Tim Ferriss Show: w/ Bill Gurley on Navigating the AI Era (Transcript)

One thing that is surprising to me is that even though I fundamentally believe this is an important real technology wave, the big players, even the Mag 7, have all decided to do things from a deal perspective. You’ve read about these circular deals and whatnot.

TIM FERRISS: Could you explain what you mean by that?

BILL GURLEY: Yeah, I mean, there’s a lot of talk out there, but it all started when Microsoft invested in OpenAI. OpenAI agreed to buy services from Microsoft, which is called a circular deal, because you’re giving them money they wouldn’t have otherwise.

And when Dario was on stage at DealBook last week, he said, “Oh, I can explain. This is not that hard. Amazon wanted us to spend money we didn’t have, so they gave us even more money.” And I’m like, well, that’s precisely why this is a question of behavior.

But it’s gotten bigger. Nvidia’s handing out money and then Nvidia gave CoreWeave money, but then also agreed to buy any services they have left over. This stuff’s not ideal. If you were to say, what’s crisp, clean accounting, you wouldn’t do these kind of things. And some of them say, “Well, it’s not material,” in which I would say, well, then why are you doing it?

I’ve asked other people to try and understand how even big sophisticated companies might get speculative, using a word from the previous discussion. And I hear things like, well, you know, loss aversion tends to go down when you’re winning. If you’re on a hot streak in a casino, you take more risk, things like that.

But it is surprising to me. When it comes to retail investors, I mean, I would be particularly concerned for them at this stage in the AI game because there is a plethora of SPV vehicles. You’ve heard that phrase, I’m sure. SPV. This is where someone has an in on an investment and they do a one-off VC fund, if you will. Special purpose vehicle. Yeah, it’s a single entity, just for one.

TIM FERRISS: We have a chance to invest in X. We have an allocation of however much money and then they can allow sort of Jane Doe and John Doe potentially.

BILL GURLEY: Take a rake on it. And there’s people promoting SPVs in situations where they don’t even actually have the underlying stock, or maybe they hope to get it. It’s the wild, wild West. And most of the people on that edge, I would put in the category of interloper carpetbagger. These are people that have come to this thing and I just think you got to be quite careful.

The investments that were made that have already had 100x+ returns were made a while ago, before this thing started. And that’s not to say there won’t be an incremental AI investment that makes money. I think there will. But your odds right now of that being the case are really, really low.

Understanding Your True Risk Tolerance

TIM FERRISS: Yeah. I would add to that and say, and this applies to me as much as anyone else, but your actual risk tolerance may differ, probably does differ significantly from your perceived risk tolerance if you haven’t had a huge drawdown, if you haven’t actually ridden a few of those waves and see how you respond in those circumstances.

And you should be, I suppose, skeptical of how you view your own intestinal fortitude with some of those things or maybe the losses you can absorb. Because I recall, for instance, I’ve seen this many, many times. But with these types of SPVs, people get involved and let’s just say they’re not typically an angel investor. They don’t have the experience of watching 60, 70, 80% of their investments go to zero or become the walking dead.

And they sign off on all of the, not necessarily waivers, but they accept, accept, accept the SPV terms of service, which all say you could lose all of your investment. This is incredibly risky. But then when it does go to zero, the financial and psychological impact is catastrophic.

BILL GURLEY: There’s a lot of people, and I think this comes from a very good place. I think they’re very well-intentioned who look at the world and say, well, first of all, rising inequality. Why can’t everyone have access to the same things? And then companies are staying private longer, so they say we need to institutionalize the generic public’s ability to invest in private companies.

And the problem, I think there’s two problems. One you just hinted at, which is most private company, VC-backed, even go to zero. The majority, which is not something people really, they sense that they want the lottery ticket, they want the Uber, they want the one that goes to the moon. Yeah, but they don’t understand that that comes along with it.

TIM FERRISS: They don’t want to buy losing lottery tickets for 12 years.

BILL GURLEY: Right, exactly. And the second problem is the information transparency in the private company game is just low. And I think the institutional investors have come to understand that and kind of know what they’re getting into and know how to evaluate things.

But if you come at it with a public market mindset, thinking, “Oh, every set of financials I’ve been handed is audited and is correct,” that’s just not the case. It’s super loosey-goosey.

How to Approach Angel Investing Today

TIM FERRISS: So if you were, this may be a difficult question, but if you were angel investing right now, how would you be thinking about your approach?

BILL GURLEY: I’ll tell you a funny story. When I decided to hang up my gloves, if you will, and stop making institutional venture capital investments, I had a whole bunch of ideas about what I wanted to do next. And one of them was, I’ll do a bunch of angel investing. Bezos did it on the side. This would be fantastic.

TIM FERRISS: He did pretty well with his angel investing.

BILL GURLEY: I was explaining this to a, I won’t say who it is, but a Silicon Valley CEO, very successful. And he said, “What are you going to do now?” I said, “I was thinking of doing angel investing.” He goes, “Why would you do that?” He said, “I got 50 of these things. People don’t return my calls.” He goes, “I wish I’d never done it.”

So there’s an unglamorous side to it as much as there is a glamorous side. And you’ve participated in this world before. What would I say? I think if I were doing angel investments, I’d try and find an intersection of people that are super curious and are playing with all these AI tools, but bring a perspective from a particular industry that gives them an advantage in that area where they could simultaneously be maybe the smartest user of AI in their genre, in their vertical.

TIM FERRISS: So despite the, or maybe because of, because we talked about the pair, the AI bubble, you would still be looking at AI-intersected opportunities if you’re angel investing.

BILL GURLEY: Yeah, there’s a weird reality out there right now and this could end if ever a bubble has popped or whatever. But the institutional investors have zero interest in non-AI deals. Zero. It’s more black and white than I could be successful.

TIM FERRISS: And for people who do not know the term, define the institutional investor.

BILL GURLEY: People who are paid both a salary and a piece of the return to be active investors of other people’s money, using other people’s money.

But the reason that kind of matters is if you angel fund a deal and have any hope of it raising money in the future, if it’s not AI-related right now, it could die of neglect. There is no interest. I can’t state clearly enough how there’s zero interest.

And I could simultaneously make fun of that reality, but I could also justify that reality. But it is the reality right now.

A Warning: Become AI-Enabled or Risk Obsolescence

And by the way, while I mention that, I feel obligated for your audience: I don’t care what field you’re in, you should be playing with this stuff. It has the potential to impact your role in your career. And the best way to protect against any risk of your career being obfuscated or eliminated from AI is to be the most AI-enabled version of yourself you can possibly be.

China’s Tech Ecosystem and Competitive Dynamics

TIM FERRISS: How would you think about, maybe you can give a hypothetical example of looking for someone who has very, very sophisticated domain expertise and experience, who’s now intersecting with AI and has a unique, because of the combination, perspective on things to invest in as an angel investor? Separate that from something that’s just going to be consumed by the fundamental models in these larger companies.

BILL GURLEY: From a career perspective or from an angel investment perspective?

TIM FERRISS: How would you pick folks you don’t think are just going to end up working on something that gets replicated in short order by the bigger companies?

BILL GURLEY: The key is just to stay pretty far away from the edge of whatever. I mean, you can go online and see interviews with people at Anthropic or OpenAI and what they’re working on. If it’s the next thing they’re going to do, I don’t think you’re going to be protected.

But as I think about founders and angel investors, you’re talking about a pretty broad array of things at this point. As I mentioned earlier, you’re not going to back the next big model company. Besides, if you were, you need a billion dollar angel investment to go make that happen. The game’s changed. There’s so much money involved. I think you’re going to want to be off the beaten path anyway.

When I think about these deeper verticals, I don’t think it will make sense for OpenAI to go crush every little vertical.

TIM FERRISS: Waste management.

BILL GURLEY: And even if the model is capable of understanding that subject matter, there are workflows, there are data sets that are local to your customer and that stuff has to be stitched together. So I think having an understanding of a particular industry and one that’s not going to be on the next thing to do list at OpenAI would probably be your best bet.

TIM FERRISS: Got it. So is it fair to say, if I’m understanding you correctly, that effectively looking for something that would not be a high priority for one of these larger companies, and also proprietary data set of some type?

BILL GURLEY: Proprietary data sets. The more workflows that exist are better because you can build software around those things.

TIM FERRISS: What is a workflow?

BILL GURLEY: The thing that popped in my head, I’m on the board of Zillow. Zillow has been investing for the past five years in tools that help the Realtor do their day to day job. They have a tool called Showing Time that helps you book in person tours at houses as an example. But there’s putting the mortgage together, getting the sign off. So there’s just all these tasks that have to happen, tasks that can be automated, that can be integrated with AI.

The more of that stuff you can build into a system, the better off you’re going to be protecting yourself from a model that just answers questions. Which is why I brought it up.

Ten Days in China: Observations and Insights

TIM FERRISS: Let’s move on to big topic, big country: China. You spent 10 days there over the past summer. What was your experience? What did you see? What made an impression? What did you do?

BILL GURLEY: I’d been about six times before, so this is like my seventh trip. One thing that was different, my daughter is an Asian Studies major, as you were, and she spent the summer in Hong Kong. So we picked her up and then we toured six cities in 10 days.

And my objective with this trip, in the past trips it was mostly just to meet with entrepreneurs and founders and mutual sharing of information, that kind of thing. This time I was more interested in just being eyes wide open and learning. And so we took two of the high speed trains just as an experience set. I got a tour of the Xiaomi factory with their new car, the SU7, and was trying to get a feel for what’s most recent there.

And we went to Shenzhen Overnight City, which has gone from I think less than 100,000 people in 1980 to 20 million people, just to see the scale and scope of the whole thing. There’s a lot of rhetoric in the US about what is or isn’t happening in China and I just wanted to have a better feel for it.

And we’re making policy decisions that are going to impact the global footprint and God forbid, end up in a World War III kind of situation. So anyway, I just wanted a better understanding. I was aided by the fact that Dan Wang shared his book “Breakneck” with me right before I left and I read it while I was there, which was interesting. And then it came out and of course it ended up on the bestseller list. But I think China’s misperceived in a lot of ways.

TIM FERRISS: What are some of those misperceptions?

Misunderstanding China’s Economic Model

BILL GURLEY: The biggest one is that people who have a rudimentary understanding of what is happening there use this word “communism” to infer a lot of other things. And one of the things that’s inferred by communism is top down state run system and they think of Russia and they assume, well that’ll always lead to bad capital allocation, no innovation, because they have this picture in their mind of these brick buildings with snow all around them and not much happening.

And the reality there is just far, far different from that. I think Dan Wang did a great job of explaining how the country puts out this five year plan. But then the provinces, which are a lot bigger than a US state, but they’re the equivalent, it’s how the country segments, and they compete with each other.

And the effective mayor of the province, if he does well, has a chance to move up in the system, which is not a reality in the US system. But what that leads to is just a massive amount of competition.

TIM FERRISS: What are the metrics by which they’re being judged? Do you have any idea? On a province level, is it some equivalent of GDP? It’s not the right term, but I’m guessing.

