Gurley suggests a healthcare industrial complex has emerged that prioritizes profit over cost-effective preventative care.
“People talk about the military industrial complex. We may have created a health care industrial complex that really can't stop maximizing profitability and not focus necessarily on the lowest cost, best, most preventative process.”
Gurley says Stitch Fix reached billion-dollar run rate profitably, generating $60M free cash flow on just $40M raised.
“So we're at a billion dollar run rate. We've been profitable for many quarters. In fact, when the company came public, it is over a $100,000,000 of cash on the balance sheet.”
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“The company had only raised $40,000,000. Hence, we had created $60,000,000 in free cash flow, something that's extremely rare in Silicon Valley these days.”
Gurley explains Stitch Fix stayed under unicorn status by avoiding fundraising while maintaining profitability for several years.
“One of the unique things about Stitch Fix relative to all of the unicorns out in Silicon Valley is that they've run very disciplined and profitable approach. They've been profitable for several years.”
Gurley notes Stitch Fix remained profitable for years and never raised above $1B valuation.
“They've been profitable for several years. The reason that you never heard of them as a unicorn was because they never raised money above 1,000,000,000 because they didn't really do raise money.”
Gurley says Stitch Fix was never valued above a billion because they ran profitably and didn't need to raise money.
“The reason that you never heard of them as a unicorn was because they never raised money above 1,000,000,000 because they didn't really do raise money.”
Gurley predicts many unicorns will damage equity value by avoiding public markets and profitability.
“I think you're gonna see a large number of unicorns who were afraid to play on Sunday, afraid to be in the public markets, that didn't get their act together in time, didn't get profitable, didn't understand unit economics, and and hurt the value of the equity as a result.”
Gurley observes maturing unicorns recognizing they must become profitable or go public.
“I do think we are also watching, however, as many of the unicorns mature in age, that many of them are having to come to the recognition that they either need to grow up, get profitable, go public, or do something along those lines.”
Gurley observes aging unicorns recognizing they must become profitable or go public as staying private forever fails.
“And that this this silly notion of we're gonna stay private forever is not playing out in a very positive way.”