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ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO. WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired.ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO. WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired. ARCHIVES - ABOVE THE CROWDABOVE THE CROWD Most Recent. Customers Love Free Stuff But That’s Not Your Problem; Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic WealthABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
CUSTOMERS LOVE FREE STUFF BUT THAT’S NOT YOUR PROBLEM On March 26, SoFi announced that “it will be offering its members (at least those with $3K in their account) the ability to invest in IPOs for companies going public, an investment opportunity that has traditionally been reserved for large institutional investors or ultra-high-net-worth individuals.” In this case “been reserved” is a euphemism for “limited to the best clients” ofABOVE THE CROWD
The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. November 15, 2017: In November of 2015, I posted a tweet that declared Benchmark was interested in discovering Internet healthcare investments. Our firm has had the good fortune to invest in many two-sided networks that used information aggregation, supplier aggregation, and userABOVE THE CROWD
February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. 2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE Here are some specifics to help frame the issue. According to Matthew Harrigan at Wunderlich Securites, in 2009 DirecTV paid approximately $37/sub out of an ARPU of $85/sub to content owners for programming costs (i.e. affiliate fees).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO. WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired.ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO. WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired. ARCHIVES - ABOVE THE CROWDABOVE THE CROWD Most Recent. Customers Love Free Stuff But That’s Not Your Problem; Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic WealthABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
CUSTOMERS LOVE FREE STUFF BUT THAT’S NOT YOUR PROBLEM On March 26, SoFi announced that “it will be offering its members (at least those with $3K in their account) the ability to invest in IPOs for companies going public, an investment opportunity that has traditionally been reserved for large institutional investors or ultra-high-net-worth individuals.” In this case “been reserved” is a euphemism for “limited to the best clients” ofABOVE THE CROWD
The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. November 15, 2017: In November of 2015, I posted a tweet that declared Benchmark was interested in discovering Internet healthcare investments. Our firm has had the good fortune to invest in many two-sided networks that used information aggregation, supplier aggregation, and userABOVE THE CROWD
February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. 2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE Here are some specifics to help frame the issue. According to Matthew Harrigan at Wunderlich Securites, in 2009 DirecTV paid approximately $37/sub out of an ARPU of $85/sub to content owners for programming costs (i.e. affiliate fees).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it hasABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired. INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO.ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it hasABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired. INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO. ARCHIVES - ABOVE THE CROWDABOVE THE CROWD Most Recent. Customers Love Free Stuff But That’s Not Your Problem; Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic WealthABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
2019 | ABOVE THE CROWD | BY BILL GURLEY February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOVE THE CROWD
April 21, 2016: Why the Unicorn Financing Market Just Became DangerousFor All Involved In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229.ABOVE THE CROWD
February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. 2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE Here are some specifics to help frame the issue. According to Matthew Harrigan at Wunderlich Securites, in 2009 DirecTV paid approximately $37/sub out of an ARPU of $85/sub to content owners for programming costs (i.e. affiliate fees).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it hasABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired. INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO.ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it hasABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. A RAKE TOO FAR: OPTIMAL PLATFORM PRICING STRATEGY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake WHY YOUTH HAS AN ADVANTAGE IN INNOVATION & WHY YOU WANT TO A few relevant scenes from the recent blockbuster Moneyball: Peter Brand: Billy, Pena is an All Star.Okay? And if you dump him and this Hatteberg thing doesn’t work out the way that we want it to, you know, this isthis is the kind of decision that gets you fired. INVESTORS BEWARE: TODAY’S $100M+ LATE-STAGE PRIVATE ROUNDS Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies, an IPO. ARCHIVES - ABOVE THE CROWDABOVE THE CROWD Most Recent. Customers Love Free Stuff But That’s Not Your Problem; Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic WealthABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
2019 | ABOVE THE CROWD | BY BILL GURLEY February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOVE THE CROWD
April 21, 2016: Why the Unicorn Financing Market Just Became DangerousFor All Involved In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229.ABOVE THE CROWD