BILL GURLEY: Probably. We could go talk to AI and get a better answer than I have right now. But yeah, I would think that’s part of it. Prosperity, employment, those kind of things. By the way, this provincial competition has also led to overbuild of buildings. It’s not always positive. Bridges that aren’t used.

TIM FERRISS: Ghost cities.

BILL GURLEY: Ghost cities, yes. But you end up with hyper competition. So I think the thing that a lot of people in Silicon Valley love about capitalism is this notion of the invisible hand and competition that leads to innovation and best practice and the winners rise up and they’re better for it. That is happening there.

And if you read about the solar industry or the EV industry or now the robotics industry, they have hundreds of different companies competing in these fields and it’s brutal competition. And as a result of that they’re ending up with very innovative companies, which once again I think people wouldn’t prescribe to being possible in a communist world. And remarkable execution from an industrial standpoint.

So the price points of the products that will be sold around the globe are well below anything that could be done in the US.

Inside the Xiaomi Factory

TIM FERRISS: How do you go about getting a tour of Xiaomi factory? I would think that they would be very closed about that. What’s in it for them and how do they…

BILL GURLEY: I don’t know if you saw this going around the Internet yesterday, but they shipped a car to this YouTuber.

TIM FERRISS: Oh yeah, I saw it.

BILL GURLEY: Which is brilliant. And he did a 15 minute video. That’s the SU7, that’s the factory I went to. As I mentioned, I’d been there before. So I met Lei Jun, who’s the founder of Xiaomi in 2005 when he was chairman of Joyo which was an e-commerce company that Amazon bought. So he’s been around a while.

Yeah, he has evolved into, the best thing I could say is he’s the Steve Jobs of China right now. When he quit doing Joyo and he had this other company as well, he declared 10 years ago he’s going to build a smartphone. Just out of the blue, “I’m going to build a smartphone.” He didn’t have any smartphone experience but Xiaomi is now the third largest manufacturer of handsets in the globe.

And about four or five years ago at about the exact same time Apple hinted they were interested in building a car, he said “I’m going to build a car.”

TIM FERRISS: Well not only did he say “I’m going to build a car,” but that was a response to sanctions, right? It was an emergency. As I listened to one of, what I listened to the translation of, even though my Chinese is decent, but it’s not as good as it once was, his I think it was 2024 company wide address where he talked about the sanctions coming in, saying “What if we couldn’t make phones, what would we do?”

BILL GURLEY: That talk is unbelievable. And it’s translated on YouTube and I would encourage people to watch from about minute 30 to about an hour 15, which is where he talks about his process for designing the car. I don’t know if you saw that part.

TIM FERRISS: I did.

BILL GURLEY: But it’s crazy. He says he put a note on any car in his parking lot that he had never drove and he would ask each employee to give him three positives, three negatives and loan him the car. Said he drove 200 of his employees’ cars. When you hear that kind of stuff you’re like “Wow, I wonder if anyone at Apple did that.”

I mean it’s just such a bottom up, just ground truth way to start the process. But even still, even if you did that, a bunch of people could do that. How do you have the wherewithal to build a factory? He never built a factory before. I’ve been in other car factories here in the US. It was phenomenal.

Anyway, back to your question. Why I could get in is I knew Lei Jun from way back.

TIM FERRISS: What does the process look like? Are there a bunch of clearances and you have to get the okay from the provincial…

BILL GURLEY: I don’t think we went through the whole factory, but no, I mean, they’re a public company. I think they’re interested in the experience.

TIM FERRISS: Well understood. Yeah.

BILL GURLEY: Which I think hints at why they enabled this. I think they had to send a car to this guy, the YouTuber. And by the way, the president of Ford went over there about six months before I did, went on the same tour. So they let him go there and he had an SU7 shipped to Michigan and he drove it for several weeks. And he’s talked about how incredible it is.

TIM FERRISS: Well, he also, if I’m remembering correctly, has talked about EV production and battery dominance, or at least component dominance from China and the sort of risks inherent in that. I don’t want to bleed too far into geopolitics, but it’s hard not to pull it into the conversation.

So this is a question from X, the artist formerly known as Twitter. One of many questions. But I’ll ask, what are your top handful of critiques, say, of the Chinese tech ecosystem or CCP, after going on a tour there? What would you say they’re not doing well or things that complicate their ability to compete?

Critiques of China’s Tech Ecosystem

BILL GURLEY: The first one that I think’s been well publicized is when an entrepreneur has risen to a level of success and then uses that as a platform, the government seems uninterested in that. So exhibit A: Jack Ma. And there’s a saying that I think I heard while I was over there: “Don’t be the tallest tree.”

TIM FERRISS: Don’t be the tallest tree. “The nail that sticks out gets hammered down” in Japan. They have a totally different system.

BILL GURLEY: Obviously the other entrepreneur outside of Lei Jun is the ByteDance CEO. And ByteDance probably got the leading position for the consumer AI, like OpenAI, but over there right now, in addition to just incredible revenue growth. This is the company that owned TikTok and whatnot. But they’re not going public and you don’t see him at all, which may get to this tallest tree thing.

TIM FERRISS: I mean, celebrities also disappear over there very mysteriously.

BILL GURLEY: Yes. And business people.

TIM FERRISS: Yeah.

BILL GURLEY: So yes, that does happen, I will say.

TIM FERRISS: And for people who are wondering, right, because there are a lot of, how should we put this? I mean, there are people who are very angry, very hawkish. Some people are very, very supportive and then their agendas or alliances get questioned. I, like you, I’m just interested in understanding what is happening to the extent that I can.

BILL GURLEY: Right.

China’s Infrastructure and Manufacturing Advantages

TIM FERRISS: What is the actual truth on the ground? What are the details? And frankly, I mean the innovation over there is remarkable. And what they’ve done in terms of establishing access to rare metals and everything they need to manufacture is remarkable. You go to South America or Africa and it is Chinese everywhere on infrastructure projects. I mean, they’ve been very, very smart about it.

So I’m deeply interested in all of it. And please hold your thought because I want to hear everything you have to say. What I would say is a piece of the three dimensional chess that I’ve been impressed with is how well the Chinese government is able to, well, I mean, of course they’re able to integrate with the private sector so that they’re able to use in a sense products to widen their scope of access potentially. Like DJI for instance. Great example.

People have a lot of questions around these cars, as spectacular as they might be. Are they an extension of surveillance? Right. These are open questions that I think are worth asking. But you’re about to say something.

BILL GURLEY: No, no, no, no. I think, let me make one point and then let’s come to that. So there’s two other things I wanted to mention. Obviously infrastructure. So they are building new nuclear fission plants. So fission being old school, not new school at one quarter the price that we do it here in the US So is South Korea, by the way.

TIM FERRISS: Yeah. And the numbers are incredible.

BILL GURLEY: But when we sit here and say, oh, we want to reshore manufacturing and they can build things at one quarter the price we can. If you don’t solve that, you’re going to reshore something and we’re going to not be price competitive globally. And then because you won’t import what they have and you’re going to make our citizens buy this new from this new factory where we’re making things way more expensive. It doesn’t work.

TIM FERRISS: Like the math doesn’t matter.

BILL GURLEY: It doesn’t work. And by the way, I’m not sure it brings jobs. The Xiaomi factory was a third. Based on some numbers I was able to acquire a third the number of employees per car output. And I got to believe in 10 years it’ll be a sixth. And so you could calculate the total number of jobs you’d be bringing back if you brought back all this car production. And it’d be hundreds of thousands. It’s not millions and millions of jobs.

So anyway, that infrastructure thing’s for real. And I think Dan Wong does a good job of saying that America is run by…

TIM FERRISS: This is the author of Breakneck.

Engineers vs. Lawyers: Different Approaches to Growth

BILL GURLEY: Our country is run by lawyers and theirs is run by engineers. So when you try and build something here, the lawyers just get in the way and try and block it. Which certainly when you hear Elon talks about why the gigafactories here in Austin and not in California all relates to those things. So anyway, that’s infrastructure.

There’s another thing that I think quite interesting, which is the government may not care about whether or not their companies have really big market caps. And when I first realized this, you know, you saw what happened when they took down Alibaba, when they went after Jack Ma. Ant Financial could have been this big thing and it got, you know, haircut. And you question, well, do they care?

And if you are pushing your companies to be low cost providers, maybe that’s at odds with them being hyper profitable and really big. And then you can turn around and ask the question. Hearing that caused me to ask the question, does America really benefit by the fact that the MAG7 have $3 trillion market caps? I know the employees of those companies do, but is that a sign of our competitive capitalistic society not being truly competitive on a global scale?

And even within like there’s a notion you learn about in economics classes called pure competition. And in pure competition, no one has an intellectual property advantage. Marginal profits are whittled down just to the cost of capital and the consumer benefits because there’s no excessive profit capture. If we have all these companies that are able to kind of have excessive profits, is that a form of market failure?

And does the fact that they exist help America in any way? At first, of course, I’m a venture capitalist. I want to think yes, of course. But then as I think about it, I don’t know that our government or our society or our people are better off because these six companies have $3 trillion market caps. It’s not that many people that the percentage of the country that’s employed by those companies is small on an overall basis. And so anyway, I think they have a different perspective on whether big market caps matter. And I think that is somewhat intriguing.

Technology and Surveillance Concerns

TIM FERRISS: What do you think about the innovation in China leading in some cases to the development of superior technology at a lower cost that is plausibly an extension of the intelligence gathering apparatus of the government. Is that a real thing?

BILL GURLEY: I’m not in a good place to know.

TIM FERRISS: I would have to imagine it seems like they would have to be stupid not to use that, given their ability to penetrate.

BILL GURLEY: I think it’s certainly well known that they do surveillance of their own people. And I know that would be particularly upsetting to people like Greg Lukianoff, that runs FIRE and is very interested in free speech. The flip side is there’s very little street crime. You walk around, you don’t worry about that when you’re there.

TIM FERRISS: Yeah, it’s true. Also in Japan, though. Right.

BILL GURLEY: It doesn’t make it right or wrong. It’s just, it is what it is. And I don’t know that we have this ability to kind of tell them how they have to do it. Now, to the extent that the Huawei stuff, where their products are being shipped out and then those are used to gather intelligence out of their country and the rest of the world, of course that’s a problem.

TIM FERRISS: Yeah.

BILL GURLEY: But I think the way to deal with it, I’m not a politician, but I think the way to deal with it, I’m more of a believer of engage. Talk about what you don’t like and what you do like and try and negotiate that problem away like we’re trying to do with the fentanyl precursors. Yeah.

TIM FERRISS: Well, way back in the day, when I was an East Asian Studies major, this was lifetimes ago. And keeping in mind, I was at the Capital University of Business Economics in 1996, that was the bicycle era. These old photographs of Beijing with millions of bicycles with people in their long green jackets. I had one of those jackets for the winters. It gets really cold. But things have changed a lot.

At the time, I was looking forward and thinking I might be one of those people who could engage in Chinese. I think the way to do it is in English, frankly, for a whole host of reasons. But even if you speak the other language, like Putin speaks English pretty well, but he does all of his negotiations when he’s speaking in Russian. For a lot of good reasons. The same good reasons.

