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Benchmark’s Bill Gurley has seen enough tech cycles in his venture capital career to know nothing goes up and to the right forever.
And that includes the valuations of public and private companies currently duking it out for AI supremacy.
“I do think that there will eventually be a correction,” Gurley said in a new episode of Yahoo Finance’s Opening Bid Unfiltered podcast (see video above or listen below). “And one of the reasons that I feel strongly about that is that so many of the players, so many of the competitors, especially the deep pocketed venture [backed], ones that have raised tons of venture capital, they’re losing massive amounts of money.”
“More than Uber ever lost, which was a lot and more than Amazon ever lost,” he added. “And so the burn rates are bigger than they’ve ever been in the history of venture capital. And eventually they’re going to want to bring those in.”
Gurley added, “These companies then have to do what Uber did, which is transition from losing money to being cash flow positive. And as they do that, the pricing for these products is going to shift. And I just feel like that’s going to be a moment of a correction.”
Gurley is seen as a heavyweight player in Silicon Valley after decades of making bold bets on emerging tech companies.
His claim to fame was an $11 million bet on the Travis Kalanick-led Uber (UBER) in 2011. But other key investments have included Twitter (now X and owned by Elon Musk) and Nextdoor (NXDR). He presently sits on the board of online retailer Stitch Fix (SFIX).
Gurley has seen it all over the course of his career, from the bursting of the dot-com bubble to today’s AI revolution. He even worked on the Amazon IPO.
In his new book, “Runnin’ Down a Dream: How to Thrive in a Career You Actually Love,” Gurley shared several principles to finding success in one’s career. He mixed in experiences from his VC career to drive home the point of not settling for an unhappy job.
The tech veteran is right to call out concerns on the AI excitement.
Buzzy startups from OpenAI (OPAI.PVT) to Anthropic (ANTH.PVT) are losing gobs of money, yet are managing to raise more cash at ever-higher valuations. Smaller AI players also finding it easy to raise money given the excitement over the technology.
But similar to companies like Amazon and Uber that came before them, today’s AI players will have to show profits in the not-too-distant future.
“I think when the startups finally have to prove unit economics and simultaneously we start looking for optimization, you could see some things move around,” Gurley said.
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Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
Each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid Unfiltered. You can find more episodes on our video hub or watch on your preferred streaming service.
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