Gurley argues Verizon CEO was thrilled about the wireless merger because it reduced competition in an oligopoly.
“the journalist wanted him to be more afraid. My point of view is he's probably thrilled thrilled to death that this is happening because, you know, it it's what you look for. There's less competition.”
Gurley contrasts past Microsoft dominance with today's five to seven competing monoliths creating more startup opportunities.
“When I got into venture, every startup presentation ended with what are you going to do when Microsoft does this? Right.”
Gurley identifies five to seven major tech companies today, unlike the aligned Wintel coalition of the past.
“And interestingly, they're not, you know, least with Wintel, you had Microsoft, Intel and Dell and Compaq all fairly aligned to the same initiative.”
Gurley argues hyper competition makes VCs fear missing deals more than demanding discipline from founders.
“Hyper competition has made it such that the majority of VCs biggest fear is missing out on the next investment.”
Gurley warns that if Solana replaces Ethereum, it suggests all crypto tokens are worth far less due to race-to-the-bottom dynamics.
“And that's why someone said to me the other day, if Solana eats ETH, then all of these tokens are worth far less than we imagined because there's just a race to the bottom.”
Gurley explains Minecraft and Roblox succeeded with simpler primitives and child demographics versus Second Life's complexity and adult focus.
“One, primitives are simpler. And so the creator tools at Second Life, you could do amazing rich things, but they were a little harder to use.”
Gurley suggests if Solana eats Ethereum, the next competitor could make Solana equally uninteresting.
“Yes. But I think there's an equally interesting counterpoint to that, that Solana might be cheaper than Ethereum, but then the son of Solana might make Solana equally uninteresting.”
Gurley calls the Altman-Masa plan to compete with Nvidia radical given AMD and others have decades head start.
“There are already people competing with Nvidia. AMD's competing with Like, there are other people that have somewhat of a head start. Like decades.”
Gurley argues Waymo and Cruise cannot compete because their $150,000 cars make fleet scale mathematically impossible.
“And their cars cost 150,000. So if they wanted to have like, the math just doesn't work. You can't build the footprint. You know? And so who could? I don't know.”
Gurley posed question about how player behavior changes when multiple competitors understand increasing returns dynamics in advance.
“I said to Michael one time, what if there were multiple players in an increasing returns game and they knew what the outcome was gonna look like? How would it affect their behavior?”
Gurley argues foundational AI model companies burning $100-200M annually represents poor capital allocation but may be unavoidable.
“100,000,000 a year? 200,000,000 a year? There's no way that's high quality capital allocation from my point of view. There's no chance. But maybe they don't have the alternative.”
Gurley says AI foundational models no longer qualify as startup market due to massive capital and big company involvement.
“It's already evolved to a point that's very similar to where Uber, Lyft and DoorDash ended up, where there's just so much money moving around that I really don't even think about it as a startup market anymore.”
Gurley says AI foundational models are no longer a startup market, with big company involvement being dangerous.
“If you wanted to be accurate, non consensus in a way around these, part of it ties into the big guys being interested in what they're doing with their own balance sheet to reinforce this, which I consider to be remarkably dangerous and unhealthy.”
Gurley cites Boeing as example of regulatory coziness problem in industries with longest regulatory history.
“There's a lot of talk about Boeing these days and a lack of competition and coziness with regulators. And it's a really big problem in the industries that have been around the longest.”
Gurley suggests the Magnificent Seven's dominance may stem from all players now understanding network effects dynamics.
“maybe the reason the magnificent seven exists, maybe the reason why those price wars went to where they did is just everyone got educated.”
Gurley calls foundational model companies' hundred-million-dollar annual burn rates poor capital allocation but possibly unavoidable competitive traps.
“200,000,000 a year? There's no way that's high quality capital allocation from my point of view. There's no chance. But maybe they don't have the alternative.”
Gurley says venture capital structurally sucks due to low entry barriers and high exit barriers.
“There's high competition. But the big problem, and this is structural, is there's low barriers to entry and high barriers to exit.”
Gurley says hyper-competition with every AI coding player having $400M can reduce venture returns despite market enthusiasm.
“Having crazy money in the market is not necessarily consistent with creating positive return for your venture capital portfolio.”
Gurley says closed AI model companies must compete with frontier performance while Meta gives it away free.
