Famed investor Bill Gurley thinks that the worst advice ever given to companies in Silicon Valley is “stay private longer.”
Gurley believes that the hesitance of private companies with huge valuations to enter the public markets has set the bar for more promotional behaviour and less discipline.
Speaking on stage at the Wall Street Journal’s WSJDLive conference, Gurley compared the situation to college, when you’d be at the bar and see that one really old person that’s in their seventh or eigth year of undergrad.
“Everyone’s like, ‘What is he doing?'” Gurley said.
That’s how he thinks we should view these enormous private companies. When startups have raised hundreds of millions of dollars and have hired thousands of employees, they shouldn’t hold to the notion that they don’t need to go public.
“We need to go back to looking at the IPO as the objective,” Gurley says. “Until you get liquid, you really haven’t accomplished anything,” he said.
“What you’re signalling when you tell people that is that you’re afraid to play,” he said.
Gurley also said that the scariest thing that he’s seen in the last year is the increase in burn rates.
“Somehow we’ve gotten very comfortable with a $US20 million a month burn rate,” he said. “When did that become ok?”