works, but I think the most important question as an investor stepping back is going back using Clay Christensen language of disruptive innovation versus sustaining innovation. So sustaining innovation using Christensen language is something that is really different, it could be very material, it could be radical, but it's within the same, what do you call it, value network. It's basically helps the incumbents become better at what they do. And then a disruptive innovation is something as a new business model that allows new companies to sort of break in and actually disrupt the more traditional incumbents.