BILL GURLEY: First of all, I do get accused of being like an agent of the CCP or something, even by some of the people that responded to your Twitter thing.

TIM FERRISS: I’m not.

BILL GURLEY: I’ve only visited a few times. I don’t know anybody in the government. But I worry greatly that we make bad policy decisions if we misunderstand what’s really going on. I agree with that.

TIM FERRISS: I fully agree with that. I mean, I’ve thought about, I frankly am worried about it. I mean, I would take a burner phone and a burner laptop. I’ve thought about, because I want to get a better understanding of the culture of innovation that can be fostered and exactly how things are to the extent that it would be visible to me how things are developing in China, I’ve thought about going there. I thought about doing the same thing in India too. To go and interview like 10 of the top entrepreneurs. Right.

But the reason I haven’t done it is that I’m just like, I don’t know what radars that’s going to put me on, what kind of surveillance, what kind of fill in the blank, how difficult is it going to be, who am I going to, whose rings am I going to have to kiss. Am I overthinking it or is it…

BILL GURLEY: I think you’re overthinking it. I think the odds that Tim Ferriss would disappear in China is really…

TIM FERRISS: Oh, I’m not worried about disappearing.

BILL GURLEY: That would be terrible. The upside, downside on that doesn’t make any sense.

TIM FERRISS: I’m not worried about disappearing.

BILL GURLEY: There are companies that may not speak with you. Like when I was there, DeepSeek and Unitree, the word was kind of out on the street that they’re not meeting with Westerners. Yeah. You know, for reasons that are…

TIM FERRISS: Well, I’m sure that’s true conversely in the US too. Right?

BILL GURLEY: Yes. Oh, yeah. And by the way, I think that reflective, you know, lens when you think about the country is helpful. Like when Alex Karp was just on stage at DealBook last week, he was talking about surveillance and he says, “Well, of course our tools are used to surveil the enemy.” And I’m like, okay, well my God, the Chinese are surveilling us, but obviously we’re surveilling them too. Let’s be honest about these things.

TIM FERRISS: Yeah. I mean, it’s a lot easier for a bunch of obvious reasons, in some respects, a lot easier for them to surveil us than the other way around. I mean, partially just due to the homogeneity of the society over there. Right. You can’t send a bunch of blonde haired, blue eyed, black, Latino, whatever to China to end up at top universities, top companies, et cetera.

Supply Chain Integration and Manufacturing Reality

BILL GURLEY: It’s just a lot harder. By the way, to put a bow on this part, I would say there’s two other things. One, you hinted at. One, the supply chains are so integrated in China down to the raw material level that even if you brought a factory back here, it’d be more of an assembly shop, and you’d still be sourcing from there, which isn’t necessarily cost competitive. And to replicate all of it would take a very, very, very long time.

TIM FERRISS: Well, including raw materials for staple pharmaceuticals. I mean, there’s a lot going on. So what at this point, is it a day late and a dollar short for the US I know I almost promised you we’re not going to go into this, but I want to know your opinion. I’m so curious.

What are the keys to the US remaining globally competitive and vibrant as an economy? You hinted to one which is, I mean, it seems kind of inevitable. Nuclear power or more power. So how do you do that? I’m not sure how quickly you can right the ship, although it seems like a handful of people have done a pretty good job of changing the narrative. What are some of the key things, in your opinion, that the US needs to do?

Keys to US Competitiveness

BILL GURLEY: One is make it easier to build, build companies, build, I think, build infrastructure. You’re going to build semiconductor plants if you’re going to build nuclear plants on time and on budget, that’s very hard to do in the US right now. And the glimmer of hope, I would say, is that a few states seem to have governors that want to get stuff out of the way.

And I think it’s red tape and bureaucracy and lawyers and litigation that make this stuff so expensive. And so Texas and Arizona seem to be getting their unfair share of data centers and semiconductor plants, I think, because of that attitude. I’ve seen a similar attitude in Pennsylvania, you know, where they repaired I-95 in 12 days, but they literally had to take a bunch of statutes that are on the books and say they don’t apply right now. So that mindset, I think, needs a lot more momentum. That’d be one thing.

There’s another thing that I think is important for people to understand. On the China front, there are numerous people with a loud microphone that will say, “Oh, they know how to scale out plants, but they don’t know how to do any innovation.” And that’s just flat wrong. Whoever’s saying that just hasn’t been there. They don’t know the facts on the ground. These entrepreneurs are every bit as good as the entrepreneurs here.

There are examples, like in LiDAR, they built a MEMS LiDAR product that’s like $130 a car.

TIM FERRISS: What is MEMS LiDAR?

BILL GURLEY: LiDAR uses solid state semiconductor technology instead of that big spinning radar.

TIM FERRISS: Yep.

BILL GURLEY: And so the LiDAR on a Waymo is five grand. It’s 130 bucks for MEMS LiDAR they’re putting on every car. You can go in the ChatGPT and say, “Tell me about MEMS LiDAR innovation in China.” It’s a great example. Leijun’s another one. Anybody that thinks there’s no innovation is just, yeah, they’re just wrong. They got blinders on. Yeah.

TIM FERRISS: No, that’s not true. That’s definitely not true. I asked you two years ago if there are any countries that you’re long on. At the time, I’d be curious if this is still the case. You said you’re long on the UK. Less regulatory capture.

BILL GURLEY: Did I say that?

TIM FERRISS: Losing party pay is in the legal system.

BILL GURLEY: I do love that.

TIM FERRISS: Which reduces frivolous litigation compared to the U.S. Any thoughts on where you’re bullish these days?

BILL GURLEY: Well, ironically, Matt Ridley was in town a few weeks ago.

TIM FERRISS: The rational optimist.

BILL GURLEY: Yes. I love his stuff, but he would say that I would be dead wrong on that. Things aren’t going well there and he lives there. So I’ll just take that as I got that one wrong.

TIM FERRISS: Well, I mean, it depends on the timeframe too, right? Is it two years or is it five years, or is it 10 years?

BILL GURLEY: One of the things that’s been impressive about China is, you know, since Deng Xiaoping kind of brought back capitalism, 500 million people have come out of poverty. And you look at countries that have a very strong work ethic and a high education and a low, currently low per capita income, and you would think more jobs would come their way.

So two that would pop for me are Vietnam and Turkey, who kind of check all those boxes. Hopefully I do better. Check in in another two years.

TIM FERRISS: All right, so let’s talk about this is going to be a segue to talking about Running Down a Dream and all things involved with that. Maybe we could start with an anecdote from a fellow Austin Knight, likes to play the bongos. Long hair associated with smoking reefer every once in a while. Matthew, you’re talking about a short anecdote about Matthew before we started recording. Would you mind sharing that?

The McConaughey Story: “Don’t Half Ass It”

BILL GURLEY: Because I was kind of wrapping up the book, I started listening to Greenlights and I was told you had to listen to it because of course he reads it. So you get all the great McConaughey affections as you read it. But there’s a story in it that just popped in my brain and kind of summarized exactly what I’m trying to accomplish with this book, Running Down a Dream.

And he had spent the vast majority of his young adult life, so this anecdote’s from when he was like 20, 21, telling his family he was going to be a lawyer. And so he’d gotten into the University of Texas, he was pre-law. Every time he went home, he talked about, yeah, I’m going to be a lawyer.

And he had met some people at Texas that had convinced him that he should switch to film school. And he had immense anxiety about sharing this with his father. His father, this is all in the book, but his father’s a very tough individual and so reason to be fearful. You know, when you’re going to drop some news, no longer going to be a lawyer, I’m going to go to film school.

And he builds it up a lot in the book. Like, I didn’t know when I was going to talk to him. You can imagine being in that situation. You’re delaying, delaying, delaying. But he finally tells his dad and his dad utters this very simple phrase: “Well, don’t half ass it.”

And he says, you know, of all the reactions he could have had, “don’t half ass it” were the last words I expected to hear and the best words he could have ever said to me. And he said in that single moment, he gave him blessing, consent, approval, validation, privilege, honor, freedom and responsibility. Called it rocket fuel.

And I’d like to believe there are a number of people out there, young adults, maybe even some mid, midlife career, who have this notion that they should be doing something else. But society has put them on a path or just the way they matriculated through college, put them into a career that they just don’t love and that they have this inkling that they could go do this thing.

Or maybe you’re a young kid and you really want to do X, but everybody else is telling you to do A, B and C. Like, I want to help them have the confidence and permission to go do X, to go chase this dream.

And as you hinted at from our last call, I think the amount of your ability to make connections and to gather information and learn on your own pace has never been better. You can literally just sit there and talk to ChatGPT six hours a day if you so choose and learn so much about any particular field. And so like your ability to take things into your own hands and to go try and be successful in this thing that you feel passionate about, I think has never been better.

TIM FERRISS: Why do you think when you initially gave and subsequently had to go online, Running Down a Dream as a presentation, why do you think that took? Why did it strike a chord in the way that it did? What do you think it was?

Why Running Down a Dream Resonated

BILL GURLEY: I think we’ve built a society, like nobody’s fault. Like we just have built a society where we love to celebrate people that are successful in a lot of different fields. But when it comes to our own children, we tend to think way more pragmatically about what they should be doing. You know, lawyers, consultants, doctors, computer scientists. Like it’s all these jobs that have certainty to the financial component.

And I think that’s like so well intended. Like I don’t think there’s malintent of anyone in the system. And I’m a parent of three. Like I’ve been through this. You just feel this obligation to try and push them towards prosperity. But it’s not intellectual prosperity, it’s not happiness, it’s financial stability. Yes, that most people are guiding children towards.

This isn’t that complicated a math. But most people end up working 80,000 hours in their life, is a third of your life. Why do something you don’t like? There’s Gallup poll data on career engagement and 59% of people say they’re not engaged at work. And this is that whole quiet quitting thing that we hear so much about. And some of these numbers are at an all time low and it just seems horrific that people are kind of sauntering through life.

TIM FERRISS: What are some of the keys to taking the path less traveled than in this case? Right. There are a few I highlighted for myself. But where should we start? I highlighted one for myself. We don’t have to start here, but go where the action is. I just think this is so underrated and people further undervalue it. Maybe in a digital world, but we can start anywhere you want. That’s just one that really jumped out to me because I think it’s really underrated. But where would you like to start in the book?

The Interplay Between Passion and Learning

BILL GURLEY: One of the things that we tie together very early on is the interplay between passion or fascination or curiosity and learning and the way to be most successful in any endeavor. But certainly if you’re going to go tilt it, something that’s less pragmatic is to be the smartest, most knowledgeable person you can possibly be. And knowledge is free now, as we’ve talked about.

And I have this test for whether or not you’re actually truly passionate about what you’re trying to do, which is do you self learn on your own time? Like would you not watch Breaking Bad and read about this field and be energized by that activity? If you are, and you know, we have 20, 30 different stories in the book of people that have been successful, almost all of them check that box.

You just have this amazing ability to gain knowledge so much faster than everyone else you would be competing with. And that’s going to be useful. That’s unquestionably going to be useful.