February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies THE MOST POWERFUL INTERNET METRIC OF ALL The Most Powerful Internet Metric of All. March 6, 2000: If you are running a Web business and can only focus on one metric, what should it be? By a landslide, the answer is conversion rate. “Once in a while. You get shown the light. In the strangest of places. If you look at it right”. — Grateful Dead. 2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE Here are some specifics to help frame the issue. According to Matthew Harrigan at Wunderlich Securites, in 2009 DirecTV paid approximately $37/sub out of an ARPU of $85/sub to content owners for programming costs (i.e. affiliate fees).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES - ABOVE THE CROWDABOVE THE CROWD The Thing I Love Most About Uber. “Customer First” Healthcare. The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. Thinking of Home: Dickinson, Texas. Benchmark’s New General Partner Sarah Tavel. On the Road to Recap: In Defense of the Deck. Be Like Dave. Investors Beware: Today’s $100M+ Late-stage Private Rounds Are GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it hasABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) “CUSTOMER FIRST” HEALTHCARE Above the Crowd. By Bill Gurley. “Customer First” Healthcare. December 18, 2017: December 18, 2017: The subject of the “consumerization of healthcare” has been around for many years. Most frequently people use this phrase in association with personal technology devices (heart-monitors, exercise accessories, sleepmonitors, etc) that
HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known asABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES - ABOVE THE CROWDABOVE THE CROWD The Thing I Love Most About Uber. “Customer First” Healthcare. The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. Thinking of Home: Dickinson, Texas. Benchmark’s New General Partner Sarah Tavel. On the Road to Recap: In Defense of the Deck. Be Like Dave. Investors Beware: Today’s $100M+ Late-stage Private Rounds Are GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it hasABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The key statistics are as follows: ARPU (average revenue per user) Avg. Cust. Lifetime, n (This is the inverse of the churn, n=1/) WACC (weighted average cost of capital) “CUSTOMER FIRST” HEALTHCARE Above the Crowd. By Bill Gurley. “Customer First” Healthcare. December 18, 2017: December 18, 2017: The subject of the “consumerization of healthcare” has been around for many years. Most frequently people use this phrase in association with personal technology devices (heart-monitors, exercise accessories, sleepmonitors, etc) that
HOW TO MISS BY A MILE: AN ALTERNATIVE LOOK AT UBER’SSEE MORE ONABOVETHECROWD.COM
A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as ARCHIVES - ABOVE THE CROWDABOVE THE CROWD Most Recent. Customers Love Free Stuff But That’s Not Your Problem; Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth 2021 | ABOVE THE CROWD | BY BILL GURLEY June 3, 2021: Thanks to the pioneering work of Barry McCarty and others, paying the “IPO Pop Tax” is now 100% optional.ABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
2019 | ABOVE THE CROWD | BY BILL GURLEY February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible throughABOVE THE CROWD
April 21, 2016: Why the Unicorn Financing Market Just Became DangerousFor All Involved In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229. CONVERSION: THE MOST IMPORTANT INTERNET METRIC OF ALL October 2, 2013: Over 13 years ago, in March of 2000, I wrote a blog post titled “The Most Powerful Internet Metric of All. ” The key thesis was this: if an Internet company could obsess about only one metric, it should be conversion. ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
2010 | ABOVE THE CROWD | BY BILL GURLEY July 15, 2010: Last night, Google reported financial results for the second quarter of 2010. While revenue growth was up 24% year over year, revenue was fairly flat compared with Q1 of 2010. Moreover, earnings fell short of average street estimates sending Google down $20 per share (4%) in the aftermarket. WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE Here are some specifics to help frame the issue. According to Matthew Harrigan at Wunderlich Securites, in 2009 DirecTV paid approximately $37/sub out of an ARPU of $85/sub to content owners for programming costs (i.e. affiliate fees).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES | ABOVE THE CROWD | BY BILL GURLEY Most Recent. Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth; Benchmark’s Newest General Partner Chetan PuttaguntaABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The Dangerous Seduction of the Lifetime Value (LTV) Formula. September 4, 2012: Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
UBER’S NEW BHAG: UBERPOOL Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.”. BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a newBHAG, and
WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE For those who do not know, affiliate fees are the primary revenue stream that funds today’s mainstream television content development. These are basically a “share” of the subscription fee you pay to your cable or satellite operator that is then shared back to the content owner/distributor (typically on a per subscriber basis).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES | ABOVE THE CROWD | BY BILL GURLEY Most Recent. Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth; Benchmark’s Newest General Partner Chetan PuttaguntaABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTV The Dangerous Seduction of the Lifetime Value (LTV) Formula. September 4, 2012: Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
UBER’S NEW BHAG: UBERPOOL Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.”. BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a newBHAG, and
WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE For those who do not know, affiliate fees are the primary revenue stream that funds today’s mainstream television content development. These are basically a “share” of the subscription fee you pay to your cable or satellite operator that is then shared back to the content owner/distributor (typically on a per subscriber basis). ARCHIVES - ABOVE THE CROWDABOVE THE CROWD The Thing I Love Most About Uber. “Customer First” Healthcare. The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. Thinking of Home: Dickinson, Texas. Benchmark’s New General Partner Sarah Tavel. On the Road to Recap: In Defense of the Deck. Be Like Dave. Investors Beware: Today’s $100M+ Late-stage Private Rounds Are 2020 | ABOVE THE CROWD | BY BILL GURLEY Going Public Circa 2020; Door #3: The SPAC. August 23, 2020: If you are looking past or through Covid — and why not, all of Wall Street is — the topic du jour in Silicon Valley is Special Purpose Acquisition Companies, or SPACs. SPACs are all the rage, and everybody and their brother have either raised one or are talking about raisingone.
