Gurley argues companies that can't generate $100 million in revenue shouldn't take venture funding.
“I'm the first to argue that if your idea is not something that can generate a $100,000,000 in revenue, you may not want to take venture.”
Gurley calculates that owning eighty percent of a thirty million dollar exit yields twenty-four million for the entrepreneur.
“if you have a killer product that might elicit a $30,000,000 exit and you can bootstrap and hustle your way and own 80% of it, you know, 80% of 30,000,000 is $24,000,000.”
Gurley calculates that owning 80% of a $30 million exit yields $24 million for the entrepreneur.
“And so if you have a killer product that might elicit a $30,000,000 exit and you can bootstrap and hustle your way and own 80% of it, you know, 80% of 30,000,000 is $24,000,000.”
Gurley cites DP Review selling to Amazon for $40-70 million as a single-founder bootstrapped success.
“One guy, one founder and Amazon reported, no one knows the exact number, but I've heard anywhere from 40 to $70,000,000 for a single guy.”
Gurley cites DP Review, a one-person digital camera review site acquired by Amazon for forty to seventy million dollars.
“I love this story of DP Review, which is a website for digital camera reviews.”
Gurley argues venture capital has an anti-IPO attitude that prevents companies from hitting the long ball.
“in general, in the venture business, we have this problem, this kind of anti IPO attitude that I think prohibits companies from hitting the long ball.”
Gurley says Adept-style acqui-hires with license deals cannot generate venture returns after raising $415 million.
“if you're a venture capitalist and every one of your deals turned into one of these weird human acqui hires with a licensed deal back, you're not going to generate a return for your portfolio.”
Gurley warns founder equity drops from 90% to 10% while market prefers $20-100M exits over billion dollar outcomes.
“And very quickly, almost in a flash before you know it, your founder's equity goes from 90% to 10%. And I've watched it happen over and over and again.”
Gurley notes owning 100% of a $20 million exit creates lifetime wealth and attracts more acquirers than larger exits.
“Your boss won't care. If you own a 100% of a $20,000,000 company, that's lifetime wealth.”