Ep7. The Great IPO Debate, Tesla Robotaxi vs. Uber, & Tech Check | BG2 with Bill Gurley & Brad Gerstner

**Bill Gurley** (0:00)
If you're public with 100 million in revenue and a 10% growth rate, your valuation's not gonna be all that great. But guess what? If you're private at 100 million revenue with a 10% growth rate, it's not like you're better off.
Like, like, you're just fooling yourself.

**Brad Gerstner** (0:31)
Hey, man, good to see you.

**Bill Gurley** (0:33)
Good to see you, Brad.

**Brad Gerstner** (0:34)
How you been? I've been well. How was the eclipse? Didn't you have an eclipse party down there?

**Bill Gurley** (0:39)
We did. We had a lot of people out to a location that had a total eclipse, and we got super lucky about 30 minutes prior to the total.
It had been cloudy and clouds parted, blue sky, bright sun on everyone, and then a miraculous event. It's kind of strange to see grown humans applauding at the sky for a-

**Brad Gerstner** (1:01)
Was it religious for you? It really was for a lot of people.

**Bill Gurley** (1:05)
It felt that, you know, that's a loaded term, but yes, it felt, let's use the word spiritual. It felt spiritual.
And certainly our forefathers, you know, equated it with something religious.

**Brad Gerstner** (1:20)
Well, I was sorry to miss it. My mother told me she's 88, and she said she was in tears.
And, you know, I honestly, I was skiing with my 13-year-old son, and so we missed it. But, you know, the rest of my family saw it and they said it was incredible. Well, lots of tensions in the world, Bill.
You know, it was interesting. Oh, no. I tweeted last week that on the one side, you know, I really see a lot of great things happening in the markets.
You know, M&A I think is going pretty bonkers right now and liquidity is definitely heating up. You saw the rumors about the Salesforce Informatica deal, the Google HubSpot deal. I think I know at least six other deals over a billion dollars that, you know, are actively being courted in the M&A pipeline. So you got that on the one hand. On the other hand, you know, we had inflation come in hotter. We have the 10-year kind of back at 4.7%, so up a lot for the year. And we have these geopolitical concerns that are not only tragic, you know, human events, but the backdrop is getting, I think, more challenging for the markets at the same time that the markets have been done pretty well for the year. So that always gets me concerned.
You know, I was with a legend investor over the weekend, and I said, what was your net exposure at the beginning of 23? And he said 80%. I said, what about the beginning of 24? He said 40%. I said, what about now? He said zero, right? And so whenever you have that sort of, I think, reaction, it always, you know, you have to slow down and think about it. So I definitely think there's a lot of increasing volatility. We're heading into this election. Here in November, that most people aren't even yet thinking about, but we know that's going to lead to a lot more volatility. So I'm feeling, you know, looking at our own portfolios, I'm feeling that tension on the one hand, really excited, on the other hand, increasingly nervous.

**Bill Gurley** (3:28)
Well, as you know, I've often sworn off the notion of macro analysis, primarily because I think the best investors of all time have sworn it off. And through immense pressure from you, I've started paying attention to these things.
Don't do it. Which I don't like because I think it's quite clear that right now risk seems to be on the rise, like just the term risk, you know, across a bunch of different vectors, which is unfortunate. It'd be nice to see it start moving in the other way, but with the election coming and these different conflicts around the world, it's hard to have confidence that something like that can happen.

**Brad Gerstner** (4:11)
Yeah, no doubt about it. Well, speaking of the markets, maybe we just jump right into our first topic here, which is, you know, there's been a lot of debate over the course of the past few weeks on the IPO markets, the size you need to go public, why we have so few public companies in the US.
So maybe just kick off with looking at a little Fred data to normalize where we are, right? The number of public companies has gone in the US has gone from 6,500 or so down to about 4,000 over the last 20 years. This is a cause and concern for many, because on the one hand, we have more innovation, we have more startups, and so you would think you would have more public companies, not less. And if you look around the world, that's in fact what you see.