2019 | ABOVE THE CROWD | BY BILL GURLEY February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through 1996 | ABOVE THE CROWD | BY BILL GURLEY Backhoes Don’t Obey Moore’s Law: A Story of Convergence. October21, 1996:
2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake 2015 | ABOVE THE CROWD | BY BILL GURLEY February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies 2016 | ABOVE THE CROWD | BY BILL GURLEY April 21, 2016: Why the Unicorn Financing Market Just Became DangerousFor All Involved In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229. 2012 | ABOVE THE CROWD | BY BILL GURLEY December 26, 2012: Over the past several years, I have become a huge fan of Mark Armstrong’s web service, Longreads. For those of you that don’t know, Longreads is a Twitter handle ( @longreads), and a web service ( www.longreads.com) that points to the best long form content on the Internet.At its core, it’s an amazingly effective editorial and discovery engine. ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES | ABOVE THE CROWD | BY BILL GURLEY Most Recent. Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth; Benchmark’s Newest General Partner Chetan PuttaguntaABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTVDANGEROUS SEDUCTION LIFETIMEDANGEROUS SEDUCTION CASTDANGEROUS SEDUCTION IMDBDANGEROUS SEDUCTION LMN CASTDEADLY SEDUCTION LIFETIMEDEADLY SEDUCTION LIFETIMEMOVIE
The Dangerous Seduction of the Lifetime Value (LTV) Formula. September 4, 2012: Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
UBER’S NEW BHAG: UBERPOOL Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.”. BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a newBHAG, and
WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE For those who do not know, affiliate fees are the primary revenue stream that funds today’s mainstream television content development. These are basically a “share” of the subscription fee you pay to your cable or satellite operator that is then shared back to the content owner/distributor (typically on a per subscriber basis).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES | ABOVE THE CROWD | BY BILL GURLEY Most Recent. Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth; Benchmark’s Newest General Partner Chetan PuttaguntaABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTVDANGEROUS SEDUCTION LIFETIMEDANGEROUS SEDUCTION CASTDANGEROUS SEDUCTION IMDBDANGEROUS SEDUCTION LMN CASTDEADLY SEDUCTION LIFETIMEDEADLY SEDUCTION LIFETIMEMOVIE
The Dangerous Seduction of the Lifetime Value (LTV) Formula. September 4, 2012: Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
UBER’S NEW BHAG: UBERPOOL Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.”. BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a newBHAG, and
WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE For those who do not know, affiliate fees are the primary revenue stream that funds today’s mainstream television content development. These are basically a “share” of the subscription fee you pay to your cable or satellite operator that is then shared back to the content owner/distributor (typically on a per subscriber basis). ARCHIVES - ABOVE THE CROWDABOVE THE CROWD The Thing I Love Most About Uber. “Customer First” Healthcare. The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. Thinking of Home: Dickinson, Texas. Benchmark’s New General Partner Sarah Tavel. On the Road to Recap: In Defense of the Deck. Be Like Dave. Investors Beware: Today’s $100M+ Late-stage Private Rounds Are 2020 | ABOVE THE CROWD | BY BILL GURLEY Going Public Circa 2020; Door #3: The SPAC. August 23, 2020: If you are looking past or through Covid — and why not, all of Wall Street is — the topic du jour in Silicon Valley is Special Purpose Acquisition Companies, or SPACs. SPACs are all the rage, and everybody and their brother have either raised one or are talking about raisingone.