TIM FERRISS: It makes me think of an interview I saw a long time ago. Actually, it was quite a few years ago, but it was an interview with Joe Rogan, and he said something that surprised me. It might surprise a lot of people, which was along the lines of, he’s not good at, it was either willpower or discipline, which he’s in great shape, obviously. He’s black belt in jiu jitsu. He’s done what he’s done with the podcast. He’s the undisputed king of podcasting, et cetera, et cetera, et cetera.

And he said, “I’m not actually good at,” whether it was discipline or willpower, “but I am good at obsession. And it’s all on or all off.” And I’ve seen that. I’m sure you’ve seen this in a lot of the entrepreneurs who actually make it to the other side and create these mega successes. They are just obsessed. And that gives them a huge not just knowledge advantage, but endurance advantage. You just go down the checkboxes. It’s all advantages.

BILL GURLEY: I had the opportunity to talk to Angela Duckworth when I was working on this, and her book Grit talks about two components: passion and perseverance. And I heard a podcast she had done recently where she said if she could go back, she would put far more weight on the passion and the perseverance, because, she says, we’ve taught our children to grind.

And so once again, starting in sixth grade, they’re told to learn the flute and take lacrosse and do all this stuff and crush the SATs and take the extra credit classes and all this, and they all do it, and then they go to college and how are you doing? They take six hours of class instead of four, and they’re just going.

But eventually, she says, if you don’t have that passion, you just burn out. And so you’re right about the energy part. I think it’s both knowledge and you’ve put in more cycles.

TIM FERRISS: Yeah. It makes me think of maybe this is cliched in Silicon Valley because it gets so oft repeated, but a lot of folks listening will not have heard it, which is if you’re looking for the next sort of technological breakthrough or something on the edge, look for what the nerds are doing on the weekends, right? It’s not just a great way to find what might be coming around the corner in a few years. It’s a great way to find the people to bet on who are already using their excess, their free time to work on these things.

BILL GURLEY: No doubt.

TIM FERRISS: I think of Bre Pettis and 3D printing. I mean, I can just go down the list.

BILL GURLEY: And by the way, that’s another advantage of going to the epicenter, is there’s more people doing that all the time.

The Bob Dylan Example

TIM FERRISS: Let’s talk about people might be surprised by this, but Bob Dylan, right? I think this is just the quintessential example. Why is he relevant to what we’re talking about?

BILL GURLEY: When this idea popped in my head, I had finished the third biography and contrasted it with these other two. And I just saw all these patterns. VC is a game of pattern recognition, I guess my brain’s just developed. I was like, oh, my God. It’s all this kind of lock thing where these three people had all done the same thing. And one was a basketball coach, one was a restaurateur, and the other was Bob Dylan. Not people, you would not industry. Hey, this is where you should get career development advice, right?

There’s a part of the Dylan story that most people wouldn’t know unless they had read all the biographies or maybe seen the Scorsese documentary. But the new movie misses the whole thing, which is the pre-New York. Bob Dylan was hanging out in Minnesota studying folk music at such a deep level that I feel confident in saying when he left, he knew more about folk music than any other human in Minnesota.

And he was borrowing, maybe that’s even a euphemism, he was stealing his friend’s albums. He was going into the record store, into these listening booths. Like he knew all there was to know and had studied every bit of it. And he’s referred to by Scorsese as a music expeditionary.

And the people that knew him in New York said he could mimic any one song. It’s not what you would think of when you hear a Dylan song. That he had kind of mastered the bedrock underneath and then started innovating.

Picasso, by the way, same thing. Perfect realist painter at age 14. If you go to the Barcelona Picasso Museum, it’s in geographic order. And you’re kind of shocked at how good a realist this kid was before he went and did this other thing. That bedrock knowledge, I think, is so differentiating for someone to have all the history and then to start doing the innovation.

TIM FERRISS: What was the before and after on Dylan? Sort of Minnesota, New York City. And why is that such an important…

BILL GURLEY: And just to even pile on more on this kind of studious part of Bob Dylan. He did a podcast series for a while where he just walks through all these different genres of music and you’re…

TIM FERRISS: You’re talking about Bob Dylan himself. I didn’t realize this.

BILL GURLEY: You can go find it. He stopped, but he, and then that book he put out of the 50 best songs, that coffee table book that came out two years ago. It’s incredible the amount of knowledge he has about songs, you know, outside of his genre, everything. So he’s a clear student of what he’s doing.

I think this is well known and is covered at the beginning of the movie. He went to New York to find Woody Guthrie, probably the single kind of most deterministic and ambitious mentor pursuit story that I’ve ever heard of. Like, he hitchhiked there with no money and found him and became friends with…

TIM FERRISS: This echoes back to go where the action is also.

The Epicenter Effect: Bob Dylan’s Manhattan Move

BILL GURLEY: Oh, no doubt. And by the way, he landed in Manhattan at the center of the folk music scene. And all those people he was studying when he was listening in Minnesota, they were all there. He got to know them all. If that doesn’t happen, I don’t think Dylan happens.

TIM FERRISS: How relevant do you think the “go where the action is” now, considering the access to information using ChatGPT or other tools, et cetera, et cetera, et cetera. Maybe less so. Access to mentors, although you can have virtual relationships. But how relevant do you think that is? I’ve got my own opinion, but you—

BILL GURLEY: You could certainly have the type of peer and mentor experiences that are remote. I have a great anecdote about MrBeast in the book that we could talk about. That was a remote one. But the benefits of being in and around a whole bunch of people that are chasing the same thing is so high.

And I think the intuition is, oh, well, it’s going to be even more competitive. So why would I go? Wouldn’t it be better to try and do this in a town where it’s less of a big deal? But the problem is your learning is impacted, your access to peers and mentors is drastically reduced, and then probably most importantly, your optionality gets cut so dramatically.

People think that a lot of success stories, they attribute it to luck. But there’s that famous saying, “luck is when preparation meets opportunity.” And when you’re in the epicenter, both your preparation and your opportunity go up 10x. And so your ability to just have that lucky moment where you get brought into something is so much higher.

The Power of Serendipity

TIM FERRISS: So the lucky moment is, I think, really important to underscore in terms of going where the action is, because there’s a lot you can do virtually. But let’s just say you’re using ChatGPT. You’re going to get what you prompt. In other words, you’re asking for something, and that can take you down a rabbit hole.

But there, at least in my lived experience, and certainly I still see this happening when I moved to Silicon Valley in 2000. And then I look back at my angel investing career, I look back at all these collaborations. The vast majority of them did not come from me going out with an agenda and seeking something. They came from serendipitous bumping into somebody at a coffee shop.

I literally met Naval Ravikant because I was hitting on his girlfriend at the time when she was getting her coffee. Didn’t realize they were together. And then you look at Garrett Camp, Kevin Rose. These are like at a barbecue, I met Kevin Rose. And you go down the list and you look at all of these formative, massively impactful, personally and professionally relationships. They almost all came from serendipity.

And you just don’t seem to get that density unless you’re in the center of the action. And perhaps it’s easier to relocate yourself. I’m sure it is when you have fewer responsibilities. But God, I can’t even imagine what my life would have looked like had I not left Long Island and then ultimately moved to Silicon Valley.

BILL GURLEY: Same for me. I had thought about the notion of venture capital and practicing it and probably would have jumped at any job I could have got. Like when I was at McCombs here in Austin, I tried to get an interview at Austin Ventures. I didn’t get one, but had they said yes, maybe I practiced there. And I’m glad that didn’t happen. Going and practicing it where I did was the exact right place to do it.

I do think if you can, because there are financial constraints, if you want to be great at a field and that field has an epicenter, I think you should go.

Finding Your Epicenter

TIM FERRISS: And there are different types of epicenters too. You think about, let’s just say, AI. Not to repeatedly bang that drum, but you could just say, okay, AI. First thing that comes to mind, Silicon Valley. But this is going to be a bit of a digression, but I remember asking Derek Sivers, a friend of mine, amazing entrepreneur, kind of philosopher programmer, people can look him up, but I asked him, who’s the first person who comes to mind when you think of the word successful?

And he said, well, actually the most interesting or more interesting question might be who’s the third person who comes to mind? Because I might say something really obvious like Richard Branson, but is he successful? I don’t really know what his goals were, so I’d have to compare his goals to his outcomes and then you get to the third.

Similarly, with an epicenter, you could say Silicon Valley first, but there might be something that is dense in learning but has other advantages. Like I think it’s the University of Waterloo, but one of these universities where industry is trying to raid the academic program because it’s so strong in terms of teaching the technical side. So there’s so many different ways to approach it.

But let’s talk about a virtual example you mentioned. MrBeast, could you describe that story?

MrBeast and the Virtual Epicenter

BILL GURLEY: I actually heard it on a podcast, but I also got a chance to talk to Jimmy Donaldson. So we got it firsthand when he was infatuated with YouTube. He was one of the first people that was infatuated with YouTube. His parents were rightfully trying to get him to go to school in college, which he wasn’t doing because he was playing around on YouTube all day.

He met three other people who were equally fascinated with YouTube. And this is a virtual epicenter story, but it’s really a peer story. One of my six principles is embrace your peers. And I think far too many people have sharp elbows to peers because they think they’re climbing the ladder and they’ve got to beat these people. And the world’s just way too prosperous to have that mindset.

Like you can learn so much and get so much value from co-climbing that you should definitely do that. And I think it’s not taught enough and people don’t do it enough. But Jimmy happened on these three people and they got on a Skype call. He said, 20 hours a day.

TIM FERRISS: Sounds like Jimmy.

BILL GURLEY: For years they shared best practices on this call, which apparently in that world, like the color of the icon on the post you do on Instagram to send them to YouTube. Like all these little bitty esoteric things can impact conversion. And he said when he was talking about this that they all became millionaires.

And he said if you or any random individual had been a fifth person on those calls, you would have too, because of that. And it’s just a wonderful example of how peers—he, on this podcast said something that was very clever. He took the 10,000 hours thing from Gladwell and said, well, there were four of us spending 10,000 hours and then sharing ideas. So you get 40,000 hours of expertise.

Finding and Embracing Your Peers

TIM FERRISS: How would you suggest people who are not on YouTube where you can identify outliers? Perhaps I shouldn’t say easily in this day and age. I mean, it’s a sea of participants. But how should people go about seeking peers?

And do you rank order your principles in a way? For instance, do you want to first check the box if you can of go where the action is and then embrace your peers because the level will be higher? I think about, for instance, my experience in Silicon Valley. It could have just as easily for something else been Nashville or New York City or, who knows, Shanghai. I mean, it just depends on what you’re doing.

The mentors, let’s just say, like Mike Maples Jr. who taught me the very basic ropes of angel investing. Without him, I don’t go zero to one in terms of having any basic literacy or access. So that was like the first rung on the ladder. But then once I was in, you look at people who were, in a sense, just getting started at the time. I mean, holy shit, some of them have really exploded. I mean, they’ve all done really well, like Kevin Rose, Naval, Chris Sacca. The latter goes on forever. But like 49 rungs after that initial step up, zero to one, it was all peer driven, right?