“If you're a closed model company, the question first is, okay, I'm going to have to compete and keep up with this frontier level competition. That's hard enough. It takes a lot of resources.”
Gurley argues NVIDIA's moat is misunderstood as people think a better chip alone could win against it.
“I think there's a notion out there that as soon as someone invents a new chip, a better chip, that they've won.”
Gurley says China graduates 35% STEM versus below 10% in US, giving China the pieces needed to compete.
“while we are, like removing advanced STEM courses in California, the number of graduates in China's university system that are STEM is 35%, and that number is below 10 in The US.”
Gurley calls anti-Chinese sentiment irrational given China's lead in EVs and infrastructure while America maintains false superiority.
“I think this anti Chinese mentality is a little nuts because if you look at low cost EVs, if you look at their subway stations, if you look at, they're leading us in many areas.”
Gurley argues tariffs on BYD will make Detroit less competitive rather than more competitive globally.
“Detroit is not globally competitive anymore. And putting tariffs on BYD's cars is not gonna make Detroit more competitive. It's gonna make them less competitive and they're gonna fall further behind.”
Gurley says China ensures 500 to 1000 competitors in target industries, letting markets select winners rather than state sponsorship.
“in these industries where they wanna succeed, they actually make sure that there are 500 competitors or a thousand competitors. And then they let the market whittle down to what the best one is.”
Gurley explains China ensures 500 to 1000 competitors in target industries, letting markets select winners rather than state sponsorship.
“what I really uncovered the detail on is that in these industries where they wanna succeed, they actually make sure that there are 500 competitors or a thousand competitors.”
Gurley identifies Microsoft, Amazon, and Apple as US tech companies not on AI bleeding edge.
“The reason I think that's an interesting data point when you think about The US and, you know, are several big tech companies that seem to be not on the bleeding edge of AI.”
Gurley argues community sharing best practices achieves higher global output than proprietary competition alone over time.
“I don't know who would force them, but they're forced to share all their best practices from that week with everybody and everyone does it and everyone shares their best practice.”
Gurley introduces farming analogy to explain competitive dynamics between open and closed innovation communities.
“I came up with a little analogy for people. I'll try and do it quickly, but imagine you had two communities. They're both farming communities and let's say there's 10 to 20 farms in each.”
Gurley quotes Ford CEO Farley saying Chinese vehicle cost and quality far superior, losing competition means no future.
“And he says even beyond that, their cost, their quality of vehicles is far superior to what I see in the West. We are in a global competition with China, and it's not just EVs.”
Gurley questions whether America benefits from Mag7's trillion-dollar valuations or if they signal market failure.
“Hearing that caused me to ask the question, does America really benefit by the fact that the Mag7 have $3,000,000,000,000 market caps?”
Gurley argues invisible hand capitalism with hyper competition is actively happening in China despite communist label.
“So I think the thing that a lot of people in Silicon Valley love about capitalism is this notion of the invisible hand and competition that leads to innovation and best practice, and the winners rise up and they're better for it. That is happening there.”
Gurley says unprecedented capital at every AI project creates uncharted competitive territory.
“now we're in a weird world where the amount of money that gets thrown at every project, I kind of lived through this with Uber Lyft because both companies had billions and billions of dollars”
Gurley describes current venture capital as sport of Kings fight to the death, different from past era.
“I say it's not your father's venture capital. This is a sport of Kings world we've evolved into and it's fight to the death.”
Gurley argues heavy regulation consistently produces oligopolies, citing airplane manufacturing as extreme example.
“in almost every industry in The US where there's heavy regulation, you've ended up with less diversity, fewer companies, more of a oligopoly.”
Gurley argues open source creates hypercompetitive dynamics where innovations are immediately absorbed across competitors.
“And if you have 10 companies all doing open source, the minute an idea is shared, it's available to the other 10, and they absorb it immediately.”
Gurley predicts the US cannot stay ahead of China in AI with two proprietary models versus ten open source ones.
“I think the odds that that, you know, The US with two, you know, proprietary models can stay ahead of China with 10 open source ones is very low.”
Gurley compares AI adoption to tractor versus donkey farming saying understanding AI better than peers prevents layoffs.
“you can just imagine a farming competition between a guy with a tractor and some drones and the other guys got a plow and a donkey.”
Gurley says college makes people competitive and sharp-elbowed when the world is not actually zero sum.