2019 | ABOVE THE CROWD | BY BILL GURLEY February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through 1996 | ABOVE THE CROWD | BY BILL GURLEY Backhoes Don’t Obey Moore’s Law: A Story of Convergence. October21, 1996:
2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake 2015 | ABOVE THE CROWD | BY BILL GURLEY February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies 2016 | ABOVE THE CROWD | BY BILL GURLEY April 21, 2016: Why the Unicorn Financing Market Just Became DangerousFor All Involved In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229. 2012 | ABOVE THE CROWD | BY BILL GURLEY December 26, 2012: Over the past several years, I have become a huge fan of Mark Armstrong’s web service, Longreads. For those of you that don’t know, Longreads is a Twitter handle ( @longreads), and a web service ( www.longreads.com) that points to the best long form content on the Internet.At its core, it’s an amazingly effective editorial and discovery engine. ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES | ABOVE THE CROWD | BY BILL GURLEY Most Recent. Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth; Benchmark’s Newest General Partner Chetan PuttaguntaABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTVDANGEROUS SEDUCTION LIFETIMEDANGEROUS SEDUCTION CASTDANGEROUS SEDUCTION IMDBDANGEROUS SEDUCTION LMN CASTDEADLY SEDUCTION LIFETIMEDEADLY SEDUCTION LIFETIMEMOVIE
The Dangerous Seduction of the Lifetime Value (LTV) Formula. September 4, 2012: Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
UBER’S NEW BHAG: UBERPOOL Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.”. BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a newBHAG, and
WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE For those who do not know, affiliate fees are the primary revenue stream that funds today’s mainstream television content development. These are basically a “share” of the subscription fee you pay to your cable or satellite operator that is then shared back to the content owner/distributor (typically on a per subscriber basis).ABOVE THE CROWD
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through ARCHIVES | ABOVE THE CROWD | BY BILL GURLEY Most Recent. Going Public Circa 2020; Door #3: The SPAC; Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth; Benchmark’s Newest General Partner Chetan PuttaguntaABOUT BILL GURLEY
About Bill Gurley. May 30, 2008: Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital. Prior to Benchmark, Bill was a partner with Hummer Winblad Venture Partners. Before entering the venture capital business, Bill spent four years on Wall Street as a top-ranked research analyst, including three years at CS FirstBoston
GOING PUBLIC CIRCA 2020; DOOR #3: THE SPAC The numbers from 2020 are truly astonishing. The average company that has gone public in 2020 was underpriced by 31%. This equates to a cost of capital of 31% + 7% (IPO fees) = 38%! And the total dollars of one-day wealth transfer in just 6 months of 2020 was $7.8B. This is way worse than any given year prior in absolute dollars, but it has THE DANGEROUS SEDUCTION OF THE LIFETIME VALUE (LTVDANGEROUS SEDUCTION LIFETIMEDANGEROUS SEDUCTION CASTDANGEROUS SEDUCTION IMDBDANGEROUS SEDUCTION LMN CASTDEADLY SEDUCTION LIFETIMEDEADLY SEDUCTION LIFETIMEMOVIE
The Dangerous Seduction of the Lifetime Value (LTV) Formula. September 4, 2012: Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to A DEEPER LOOK AT UBER’S DYNAMIC PRICING MODEL 4) Uber’s dynamic pricing (“surge pricing”) affects a tiny minority of all Uber rides, less than 10% of trips. Dynamic pricing is most common on peak times on Friday and Saturday nights, on certain Holidays, such as Halloween and New Year’s Eve, and during 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
UBER’S NEW BHAG: UBERPOOL Collins and Porras suggest that the very best companies set an audacious, very long-term goal that shines a light towards “an envisioned future.”. BHAGs serve as a rallying cry for the company culture, an ambitious target for the future, and a focusing tool for corporate decision-making. As we turn the page to 2015, Uber has a newBHAG, and
WHEN IT COMES TO TELEVISION CONTENT, AFFILIATE FEES MAKE For those who do not know, affiliate fees are the primary revenue stream that funds today’s mainstream television content development. These are basically a “share” of the subscription fee you pay to your cable or satellite operator that is then shared back to the content owner/distributor (typically on a per subscriber basis). ARCHIVES - ABOVE THE CROWDABOVE THE CROWD The Thing I Love Most About Uber. “Customer First” Healthcare. The Ezra Klein Show: VC Bill Gurley on Transforming Health Care. Thinking of Home: Dickinson, Texas. Benchmark’s New General Partner Sarah Tavel. On the Road to Recap: In Defense of the Deck. Be Like Dave. Investors Beware: Today’s $100M+ Late-stage Private Rounds Are 2020 | ABOVE THE CROWD | BY BILL GURLEY Going Public Circa 2020; Door #3: The SPAC. August 23, 2020: If you are looking past or through Covid — and why not, all of Wall Street is — the topic du jour in Silicon Valley is Special Purpose Acquisition Companies, or SPACs. SPACs are all the rage, and everybody and their brother have either raised one or are talking about raisingone.