BILL GURLEY: Yeah.

TIM FERRISS: And those guys, we were comparing notes the whole way.

BILL GURLEY: See, that’s the thing. I would say, first of all, I would practice it wherever you are. I would practice it virtually. I’d practice it locally. And if you can move to the epicenter, I’d practice it there. I don’t know that it’s an either or thing. You can have multiple groups of peers, you can have multiple circles of peers.

But I think there’s only two tests, and one is trust. There are people in this world who view everything as a zero sum game and they will elbow you out the first chance they can get. And so those shouldn’t be your peers. Those people you should quickly push to the side. So trust and then this shared interest in learning.

And if they are equally learning on their own dime in their free time, which is my test for whether you actually truly are passionate about something. If they’re doing that also, that’s perfect. And those experiences you’ve talked about, I’ve had so many of myself that they get excited to tell you what they just learned. And then you reciprocate.

And by the way, Mike’s a great example. I have both a passion and a lot of respect for people that are writers in their industry. And Buffett did it and Howard Marks did it, who I benefited greatly from. I tried my entire career to write quite a bit, but Mike does this. Mike’s very—he’s a huge sharer when it comes to his knowledge about the subject matter. Pattern Breakers.

TIM FERRISS: Excellent book also.

BILL GURLEY: So great, Mike.

TIM FERRISS: I’m hoping to see him again soon. It’s been a minute. We talked about MrBeast, Bob Dylan, in both cases. Kind of like poor kids with nothing to lose, in a sense. Not in any destitute sense, but they’re starting at, like, futons and ramen.

BILL GURLEY: Right. He was just interviewed at Dealbook also, and his mother was in the front row, who apparently works for him now. So he was telling story about when he went to tell her he was dropping out of college. Similar to the McConaughey story. Not quite as abrupt, but Jimmy’s being more abrupt. But of course, she’s happy now.

TIM FERRISS: Yeah, it all worked out. I mean, there’s always a little survivor’s bias.

BILL GURLEY: No doubt. No doubt.

Danny Meyer: Choosing Passion Over Pragmatism

TIM FERRISS: Let’s talk about Danny Meyer, because I want to give an example of someone who gave something up to then pursue X instead of A, B or C. Could you say a little bit about Danny? I’ve interviewed him on the podcast. I might have met him through you. I don’t even remember how I initially connected with him. But who is Danny Meyer, and what is this kind of genesis story of Danny Meyer, the restaurateur?

BILL GURLEY: It’s funny, when someone asked me, who is Danny Meyer? I feel compelled. The first thing to say, he’s one of the most genuine humans on the planet. Yeah, for sure. Just a wonderful—

TIM FERRISS: For sure.

BILL GURLEY: But he is also one of the most celebrated restaurateurs of our time. He was working for a company that sold these devices that clip onto clothes, so you can’t steal them from a retail store. And he was making good money. He was making about $200,000 a year. And this is, at the time, 40 years ago.

TIM FERRISS: So real money.

BILL GURLEY: Real money. And he had convinced himself he was going to be a lawyer. I guess a lot of people convince themselves of that. And he was about to take the LSAT, and he was out to dinner with his uncle, and his uncle was probing him and probing him. Oh, yeah, he’s going to take the LSAT.

And I think his uncle sensed a lack of real conviction about this thing this person, this human was going to do. And he literally said to him, why are you doing this? You want to be a restaurateur. And when you read Danny’s book, he did spend a ton of time in his youth being fascinated with restaurants and to the point where he would take copious notes, like prior to even doing this. So his family had a reason to know that he had this deep passion.

But it’s interesting. It’s an uncle, right? I don’t know that a parent is going to jump in and say that. And maybe that’s an advantage I have, not knowing the readers of my book and giving them this permission to do things that aren’t necessarily pragmatic. But anyway, his uncle said, you should start a restaurant.

And he took the test. He never submitted the scores to a university and very soon thereafter enrolled in some vocational restaurant courses and took a job. He took the first job he could get, which was a front office job at a restaurant that was making about a tenth the salary that he was making in the sales job, and went on to—

TIM FERRISS: Gramercy Tavern. I mean, all these iconic restaurants, then Shake Shack, then. I mean, yeah.

The Power of Intentional Career Pivots

BILL GURLEY: And we walked through in detail his path once he made this intention. And one of the variables that my co-writer and I were looking for as we added stories to the book was this moment of intentionality. We didn’t want people that fell into a job and were successful. We wanted people that had made a decision, usually a pivot, to say, “I’m going to go do this now.”

And once he had made that decision, not only did he take that job, but he took advantage of being in that restaurant to learn about the multiple functions. But then he set up a tour through Europe as a stage in multiple places where he’s working for free, basically.

TIM FERRISS: I’m so glad you brought this up because I wouldn’t have brought it up myself, but this is going to relate in a second. I’ve run a bunch of competitions for, let’s just say, creating artwork for PDFs, free books I’m going to put out or whatever. And there’s always a big hubbub where folks get, some folks get very upset and they say, “Oh, you want people to work for free?” And I’m like, well, there’s going to be a winner. It’s like, if you don’t want to participate, don’t participate.

But there’s always this kind of shaking of the fist, like, “It’s so unfair. You want people to do work for free.” When I look at almost every example of someone who became the equivalent of Danny Meyer in their world, they did a lot that was unpaid almost always. I’m sure there are exceptions, but it’s like staging is a great example in the restaurant world, where it’s like, okay, you want to work at a restaurant where you’re going to have the highest density of learning and you don’t know anything. Guess what? They probably don’t want to pay you a whole lot because it’s actually going to be a bit of a drain on their resources to show you around and teach you how to work your station and do all this stuff.

So I would just encourage people to not be allergic to that. And the way I got, in a sense, my foot in the door in Silicon Valley was I volunteered at TiE, The Indus Entrepreneur. I volunteered with all of these nonprofit groups and quickly realized that most volunteers are doing the absolute minimum to be volunteers. And if you just do 10% more, it doesn’t take much. I would just refill people’s water glasses and stuff after I finished taking their tickets for an event.

And suddenly the producers of this event, who were also doing it but had real jobs—I mean, I had a job at a college shirt and I was working a lot—they were like, “Wow, this kid’s a go-getter.” Sees me filling these water glasses, let’s give him more responsibility. And that’s how I ended up connecting with all these speakers and everything. Just did some stuff for free on the weekends. It didn’t take a lot.

The Jen Atkins Story: Sneaking Into Fashion Week

BILL GURLEY: There’s a story in the book that’s actually hard to believe. We profile this woman, Jen Atkins, who’s a hairstylist. It’s an incredible story, but the one anecdote: she’s rising in her career and things are starting to work and she has jobs and she’s getting paid. She would go to Fashion Week in Paris and sneak in the back door and volunteer to do the hair of the models on stage. Like, snuck in, not supposed to be there, just to get reps with these top models in this environment.

TIM FERRISS: Incredible.

BILL GURLEY: It sounds unfathomable that someone would do that. She did it multiple times and she did it.

TIM FERRISS: What ended up happening after that? I don’t know her story.

BILL GURLEY: She’s become probably the most successful hairstylist of our time. It’s an incredible story.

Having the Conversation: Making the Leap

TIM FERRISS: How do you suggest people who are, maybe they’re doing A, B and C right now. They’re listening to this and they say, “All right, I want to take the leap. I want to do Z. I want to do whatever the off-menu option is.” They might have to have a conversation with a parent. They might have to have a conversation with a spouse. They may have to have a conversation with, who knows, whoever the most important people are in their lives.

How might they approach that? And we’re going to talk about choosing paths in a second because I do have a question about maybe how to sanity check yourself in the world of AI, but how do you suggest having those conversations? Do you moonlight for a while so it’s not either/or? Do you time box it or make it time bound in a sense where you’re like, “Hey, just give me permission to try this for six months, a year or two years”?

BILL GURLEY: It’s interesting. I think any of those approaches is realistic. We profile Sal Khan in the book of Khan Academy, and he told his wife he wanted to go try it for a year. Also, he worked at a hedge fund, just like Danny Meyer. He was making real money.

TIM FERRISS: Wow, I didn’t realize that.

BILL GURLEY: He started working with his cousins across the globe online, doing these tutorial exercises, and ended up posting a few on YouTube. They started working and he told his wife, “I really want to go tilt at this.” He didn’t even know what the business model was. And he went and changed it.

I think the real test comes back to this passion element, or we use a lot of different words because passion’s been kind of considered trite. But fascination, curiosity—if you have this deep desire to know so much about this one thing that that curiosity is so high, I think the odds that that’s not apparent to whoever these people are you’re trying to convince is pretty low.

Because if you’re going to tilt at something that hard, and if you’re going to really differentiate yourself by being that learned in that field, I think it’d be hard for someone to tell you not to go do it. It’s not going to be easy. I don’t want anyone to think that, “Oh, just read this book and magic happens.” It requires effort. And that’s why this test matters so much. This test of whether you would learn about this thing on your free time.

TIM FERRISS: And maybe, are you already learning about this?

BILL GURLEY: Are you already learning about it on your free time? Yes. No doubt.

TIM FERRISS: At least have one.

BILL GURLEY: You should be. You should be. I doubt you turn it on.

Never Too Late: The Tito’s Vodka Story

BILL GURLEY: Well, actually, I have an example of someone who just turned it on. We have a chapter called “Never Too Late,” which is where the Sal Khan thing is. Because that happened when he was close to 40. Another local Austinite, Bert “Tito” Beveridge, started his endeavor in the spirit business.

TIM FERRISS: Oh, wow. I was just thinking about him while driving here for no good reason.

BILL GURLEY: At the age of 40, he’s watching a PBS special. This is also hard to believe. He’s watching a PBS special, and back when probably when there were only four channels or whatever, but they said on the screen, they said, “Take a blank sheet of paper, draw a line down, and put what you love to do on the left and what you’re really good at on the right. Just a list of those things, and then contemplate what might be in the middle.”

And he had studied chemistry and a lot of stuff, and he liked going out to bars and socializing, and he was making flavored vodka as Christmas presents in his spare time.

TIM FERRISS: What was his day job?

BILL GURLEY: His first career was in seismology and like the oil field. And that dragged him to South America. And then when that became dangerous, both in Midland and in South America, he became a mortgage broker. He didn’t love either of them.

TIM FERRISS: Yeah.

BILL GURLEY: But the reason I brought it up, when you said, “already,” I don’t know that he was already studying the spirit business, but once he made that intentionality to go do this, then he studied it writ large.

TIM FERRISS: How did he start? Just out of curiosity, because I was just thinking about him. Tito Beverage just acquired Lala Tequila, which I was involved with. That’s probably why he popped into my head. But how did he start?

BILL GURLEY: He first started by just studying the distilling process writ large, like, read everything he possibly could. And then it turns out there were no distilleries in the state of Texas, and there were laws on the books that made it nearly impossible. So then he had to study that and literally rewrite regulation to make it possible.

