Gurley describes venture capital as an artisan business that fundamentally does not scale.
“In the long run, we like to believe that this is an artisan business that doesn't scale and that if you want someone to help you and trusted you taking this company to the next level that you want what is an artisan,”
Gurley argues scaling requires capital and expertise even if starting a company is cheap.
“I think has come out of it is that you may be able to start a company for nothing but if you want to scale a company you will need capital and you'll need expertise to scale it to the next level. Not every single player, Benioff who got it up without venture”
Gurley argues that while starting is cheap, scaling a company requires both capital and expertise.
“And what I think has come out of it is that you may be able to start a company for nothing but if you want to scale a company you will need capital and you'll need expertise to scale it to the next level.”
Gurley says marketplace success requires doing unscalable things early, which frustrates most business school-trained entrepreneurs.
“And if you took 90% of the entrepreneurs that have been to business school and understand scaling, it drives them nuts.”
Gurley argues network effects decay as platforms scale, with each incremental user adding less value than earlier ones.
“Like what's the value of an incremental member joining LinkedIn? It's probably less than what the value of the 10,000 person that joined LinkedIn. And so there are many, many, many nuances.”
Gurley says CEOs tell him Silicon Valley is wonderful to start but horrible to scale companies.
“They say Silicon Valley is a wonderful place to start a company. It's a horrible place to scale a company.”
Gurley notes AI leaders previously implied linear scaling gains but current reality differs from that impression.
“They had left that impression. And so we get to this place as you described it, it's not quite like that.”