Gurley notes Groupon had negative $900M in accumulated deficit on their balance sheet.
“there's this thing on the balance sheet that's called retained earnings, except on their side it says accumulated deficit. And they're negative 900,000,000, right.”
Gurley calls circular deals horrific and says auditors should not have approved them.
“I think the circular deals are horrific. I don't think the auditor should have approved them. And I think whenever you eventually have an unwinding, they're gonna make it worse because they won't be sustainable.”
Gurley says ChatGPT compared circular AI deals to WorldCom and Enron when given deal structures.
“I just explained the structure of them to chat GPT, and I would encourage anyone to go do this like it's a exercise anyone could do.”
Gurley criticizes circular deals where companies convert cash to revenue, saying all major AI players do it.
“You shouldn't be able to move cash from your balance sheet and create revenue on your income statement. I just don't think that should be okay. But they're all doing it.”
Gurley says ChatGPT unprompted compared AI circular deal structures to WorldCom and Enron when he described them.
“And it immediately started talking about WorldCom and Enron unprompted by me. I just said, what do you think about these types of structures?”