Gurley predicts staying private will eventually cost more than going public for some companies.
“Well, at some point, I think they're gonna be spending more dollars avoiding public than being public. It's just going be more of a hassle.”
Gurley argues late-stage private investments may be the least informed in history and shouldn't be equated to public valuations.
“These these might be these might be the least informed investment actions in in our history. And so I don't know that you can pay too much attention to the price because they're very uninformed.”
Gurley claims late-stage private market investments have less information than pink sheet stocks and may be historically uninformed.
“I mean, you you could have more financial information on a thinly traded pink sheet Canadian public company than you have.”
Gurley cites JPMorgan research showing 15% of companies lose 70% of value annually, now invisible in private markets.
“And that's happening in the private market, just like the public market, but it's invisible.”
Gurley criticizes SoftBank's strategy of deploying hundreds of millions, which forces companies into massive losses.
“I've I've been quoted publicly, like, they've, you know, played a strategy where you hand hundreds of millions of dollars to a company and say, here, go win in the market with this.”
Gurley argues staying private forever is unhealthy and going public is advantageous for companies.
“But I don't think it's healthy for companies to stay private forever. I think it's super advantageous to companies to pass through and become public.”
Gurley argues it is easier to survive downturns as a public company than as a late-stage private company.
“And so oddly, it's easier as a public company than a late stage private company to go through these types of periods.”
“Like like, you're just fooling yourself. Right? In fact, like, because of a a lack of liquidity premium, you're probably worth less than that public company.”
Gurley says private companies with weak metrics aren't better off than public ones; staying private is self-deception.
“If you're private at a 100,000,000 revenue with a 10% growth rate, it's not like you're better off. Like like, you're just fooling yourself.”
Gurley states over a thousand private unicorns have average growth rates below 10 percent.
“There's over a thousand private unicorns. Some people estimate that the average growth rate, which we should talk about because it ties into unit economics and pragmatism, is below 10%.”
Gurley estimates zombie unicorns have collectively raised $300 billion in capital.
“Yeah. Seems like they've raised somewhere between 2 and 300,000,000 each. And so you roll all that up, it's 300,000,000,000.”
Gurley states there are approximately a thousand private companies valued over a billion dollars pre-LLM.
“There's somewhere around a thousand. So these are a thousand private companies that have raised money over a billion dollars.”
Gurley argues GPs self-report private investment valuations to LPs with no incentive for accuracy.
“No one has an incentive to get the marks right. For those that don't know this world, private investing, both on the PE side and the VC side is this weird world where the GPs, the people responsible for the investments, report the price to the LPs. They get to pick it.”
Gurley identifies approximately 1,000 private companies valued over $1 billion pre-LLM era.
“So these are a thousand private companies that have raised money over a billion dollars. And Chad GBD told me it was $12.50. NBCA says 900. Let's just say it's near a thousand.”
Gurley explains private cap tables are structured to only go up, unlike public stocks.
“private one last thing. Yeah. Sorry. Private cap tables are not structured very well to go down.”