All-In E81: All-In Summit: Bill Gurley & Brad Gerstner on markets, downturns & investment cycles

Key Discussion Points:

1. Market Cycles and Risk

• Bill Gurley explained how venture capital cycles work more like a sawtooth pattern than a sine wave - risk-on periods build slowly while risk-off happens abruptly
• The current risk-on cycle ran from 2009 until early 2022, with risk-off happening in just 5 months
• Howard Marks meeting discussion where he called VC a "shitty industry" due to built-in cyclical collapse

2. Inflation and Economic Outlook

• Brad Gerstner presented detailed analysis showing inflation likely peaking and rolling over
• Consumer Price Index (CPI) expected to decelerate significantly in coming months
• Used car prices, home affordability, and airline tickets showing signs of demand destruction
• Consumer confidence at 10-year lows, suggesting slowing economic activity ahead

3. Venture Capital Deployment

• $250B of committed but undeployed capital exists in venture/PE
• Estimates only 20-30% ($25-30B) of VC money will actually get deployed over next 3 years
• Many funds may choose not to call capital rather than invest in poor conditions
• Early-stage investing remains attractive due to lower valuations and better access to talent

4. Lessons from Previous Cycles

• 2001 crash led to long "desert walk" until 2005-2006
• 2009 crisis wasn't as severe for tech/venture
• Current environment has no Fed bailout available unlike 2020
• Discussion on previous cycles

5. Valuations & Multiples

• SaaS company valuations have collapsed from 100x+ revenue to 5-8x
• Companies growing 50%+ annually now trade at 8.5x revenue vs much higher multiples previously
• Need to stop anchoring to 2021 valuations and reset expectations
• More focus now on unit economics and path to profitability

6. Investment Strategy Going Forward

• Brad Gerstner predicts markets will be higher in a year but may go lower first
• Bill Gurley considering angel investing post-Benchmark
• Early stage remains attractive as companies can be built more efficiently
• More rational environment emerging with better due diligence and deal terms

The conversation provided a comprehensive look at the current market environment, with both investors emphasizing the importance of resetting expectations and returning to fundamental analysis rather than momentum-based investing.