2019 | ABOVE THE CROWD | BY BILL GURLEY February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories.Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through 1996 | ABOVE THE CROWD | BY BILL GURLEY Backhoes Don’t Obey Moore’s Law: A Story of Convergence. October21, 1996:
2013 | ABOVE THE CROWD | BY BILL GURLEY A Rake Too Far: Optimal Platform Pricing Strategy. April 18, 2013: In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake 2015 | ABOVE THE CROWD | BY BILL GURLEY February 25, 2015: Every successful technology company raises money throughout its lifecycle, perhaps starting with a seed investment and progressing through Series A, B, C, late-stage investments, and, for the most successful companies 2016 | ABOVE THE CROWD | BY BILL GURLEY April 21, 2016: Why the Unicorn Financing Market Just Became DangerousFor All Involved In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “ The Age of the Unicorns ” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229. 2012 | ABOVE THE CROWD | BY BILL GURLEY December 26, 2012: Over the past several years, I have become a huge fan of Mark Armstrong’s web service, Longreads. For those of you that don’t know, Longreads is a Twitter handle ( @longreads), and a web service ( www.longreads.com) that points to the best long form content on the Internet.At its core, it’s an amazingly effective editorial and discovery engine. ALL REVENUE IS NOT CREATED EQUAL: THE KEYS TO THE 10X With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. Calculating or qualifying potential valuation using the simplistic and crude tool of a revenue multiple (also known as 2008 | ABOVE THE CROWD | BY BILL GURLEY June 30, 2008: Matt Richtel over at the New York Times wrote an interesting article last week titled, “Venture Investors Wrap Up an Unusually Bleak Quarter.”. The main data point that spurred the article is that this is the first quarter since 1978 that not one venture backed company went public. I don’t aim to dispute thefacts.
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CUSTOMERS LOVE FREE STUFF … BUT THAT’S NOT YOUR PROBLEMJune 3, 2021:
June 3, 2021: Thanks to the pioneering work of Barry McCarty and others, paying the “IPO Pop Tax” is now 100% optional.SHARE IT
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GOING PUBLIC CIRCA 2020; DOOR #3: THE SPACAugust 23, 2020:
August 23, 2020: If you are looking past or through Covid — and why not, all of Wall Street is — the topic du jour in Silicon Valley is Special Purpose Acquisition Companies, or SPACs. SPACs are all the rage, and everybody and their brother have either raised one or are talking about raising one. What are they, and do they matter right now? Historically they have been a kind of back-door way for a company to go public, and as a result have historically had a sub-standard reputation. But in light of where we are in 2020, especially withregard to the
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MONEY OUT OF NOWHERE: HOW INTERNET MARKETPLACES UNLOCK ECONOMIC WEALTHFebruary 27, 2019:
February 27, 2019: (*) Benchmark is/was an investor in companies labeled with the asterisk. In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he
outlined his fundamental economic theories. Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through the “Division of Labour”: It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has aSHARE IT
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BENCHMARK’S NEWEST GENERAL PARTNER CHETAN PUTTAGUNTAJuly 9, 2018:
July 9, 2018: The partners at Benchmark are pleased to announce Chetan Puttagunta has joined the firm as our newest General Partner. As early-stage investors, we are acutely aware of the work of other venture capitalists on the boards of the companies we serve. Nearly 15 years ago one of Benchmark’s founding partners, Kevin Harvey, saw the skills of a young Peter Fenton on a board they shared. Peter’s work so impressed Kevin that he recruited Peter to join Benchmark. More recently, Peter encountered a once-in-a-generation venture capitalist on the board of Elastic, Chetan Puttagunta. In every way, from how Chetan discovered theSHARE IT
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THE THING I LOVE MOST ABOUT UBERApril 19, 2018:
April 19, 2018: In spite of all the ink that journalists, analysts, and pundits have spilled on Uber over the years, no mainstream article has focused on what I consider to be the most elegant feature of this now ubiquitous, high growth global service — no driver-partner is ever told where or when to work. This is quite remarkable — an entire global network miraculously “level loads” on its own. Driver-partners unilaterally decide when they want to work and where they want to work. The flip side is also true — they have unlimited freedom to choose when they do NOT want to work.SHARE IT
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* As he has for years, @mims nails this. Full self-driving very, very far away. Tech enthusiasts don't love this real… https://t.co/ficbQE2G01 24 hours ago FOLLOW BILL ON TWITTERPOPULAR POSTS
* Benchmark’s Newest General Partner Chetan Puttagunta * The Thing I Love Most About Uber * On the Road to Recap: * The Dangerous Seduction of the Lifetime Value (LTV) Formula Copyright 2021 Bill Gurley. All rights reserved.Older Posts
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