Gurley asks what percentage of 1,400 pre-LLM private unicorns could raise up rounds today.
“What percentage of those could raise an up round right now? Yeah. What is the number?”
Gurley says IPO bankers hand-pick price and allocations, creating expected pops as one-day giveaways to clients.
“And for the past twenty five, thirty years, you have these pops that have become expected, I would say. And it's a one day giveaway to their clients.”
Gurley argues freshman students would design IPO process as anonymous auction matching supply and demand.
“They would craft a direct listing. It's obvious that you should match supply and demand and be indifferent to who the It should be an anonymous auction.”
Gurley argues citizens mistakenly believe IPOs work like direct listings with price-based allocation.
“I think they think a bunch of people put orders in, you sort them based on who's willing to pay the highest price”
Gurley explains tech valuations depend on terminal value, so existential concerns collapse price-to-earnings multiples dramatically.
“for most of these high-tech companies, the next five years cash flow are a fraction of their actual market cap, which means all the values in the terminal value.”
Gurley says he is seeing the most risk seeking venture capital behavior he has ever seen in his entire life.
“You would have a hard time convincing me that risk capital is in shortage in America right now. I'm seeing the most risk seeking venture capital behavior I've ever seen in my entire life.”