China, AI Immigration, Rare Earths & Chips, Tariffs, Market Check | BG2 w/ Bill Gurley & Brad Gerstner

**Brad Gerstner** (0:00)
And if you and I want to win championships and build a championship basketball team, we should not care where in the world the basketball player comes from. We just need to get the best players on our team to win the championship, and we ought to take the same approach to AI and technology. Hey, Bill, great to see you.

**Bill Gurley** (0:29)
Brad, how are you doing, man?

**Brad Gerstner** (0:30)
I'm doing great, I'm doing great. You know, I'm heading back to Boston this weekend for my 25th HBS reunion.

**Bill Gurley** (0:39)
25

**Brad Gerstner** (0:41)
It's crazy, I mean, you're way older than me, but you know, I can't believe it's 25 years, and I'm doing this talk on what's happening in AI, you know, these days, and there's a lot of questions about, and comparisons, because remember, we were there during the 99, 2000 kind of boom and bust, and so a lot of my classmates are wondering whether or not AI is kind of like that again. And so I was going back and pulling together these slides, and I have to say, a few things just shocked me, frankly. Like I forgot how much has changed. One was I was doing, I was looking and doing some analysis on Amazon. You know, I was day trading Amazon out of the back of the classroom back then. And you were out here working on the IPO. So I know you were paying attention to what the share price was in 98, 99, and 2000 And a couple of interesting points, right? Amazon, if you recall, Bill, and I know you do, it peaked at 243 bucks a share in 1998 But at the start of 2000, it's at 150 bucks a share. Okay? And Henry Blodgett famously makes the call, he calls $400 a share. And he literally kind of top ticks it from the year 2000 And the thing plummets and goes down to about 26 bucks a share. Right? He gets ridiculed and all this stuff. But I wanted to-

**Bill Gurley** (2:04)
By the way, it went public at 17 and broke issue.

**Brad Gerstner** (2:08)
Yes. Wow. Wow.

**Bill Gurley** (2:09)
So it traded under issue for about two months.

**Brad Gerstner** (2:12)
Right. And I'm sure you didn't get any calls from the company about what the F was going on. But here's the crazy thing, right? Remember, he gets ridiculed for making that call. So I wanted to know, and I went and asked our chat GBT friend to help me with some split-adjusted math on this. So split-adjusted from the high in 2000, which was this 150, that's equivalent to about 47 cents split-adjusted today. So it's up about 440x from where it was in 2000 And on a split-adjusted basis from the low in 2000, it's up about 1800x, right? I mean, those are shocking numbers. And so that was one of the things that dawned on us. So I said, well, what's happened to the NASDAQ since we graduated? Well, from the peak in 2000, the NASDAQ is still up 5x, and from the trough in 2000, it's up 10x. And so I said, what's the punchline? The punchline is, we were a bunch of dreamy-eyed, big, you know, big thinkers. We thought we knew everything about the Internet.
We knew it was going to change the world forever. And it turns out we overestimated what it was going to do in the short term, right over the next two to three years. Adoption was slower. We had the terrorist attacks in 2001 We had an economic recession. So things definitely grew slower. But the biggest problem was there just weren't that many people connected to a high-speed Internet. So all the things we dreamed of occurring were just inefficient to happen at that time. But what's probably even more surprising, Bill, is how dramatically we underestimated the long term. Over the next 20 to 25 years, it blew away all of our estimates and forecasts in terms of how big these companies would be. And so now we sit here at, you know, kind of the dawn of the age of AI. And I think people are asking a lot of these same questions. But, you know, that was probably the biggest punchline on my 25-year reflection.

**Bill Gurley** (4:15)
All right. Well, if they listen to the podcast, they're going to miss your talk, maybe.

**Brad Gerstner** (4:24)
Maybe, you know, talking about this pace of AI, you and I, we're sending some things back and forth, just about some strategic shifts going on in the world. Talk us through that.

**Bill Gurley** (4:35)
Well, obviously, I mean, the pace continues like crazy. Every time, between just the podcast episodes we do, which are about two to three weeks, there's new news always and constantly, and it's hard to keep up with it. But I do try and pay attention to the stuff that spikes in my brain as being strategic and something you should really pay attention to. One thing that I've seen in the past week, so this is very recent, is what I might call data walls. Everyone's recognizing the value of AI. Everybody wants to have AI work against their data, and everybody wants to wow the consumer or the customer of their product.