“But what I would tell people is the world's not zero sum. In any field that we're in, there's, there's many, many winners, many, many great winners.”
Gurley says people fool themselves by choosing to be bigger fish in smaller ponds to avoid competition.
“I think a lot of people are either intimidated by jumping into that severe of a situation where there's so much competition, or they tell themselves this, they fool themselves with this little mental trick,”
Gurley identifies open source as the biggest threat to leading AI model providers' businesses.
“the biggest threat to their businesses where they're cashing in billions of dollars is the open source movement.”
Gurley warns venture capital has massive oversupply of aspirants and being young alone won't make someone good.
“If you think like just being young will make you good at venture capital, that's wrong. But and it is a job that does not have a supply demand balance.”
Gurley says ultra competitive college path creates zero sum mindset when most fields actually have tons of winners.
“And in most fields, and I'm sure this is true in theater even though I've never worked in it, there's tons of winners.”
Gurley says regulation is the friend of the incumbent, used to raise prices and prevent competition.
“So they use it to actually raise prices, prevent competition, and further in ensconce themselves in the leadership role they're already in.”
Gurley says regulation is the friend of the incumbent, used to raise prices and prevent competition.
“I have a phrase I use, regulation is the friend of the incumbent. So they use it to actually raise prices, prevent competition, and further in ensconce themselves in the leadership role they're already in.”
Gurley states South Korea builds nuclear plants at one fourth the US cost, calling it alarming.
“South Korea, not China, South Korea can build a nuclear fission plant for one fourth the price that we can in The US. And someone needs to be massively alarmed by that.”
Gurley argues China built a highly competitive system inside communism through provincial competition mechanisms.
“They have built, inside of a communist country, have built a system that's highly competitive. And it comes from leveraging provincial competition and some other things.”
Gurley argues China has built a system with more intense competition than the United States.
“In fact, I could argue the model they've created has more intense competition than we have here.”
“The biggest problem is if you're a AI skeptic because you're never trying to figure that out. And the truth of the matter is humans have evolved with their tools forever.”
Gurley argues competing without AI is like farming with shovel against modern equipment, zero chance.
“If if I ask you to compete with a farmer that has modern farming equipment and I give you a shovel and a hoe and an oxen, there's zero chance you're gonna be competitive.”
“Because then we'll just throw out two examples, the coding space and the legal AI space. There's seven companies that have raised over $200,000,000 and they're all gonna mount customer acquisition strategies with those dollars.”
Gurley contrasts old fundraising where companies decided timing versus today where investors proactively offer money with implied competitor threats.
“And today people are just showing up at the door and saying, take the money. In many cases, with the implication, if you don't take it, they'll give it to the competitor.”
Gurley notes seven companies raised over $200M in coding and legal AI, making conservative approaches unviable.
“There's seven companies that have raised over $200,000,000 and they're all gonna mount customer acquisition strategies with those dollars.”
Gurley coined the phrase regulation is the friend of the incumbent to describe how incumbents use regulation to prevent competition.
“I have I have a phrase I use, regulation is the friend of the incumbent.”
Gurley warns AI companies are requesting regulation to prevent future competition and pull up the ladder.
“And at the end of that talk I gave, I said I was worried that the AI people were begging for regulation to pull up the ladder.”
Gurley suggests highlighting state versus state competition in US modeled on China's provincial competition.
“I'm I'm enamored by the provincial competition in China, and I wonder if shining a brighter light on state versus state competition could lead to some pretty amazing and positive things for our own country.”
“@MatthewBerman I think ideas become self reinforcing, and humans prefer to think of themselves as virtuous.”
Gurley describes early math competition success followed by humbling defeat in eighth grade from new immigrant students.
“I was very fortunate and got introduced into math competitions in the sixth grade and was super successful. But by eighth grade, I was getting my head handed to me.”
“Different states, counties, and cities trying different things. Beautiful and effective competition of policies. I doubt any tax bills are going down in NY State. https://t.co/7zbeckyx8l”
Gurley argues open models are inevitable in high-stakes software competition, reacting to NVIDIA-Hugging Face acquisition talks at $13B valuation
“Open, open, open. As I wrote in the @washingtonpost, open-models are the inevitable outcome of high stakes software competition. The more at stake - the more likely open wins. This is water running downhill. https://t.co/6x5qoLbw0k https://t.co/wAH0xjej7q”