Interestingly, he did the whole thing on credit cards. So he owns 100% of the business, which is a huge business. It’s the single largest spirit sold in America.

TIM FERRISS: Didn’t realize that.

BILL GURLEY: Yes.

TIM FERRISS: Didn’t realize it was that big.

BILL GURLEY: It’s huge.

TIM FERRISS: Good for him.

BILL GURLEY: Yes.

Sanity Checks in the Age of AI

TIM FERRISS: So wild. I promise to get to this, and I do want to get to it. Are there any sanity checks that you would put in place to complement the fascination/obsession/what I’m doing in my spare time or would pay to do or do for free? Because I’m wondering if there are any things you would take off the table or how you would hone that given the rapidly developing technology of AI.

So if someone said, “You know what I love to do in my spare time is copy editing,” I might not suggest that they throw caution to the wind and burn the ships and go into copy editing. Any thoughts? Because this is something that is—

BILL GURLEY: Well, the first thing I would note is that many of those pragmatic jobs that the well-intentioned parents have been pushing their children towards are at risk. So comp sci.

TIM FERRISS: Right.

BILL GURLEY: Yeah.

TIM FERRISS: Risky. But as compared to what? Right.

BILL GURLEY: Comp sci went from being the most least risky major you could possibly get to one that’s somewhat risky like overnight. And so that’d be my first notion. And the second thing I would add to that which I already said is no matter what your endeavor is, you need to be playing with this tool. It’s a modern tool. It’s the equivalent of a laptop and Microsoft Word. It’s equivalent of what a calculator was. You don’t want to go out in the world and play without the modern tool set. It’s a part of what you need.

If you’re playing with those things and you’re curious, you know where the edges of whatever you’re passionate about and what the technology is capable of.

TIM FERRISS: In order to find that edge and follow that edge. Right. Which will move. You have to be playing with the tools.

BILL GURLEY: Yeah. And I think in any field, one thing I love to suggest on the learning side is know the history and know the new innovative edge. If you bring both of those things to the table, you are highly compelling. That could be true even if you’re not chasing your dream job. Even if you’re just a marketing major. If you walk into an interview at Clorox and you can simultaneously show that you’ve studied the historical best marketers and you also understand how TikTok works, that’s heavily differentiating in that interview. Like you’re going to get the job, I would argue versus someone else, if you can portray those things.

TIM FERRISS: How would you apply that here? Is that just field dependent or are you referring to AI?

BILL GURLEY: I think AI is the leading edge of almost any industry. So yeah, I’m saying you should just study what it’s capable of. The thing that LLMs are most capable of, it’s a large language model. The language type stuff, your copy editing example, like things that were just rote, moving words around. Yeah, it’s really good at that stuff.

But it doesn’t mean that you can’t be the person that really understands what it’s capable of and then superpower yourself to go attack a particular interest. You had started a question by saying warnings. I think there are a lot of fields where talent really does matter. I don’t know that I can make you a singer. I certainly can’t make you an NBA basketball player.

But in all those fields, whether it be Hollywood or sports or, you know, even Danny Meyer at one time thought he was going to be a chef and he just became a restaurateur. He wasn’t a chef. I would say that for any artistic field, there are way more jobs that support those artists than there are the jobs of the artist.

TIM FERRISS: What do you mean by that?

BILL GURLEY: I mean, we have an example in the book of a Hollywood agent. And that individual had not thought about a job in Hollywood when they were growing up because they felt they couldn’t act. So they’re like, “Oh, I can’t go do that.” But there’s tons of jobs in Hollywood within the sector of entertainment that aren’t the talent itself.

So if you’re passionate about basketball or you’re passionate about the chef example of a restaurant, there’s tons of jobs you can go do in the music industry without being that particular person.

The Anti-AI Bet: Live Events and Human Experiences

TIM FERRISS: This makes me think of an interview I was watching recently, Patrick O’Shaughnessy. He was interviewing Ari Emanuel. So famous, super agent, force of nature. His whole family is just like drinking different water. I don’t know what’s going on there. But he has raised a ton of money to invest in live events, sports and so on, as an anti-AI or maybe AI antifragile bet. Right. There are lots of ways to make money when you raise a lot of money. So putting that aside, any other AI resilient or anti-AI bets that you think are interesting outside of live events?

BILL GURLEY: Live sports. I think a lot of the service industries. I think humans enjoy experiences, and I don’t think that changes personally that much. Restaurateurs or hoteliers. I think all those things are going to thrive, and people that know how to really differentiate experiences in that way.

I don’t share this thought that we’re all going to go watch movies that we’ve imagined that are made just for ourselves. I find that hard to believe. I think people enjoy great art in many different forms. They enjoy talking about it and they enjoy the community element of having seen the same thing. And so it may be that if you’re a movie maker, you’re using AI instead of this expensive CGI tool set. But I think the storytelling and the imagination and the writing, I think all those things will still be real. They really do.

And obviously just general business entrepreneurship. I took my dad, who’s 93, fly fishing in Montana this summer and we were at a lodge and one of the other guests that was staying there is a 28-year-old entrepreneur from the tip of Texas down near Corpus Christi area. And he had started like three or four businesses and was well off. I’m not saying, but he was so enamored with AI. He said, “And then I needed this and then it did this and then I needed this and then it did this.” And then like, “I wanted to know where to put the next one of these and I just asked it, where would you put it in the city?” And it immediately gave me answers.

This guy was already successful, but he was running triple speed because he had tipped into this stuff. And he was learning what was possible because he had an open mind towards it solving problems. And I thought, holy s*, if other people kind of just leaned at it the way he’s leaning at it, they would become superpowered themselves. I was really blown away by that.

TIM FERRISS: This makes me think of Kevin Rose. Kevin Rose is spending the vast majority of his free time playing with all these tools, vibe coding, using them endlessly. And I feel like that is probably over the next few weeks where I need to put some more time and just take a layup with wherever it happens to intersect with someplace that makes it easy to apply. Who’s Sam Hinkie?

Sam Hinkie: From Consultant to NBA General Manager

BILL GURLEY: Sam Hinkie is a gentleman that about, I don’t know, six years ago, became maybe the youngest GM in the history of the NBA. He became the general manager of the Philadelphia 76ers.

TIM FERRISS: Why is this story relevant?

BILL GURLEY: He was an amazing student. He grew up in Oklahoma. His father worked for Halliburton. He made good grades, good student, kind of classic, did everything right. Became a consultant. I think he was working for McKinsey and they moved him to Australia. And he’s sitting there and he’s reading other things in his spare time. He’s not reading about how to be a better consultant.

And he reads a book called Moneyball, which we all know of, the Michael Lewis book about the Oakland A’s. In almost what seems like an instant, he decided, “I really need to be in sports analytics.” And I mentioned that a lot of the stories we found have this intentionality. So that book, just like The Last Laugh did for Seinfeld, that book told him, “I’m going to go do this.” And from the day he read that book to getting the job as the head GM of the 76ers was about 10 years. So no experience whatsoever in the field to youngest GM of all time in 10 years.

TIM FERRISS: Was he obsessed with sports already at that point?

BILL GURLEY: I think so. You know, this gets back to what I said about maybe your original obsession came from participating or being the talent, but then, you know, he’s not particularly big. And so he was successful in high school, but there was no path to keep going down that field. So yeah, he had immense passion for the category, but had never imagined himself in the field, you know, in one of these other roles until that book kind of disinhibited him and gave him permission to think, “Well, you know what? I could be differentiated on this dimension of understanding analytics.”

He immediately was applying to business school, and he used that as a pivot point. For those that have the needs and the resources, I think MBA programs can be a great place to switch careers and go chase a different dream. And there’s a great, interesting anecdote in the book where he’s trying to decide between Harvard and Stanford, which is a choice for most humans, quality problems.

TIM FERRISS: Yeah, exactly.

BILL GURLEY: But he went and told them both what he wanted to do, and Harvard basically said, “Well, we don’t really have any programs like that.” And Stanford, to give Stanford a lot of credit, said, “You know what? That’s super interesting. We have this person associated with the school that does this. We will introduce you to these four people.” And we’re a lot like McConaughey’s dad when Sam brought him that challenge.

TIM FERRISS: Sounds about right. That checks out for me.

BILL GURLEY: Yeah, based on what you know of the two institutions. You know, he ended up meeting Michael Lewis because he was in the Bay Area, and some of the Stanford people knew Michael. And so he talked to the guy that wrote the book that inspired him. He hustled his a off. Like, I don’t want to make it sound like he kind of built his own curriculum, but it worked.

TIM FERRISS: For people who are not going to get an MBA, would you still suggest everyone read the first three chapters of Michael Porter’s Competitive Strategy: Techniques for Analyzing Industries and Competitors?

BILL GURLEY: Anyone that’s going to do anything in business should read that book.

TIM FERRISS: All right. Wanted to give the throwback to our first conversation.

BILL GURLEY: By the way, at the back of the book, I list about 50 books at the very end, just to whet the appetite. Well, I think you did the same thing. In fact, I looked at yours for the structure when I wanted to see how to lay it out.

TIM FERRISS: Oh, amazing. Amazing.

Avoiding False Failures: When to Push Through vs. When to Pivot

I want to get your expansion on avoiding false failures. Let me explain what I mean by that. So there’s this expression, “If you do what you love, you’ll never work a day in your life.”

BILL GURLEY: It’s in my notes.

TIM FERRISS: But my experience has been it’s not always fun, even if you’re doing what you love. Sometimes there’s burnout. Sometimes you go through chapters where things do feel like a grind. I mean, maybe I’m an outlier, but that’s been my experience. Right when I realized, for instance, in the case of the podcast, it’s like, “Wow, I have much more sponsored demand than I could ever fill. If I just doubled the number of episodes, I’d double the revenue, so why don’t I do that?” And it started to feel like a bad job. Not a bad job, it’s still a great job. But the volume was too high.

And I can imagine if people take the expression I just mentioned, “If you love what you do, you never work a day in your life,” they pursue X, whatever that is, the songwriting and the performing in the case of Bob Dylan, Danny Meyer, whatever it might be. And then they hit a really hard stretch. Maybe it’s early on, maybe it’s later, maybe they’re staging and there’s some French guy yelling at them in the case of a friend of mine. And they’re like, “Wow, God, this really feels painful. Maybe this isn’t my path.” How do you distinguish between growing pains that are temporary and an indication that you’re not doing the right thing?

BILL GURLEY: It’s funny. I’ll take a short diversion in answering the question because people often ask me, “How do you use AI?” When I was wrapping up the book, my publisher and editor said, “I want you to write the concluding chapter.” And I wrote what I think most people would do, which is I just summarized the whole book and I submitted it to him. And he said, “No, this is no good.”

And so then I went to ChatGPT Deep Research mode. And I said, “Tell me about the 10 best nonfiction concluding chapters that you know of.” And it went and did like a 20-page report and sent it to me. And what I noticed in reading that was that most of these great concluding chapters were orthogonal. They weren’t a summary. They were kind of a different take on the whole thing.

