Bill Gurley: “I Hope To God We Have A Soft Landing”

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Venture capitalist Bill Gurley, Julie Wainright from TheRealReal and co-founder of unicorn startup Slack Stewart Butterfield discussed the frothiness of the market and the possibility that Silicon Valley is indeed facing a second bubble at the Vanity Fair New Establishment Summit in downtown San Francisco today.

Talk of a possible bubble pop has been going on for a good decade now and eventually someone is going to be right, but it’s unclear to many if we truly are there at the moment. Both the audience and those on stage were split on the idea. Half the crowd raised their hands in agreement and half against when moderator and New York Times columnist Nick Bilton polled the audience.

Butterfield was the lone dissenter on stage and joked that this was why he’d been asked to participate. “I think there are a number of great companies that will survive this – much more than in 2000,” he told Bilton.

I hope to God we have a soft landing, but I’m worried we won’t, which is why I’ve been so outspoken.
— Bill Gurley, Benchmark
Wainright, who founded and then watched the demise of her own dot-com company Pets.com in the last bubble agreed on the frothiness and high valuations, but didn’t buy into the proposed second bubble at some moments, either. “Back then there were only 200 million people and now we’re in the billions on the Internet,” she said of her experience during the bust. “The world is a different world that it was 15 years ago.”

Gurley is outspoken in his firm belief of a bubble and warned once again of the dangers of not realizing it till its too late. “I hope to God we have a soft landing, but I’m worried we won’t, which is why I’ve been so outspoken,” he said.

He also admonished companies to stop buying Kind Bars and focus on revenue. “If you go bankrupt because you tried and it didn’t work that’s one thing but if you do it because you need those things you’re an idiot,” said Gurley.

Gurley’s advice for those worried about losing in another pop, “Don’t get in on something just because you’re invited. If you’re being invited right now you’re the last call not the first call.”

Bilton noted that he’d filed a piece a few months back that put the number of unicorns at 68. Gurley, Wainright, and Butterfield agreed the number is now at 160 unicorns. “In a matter of months we’ve gone up 100 unicorns,” Bilton said.

Will there be some dead unicorns soon? Gurley is in the affirmative. Wainright argued that didn’t matter so much “Look if 80 of the unicorns don’t make it, that’s possible, but if the other 80 do then that’s actually not bad,” she said.

Though Butterfield doesn’t buy into the unicorn idea he did acknowledge there would be a correction. “There will be a correction. The market will go down,” he said. But also added that “There is a cycle” and used the yo-yoing of Twitter stock this year as an example.

Interestingly, audience member Ben Parr asked each if they thought certain unicorns would still be around 10 years and named Uber as one of them. Gurley (who is an investor in Uber) unsurprisingly was positive on its staying power. However, Gurley also warned of the dangers of delaying an IPO.  “Staying private longer is a good strategy,” he said. “If you want to maintain Kind Bars and don’t want to be accountable.”