Well, my concluding chapter is now titled “It Ain’t Easy,” to your point. And I went through all of the stories that we have in the book, and I pulled out the darkest hour moments for each one of those people and included it kind of at the end. Because I didn’t want to leave people with the impression that it’s just all, you know, smiles and babies and hugs. Like, I don’t think that’s true in any field.

And I guess my answer would be, do you still feel this natural curiosity to learn the entire time? Is the impediment something that truly means you should stop? Like, I can’t get around it. Or is it something that maybe can be avoided, something I can get around?

I push heavily on the peer thing because one of the things a peer group can do is help you in those moments, both just from emotional support, but also to put perspective on whatever this speed bump is and whether it’s insurmountable or not. Mentors can help with that too, but I think peers are better for that because you worry about being judged in disclosing this.

TIM FERRISS: Yeah, 100%.

BILL GURLEY: And so peers don’t judge. That’s why that trust thing really matters. Also another reason why it matters. I think they can help you determine whether that is as big a blocker as it may seem like. But there’s going to be some of that in any field. I don’t think there’s any run that’s just, you know, without pain.

TIM FERRISS: I’m also imagining that one of the challenges that I had and some of my friends had at different points in pursuing fill in the blank, starting our first companies, just beginning to invest, having a career in X. Right when I got out of college, it was mass data storage and hitting these really rough patches and feeling like you’re the first person in the world to experience this. And it’s because of your unique flaws or uniquely bad decisions.

And I’m just realizing now I haven’t tried this. I’m sure it would work that you could just describe the dark chapter you’re going through to ChatGPT or one of these tools and say, “Can you give me any comparable examples from other people who have succeeded in other fields?”

BILL GURLEY: I’m sure that’ll work. It’ll also give you five answers on how to deal with it, how to get around. But by the way, one thing that’s important when we’re talking about this is Daniel Pink has this great book on regret, and he talks about it as a valid motivator to get you to make good decisions. And there is a reality that that anxiety may mean you’re not in the right lane.

TIM FERRISS: Yeah.

BILL GURLEY: And so when you were at that sales job, you got to the point where you’re like, “Holy s*, I don’t want to be doing this anymore.”

TIM FERRISS: Yeah.

BILL GURLEY: And I had two careers before I became a VC. One as an engineer and one as a sell-side analyst. I enjoyed both. I think I was good at both. But I reached a point about three years in with each where I was like, “I don’t want to do this the rest of my life.”

And so I would say equally with, like, don’t give up too early. But if the signal is really telling you, “I don’t want to do this the rest of my life,” that’s jump out. Like, that’s the precise moment to move on and try something new. And I spend a ton of time in the early chapters trying to get people to understand that’s okay. Most people don’t end up in a career that their major was.

I think one of the reasons people grind too long is because they think they’re supposed to. Like, they just think they’re supposed to stay in this lane they’re in.

TIM FERRISS: How did you conclude it was time to hop in those cases? We don’t have to go into tons of the background because we talked about so much of your history and decisions and so on, including, I don’t want to say stealing Palm Pilots, but it’s a pretty good story about getting a Palm Pilot with contact information. But was it just a gut feeling? Was it like a disquiet that you felt in your system? Or was it more than that?

Career Pivot Moments and the Regret Minimization Framework

BILL GURLEY: I’m sure I’ve overplayed it in my brain, but they feel like very concrete moments where I had almost near certainty. The first one was I started my third project at Compaq Computer Corporation where I was an engineer and the projects were these computers we were releasing. And the third one was another computer with a little faster clock speed and a better Intel chip, but the rest of it was all the same and we were going to do it again. I’m like, that doesn’t seem that interesting to me.

And I become curious about other things when I was doing external learning, which is what I refer to as this kind of spare time learning. It wasn’t that. Yeah, it was something else. I was reading Peter Lynch’s book on stocks and stuff like that. Right.

TIM FERRISS: Segue to the sell side analyst.

BILL GURLEY: The thing that happened as a sell side analyst and this gets into, and I may parlay this into something from the Daniel Pink book, but this notion of, do you want to do this the rest of your life. The sell side job is wonderful. You get access so early in your life to some many amazing people, but you have to work really hard. And you know this classic thing where you’re in your 20s and you’re working on Wall Street, they serve dinner at the office. Like the cafeteria is open. That’ll tell you something.

And it was like 10:30 or 11:00 p.m. and the entire research department was on the 36th floor of Park Avenue Plaza. And I did a loop. The four corner offices were the most senior analysts. And for whatever reason, I popped my head in each of their office, and they were career sell side analysts. I said, do I want to be this person when I’m 60?

TIM FERRISS: Yeah.

BILL GURLEY: It just stuck in my head. I went to the next one. Went to the next one. Hopefully, I don’t know who those people were, but I was like, no, I don’t. Like that night. That night I made the decision that I got to go do something else.

TIM FERRISS: No, it’s one of.

BILL GURLEY: If you don’t mind.

TIM FERRISS: Yeah, fire away.

BILL GURLEY: In Daniel Pink’s book, he talks a lot about boldness, regrets. And this is where I say, do you want to do this the rest of your life? He says, one of the most robust findings in the academic research, and my own, is that over time, we are much more likely to regret the chances we didn’t take than the chances we did. What haunts us is the inaction itself. Foregoing opportunities all linger in the same way.

And he says that they’ve studied this across China, Russia, Japan. It’s common across all of them. And you may have heard of this, this YouTube video where Bezos talks about his regret minimization framework. Yeah. And so he had the same thing. He’s walking around Central Park. Should I stay in this incredible job at D.E. Shaw where he’s making tons of money, or should I take this flyer on this online bookstore I want to do? And he put it in his mind, that test, which is when I’m 80 and looking back, am I going to regret not doing this?

TIM FERRISS: Well, it makes me think of, and this is also a dicey proposition, quoting Niccolò Machiavelli. But make mistakes of ambition, not mistakes of sloth.

BILL GURLEY: Yes, the same thing.

TIM FERRISS: And I do think about that a lot myself. I mean, I’m at a point where I’m trying to figure out my next chapters, too, because this podcasting game is getting pretty crowded. And I still enjoy doing it, but that’s only because I refuse to kind of play by the incentives that the platforms and algorithms provide, which is economically punishing but intellectually rewarding.

BILL GURLEY: So because you had two successful careers as not just a podcaster influencer, but as an angel investor, I would encourage you to read Arthur Brooks’ book “Strength to Strength.”

TIM FERRISS: I did. I did.

BILL GURLEY: You already read it.

TIM FERRISS: It was great. It was great.

BILL GURLEY: I think it gives great perspective for kind of a later career shift.

TIM FERRISS: Yeah. I should go back and look at my notes from that book again. Let’s chat for a second. People should all check this out. I mean, you’re such an operator. Track record’s incredible. “Running Down a Dream, How to Thrive in a Career You Actually Love.” We’ll talk about that again. We’ll mention it again at the end. What do you want to do after this book? I mean, you can’t sit on your hands very long.

The Listening Tour and Birth of P3

BILL GURLEY: No, as I mentioned, when I made the decision to stop the venture career, which I think we talked about on the last podcast, read the Steve Martin book. But I didn’t know. I knew I wanted to do something else. And I went on a listening tour and I talked to all these people that had kind of.

TIM FERRISS: Can you just reiterate what a listening tour is?

BILL GURLEY: Oh, I just identified several people who had kind of successfully retired, strong word, but made a decision to stop doing a job they were very successful at. And then, what do you do now? And it’s similar to the Arthur Brooks book, but it was just a personal. A lot of people aim to invest. A lot of people go on boards. A lot of people manage their own money. I had this list. People teach.

And I slowly was checking them off, scratching them out. Yeah, like, man, don’t really want to manage my own money. I don’t really want to angel invest. I don’t want to start my own venture firm. I’ve done that. And so I found myself crossing them all off. And I couldn’t discover something that got me excited and tied into this. What are you doing with your external learning thing?

And slowly I’ve come around to an idea that I made up. So it’s not a career that other people have. But I think I’d like to start a policy institute. I’ve come up with a name, P3, which stands for Purpose, Progress and Prosperity.

When I was doing the BG2 podcast, which I recently stepped away from, we did an episode at the Diablo Canyon nuclear facility. And before I did that episode, I spent three or four weeks calling everyone I knew to make sure that I was prepared for that. And that was one of our more successful episodes and I just really enjoyed that.

I look at the shifting mindset around the globe on nuclear energy in the past five years as an example of what’s possible with really great policy work. And it wasn’t one person. I think, the fact that Steven Pinker was banging the drum was super important. But Andreessen and Elon and all these people started pounding that same drum. Joe Gebbia’s wife made this like a big passion project of hers.

But it’s shocking how quick we went from “this stuff’s bad” to “oh no, we made a mistake, it’s actually good.” And that could have a powerful impact on the planet. And so I don’t know how many of those type things there are to find. I don’t want to go grind on state by state legislation. I don’t have any interest in that.

But looking at big problems, looking at US-China relations, US healthcare system has some massive problems. Can you come up with ideas that help shift these things? And I’ve already got to know some really innovative professors who are thinking in very innovative ways. And I look to use my financial capabilities to do grant writing through people like that and see what we can go do, see what we can go change. Regulatory capture is another one that I’ve spent time tilting at.

TIM FERRISS: So could you elaborate on what, if you’re not doing the state by state legislative change, what does the work of P3 potentially look like? What is policy work? It seems like a silly question, but.

BILL GURLEY: We’re at day one, so what might it look like? Yeah, here’s an example. A professor approached me on the regulatory capture front. What if we.

TIM FERRISS: Could you define that just for people who didn’t hear episode one?

Regulatory Capture and Data Transparency

BILL GURLEY: Yeah. So there’s a Nobel Prize winner from the University of Chicago named George Stigler. He’s passed away. Who made a very strong argument that regulation is the friend of the incumbent, that large businesses learn how to lobby Washington and no matter how well intentioned the policy is that’s passed, it ends up benefiting the incumbent more than restricting the incumbent. And he won a Nobel Prize for that work.

I gave a speech at the All In Summit that you can go watch on YouTube. It has like 5 million views on this topic. But I think this happens the majority of the time.

TIM FERRISS: That’s why ACH takes three days to clear, right?

BILL GURLEY: Yes, yes, yes. But stablecoin may solve that. But this professor approached me about making a, maybe a global database that scores countries on how captured they are and that identifies the best practices from the countries that have the best scores. That kind of thing, like investing in that type of data and transparency is pretty compelling to me. So that’s an example of what I might go do.

TIM FERRISS: Well, let me chew on that for a second. So let’s say you create this data set. Right. That presents these scores on a country by country basis. What are the hoped for outcomes of that? That countries that have worse scores start to model the countries with better scores. Certainly there might be talent flight from one place to another. I mean, we already see that in some respects. I mean, that’s not purely regulatory capture determined. But what would the, when you share that data, what would the hope be?

BILL GURLEY: The hope would be that you can shine a light on the best practices and try to get those implemented in other places here in the U.S. Yeah, that would be the hope and also I think just shining a light on them. I’ll give you an example that relates to regulatory capture. After you’ve been a senator or congressman for a while, you get invited onto committees.

TIM FERRISS: Yep.

BILL GURLEY: The minute you’re on a committee, you are in charge of regulation that affects different industries. Well, what happens, and I don’t even know if most humans know this. What happens is your local senator or your local congressman who you think is representing your district now starts raising money nationally. They go around and meet with businesses because they’re on that committee and have influence and they’re raising money nationally.

I think that’s ridiculous personally. And you could imagine restrictions against that transparency towards it. If your congressman represents this zip code in Austin, wouldn’t you want to know if they’re raising money in Minnesota? Like, isn’t that a little unusual?

TIM FERRISS: Well, you shared a story last time we spoke about being asked to raise $100,000 in donations just to get a meeting with a congressman.

BILL GURLEY: Yes, yes, yes, yes. Our mutual friend Rich Barton talks about shining flashlights in dark places. This technology that we have access to. I think donations should be on the blockchain, quite frankly. Like, there’s no reason why this information needs to be in the dark. I think there’s a lot of opportunity around data aggregation.

TIM FERRISS: Any other ideas that are percolating?

State Competition and Education Reform

BILL GURLEY: I’m enamored by state versus state competition. Part of it pops into my brain from the China experience and the provincial competition. Right. But you see Newsom and Abbott fighting back and forth and maybe there can be a positive outcome from this. And I think some of the Federalist papers kind of envisioned that different states could try different experiments and we could see what happens as a result of that.

TIM FERRISS: But we’re seeing some of it.

BILL GURLEY: We are seeing Texas and it seems pretty interesting and provocative and could lead to positive change. I’d love to see, I have this dream that some state, and maybe this state that we’re sitting in that has a surplus, would do something crazy with teacher salaries. Like what if a state just all of a sudden said we’re going to pay 50% more for teachers? Think about the dynamic that would create. It’d be pretty wild.

TIM FERRISS: Would be.

BILL GURLEY: So maybe I’ll go tilt at that one too.

TIM FERRISS: So other problems on your mind? Well, I’ll just present a list here from some prep notes. We have US healthcare, regulatory capture, intellectual property, US-China, fairness and financial markets, US K-12. Could you speak to intellectual property and fairness in financial markets? How you might be thinking about those.

BILL GURLEY: I got to be a top 10,000% supporter of open source.

TIM FERRISS: Yep.

The Value of Open Innovation

BILL GURLEY: And this gets back to Ridley’s book, The Rational Optimist. But he talks about prosperity comes when ideas have sex and just the sharing of information. In my mind, it should be free, that it shouldn’t cost anything. And it’s very unclear to me that the patent system actually adds value. I’m quite doubtful that the human mind wouldn’t innovate if it didn’t come with a 17-year financial protection. Like I just, I’m doubtful of that.

I think there’s great scientists at every university working on problems that aren’t necessarily being patented. And your ability for hyper competition and innovation is so much higher when there aren’t restrictions in place. So I think the world’s a better place when ideas are shared and not protected.

TIM FERRISS: How do you think, if we’re just, since the system we’re working with is the system we’re currently working with, how might something like drug development work without patent protection?

BILL GURLEY: Well, here’s an interesting thing. The NIH gives out $40 billion a year and a lot of that money goes to companies that end up getting venture capital backing. And then…

TIM FERRISS: Yeah, I’ve had some very open fights with people about this.

BILL GURLEY: Yeah. So why doesn’t an NIH grant come with an open source rider?

TIM FERRISS: Yeah.

BILL GURLEY: And so if the VCs want to…

TIM FERRISS: Federal funding.

BILL GURLEY: Yeah, it’s federal funding.

TIM FERRISS: Like yeah, I agree with that.

BILL GURLEY: And right now there’s a big fight over whether just their research papers have to go on non-private networks instead of the private ones they’re on today. I mean they just want the information out there. Like that’s a minor step. I would consider a major step. And you don’t have to take the money. Yeah, but why is the US government giving people money that ends up becoming proprietary inventions? That makes no sense.

TIM FERRISS: Yeah, whether it’s the US government or individual philanthropists or foundations. I mean on some level, if that, then at some point, right, I agree with that. But are there industries that… I mean the only one that first came to mind was drug development where…

BILL GURLEY: The R&D costs are so high. They all cry. The VCs will tell you it’ll never work. No one will have any incentive if we don’t have a 17-year protection. The entire Silicon Valley…

TIM FERRISS: I’m not saying no.

BILL GURLEY: I know, I know. I’ve lived in a world where if someone comes into our office and talks about patents, we roll our eyes. Because none of the types of businesses that we’ve backed at Benchmark in Silicon Valley are ever about patents. Elon has famously open sourced all his Tesla patents. Like it’s such a bold thing to do and so gracious, I think really to society.

But his point is, oddly, I was talking to Ted Cruz about this and he said, yeah, Elon thinks the same thing. Like he views the edge of competition as how fast are you moving, how great are your products, do the consumers love them. Not can I defend them in a court of law? Like it’s just…

TIM FERRISS: Yeah.

BILL GURLEY: And the protection that the drug guys get is so much… Like no one can really use software patents to get protection. An algorithm or something, like no one even tries. Yeah, but with drugs, if I have this particular genome sequence, all of a sudden I get like this huge proprietary window in the market. It’s just nutty.

TIM FERRISS: This is not exactly the same thing, but I mean, what a service to humanity. I was just watching, I think the documentary name, people can watch it for free on YouTube and other places. The Thinking Game about DeepMind and Demis and his team releasing AlphaFold. I mean the structures of these proteins, I mean it’s just like, oh my God, what an incredible…

BILL GURLEY: Well there’s an interesting right there. The original paper they wrote was open source. OpenAI doesn’t exist without that discovery which happened at Google in open source. They just exploited it the fastest.

TIM FERRISS: Wild.

China’s Open Source Strategy

BILL GURLEY: And by the way, not to divert too much back, but right now China has 10 open source AI models. They’re all in hyper competition with each other. That is a dangerously effective primordial soup for innovation compared to what we have here.

TIM FERRISS: Yeah, I should probably know this, but I don’t. How does China handle… What are the policies around and laws around intellectual property, patents, things like that?

BILL GURLEY: Interestingly, I found a document online that someone had put together, a PowerPoint about the history of open source at China. And it’s 20 years old, so it’s not like they just stumbled into it. I think when you consider that, you know, go back 20 years ago, one of the primary criticisms of China was that they stole IP. And so if you’re the Chinese government and there’s this new thing called open source, you’re going to embrace it because there’s no fault there because everyone’s sharing and everyone.

And so if you look at the big open source projects, Linux, MySQL, and you go on the web pages, like you’ll see Alibaba, Tencent, like these companies have been supporting these technologies for a while. Every five years they write this five-year plan. The Chinese government puts it out. Five years ago they had a huge section on open source. So they’re clearly suggesting to the entrepreneurs that the government favors that approach. And going back to Ridley’s book and the notion of pure competition, I think the society…

TIM FERRISS: Rational Optimist.

BILL GURLEY: Yeah, I think the society benefits from that. I use this example. Imagine there’s two feudal societies that are all agricultural based. There’s two of them though, and in one, once a week the farmers come to market and just trade goods and then they leave. And the other one, the farmers come to market and they’re required to share their best practices with everybody else. And then they’re going back to this peer kind of example in the book, that one’s going to be much more performant than the other one. And this gets to Ridley’s point about ideas having sex.

TIM FERRISS: Yeah, I mean open source also, we talked about this a decent amount in our last conversation. But it can be used as an incredible strategy or counterpunch from for-profit companies like Android.

BILL GURLEY: Yes.

TIM FERRISS: I mean, my God, I mean it’s like you can do a lot. It’s an incredibly powerful tool.

BILL GURLEY: I think that using open source as a defensive tool instead of an offensive tool is one of the most sophisticated corporate strategies a company can possibly do. It’s very hard to do because it goes against all of your instincts. But I would suggest that Amazon and Apple and maybe Meta, who has toyed with it, should run at the idea of jointly supporting an open source model. I don’t think they’re doing it, but I think they should because their incumbency is at risk if someone else has a massive proprietary advantage.

Fairness in Financial Markets

TIM FERRISS: Fairness in financial markets. What does that mean?

BILL GURLEY: You know, I’ve been tilting against this insider’s game of the IPO market for some time. And I’m very passionate that when you bring…

TIM FERRISS: Does that come with the luxury of retirement?

BILL GURLEY: Maybe. I mean, if you tilt against the investment banks, you got to be comfortable not going to conferences, that’s for sure. Because they own some really nice funds and so you fall off the invite list real quick.

The way that an IPO’s price is so God awful stupid. They pick who gets the stock and they pick the price. And I’ve said it over and over again, but a freshman comp sci student and a freshman finance student, if you told them to design the IPO, they would just match supply and demand anonymously. Like it’s how every bond is priced. It’s interestingly how every initial coin offering works. And so I’ve become late to the game crypto enthusiast because I’m so sick of this damn IPO process being broken.

TIM FERRISS: Could you say a bit more about how it’s broken? Like just walk us through a hypothetical example of why it’s broken.

BILL GURLEY: Yeah. When the company’s coming public, the bankers, they ask everyone for orders, but then they pick who gets the stock and they pick the price. They don’t let supply and demand pick. Supply and demand can automagically pick the allocation and the price. It’s not automatically the wrong word, can algorithmically, like this is super easy. Like it’s not hard.

TIM FERRISS: Why don’t they do it that way?

BILL GURLEY: Because they’re handing free money to their clients.

TIM FERRISS: There we go. That’s what I was looking for.

BILL GURLEY: Yeah, it’s been known for a long time. I uncovered an email from 1999 at Goldman Sachs, which I’ve posted on Twitter several times where they’re like saying, oh, we can use this hot stock to reward our top clients. They know what’s going on. And the fact that the SEC doesn’t get involved really bothers me.

But this tokenization thing is a real way to get around it because the crypto community has already decided to use algorithms to allocate and determine price. Like the price and the allocation should just be determined how direct listing works. Everyone knows how to do it, they just don’t do it right. You know, it’s horrible.

There’s other things too in this category. The long kind of prevalence of Visa and MasterCard is just ridiculous. Two and a half percent. And stablecoins have so much momentum right now. I think those two companies are going to be in real trouble within a five-year window. Most of the financial problems are pure regulatory capture, like the reason that there’s a problem.

Regulatory Capture and Its Impact

TIM FERRISS: Tell me if I’m explaining this well, because I’m not sure we said this directly, but basically the incumbents help to write laws and regulations that favor them and prevent newcomers.

BILL GURLEY: After 2009, we wrote this thing, Dodd-Frank, and we thought, oh, we’re going to like make things better. And all you’ve had is consolidation in banking since then.

TIM FERRISS: Yeah.

BILL GURLEY: And if you look at the offering, especially at the low end, for the poorest citizens of the US, free checking went away. The poor people have a hard time paying their bills. They don’t even have the tools to do it because free checking went away. Free checking went away after Dodd-Frank.

TIM FERRISS: Please push back if I’m oversimplifying this, but regulatory capture is not just bad for startups in Silicon Valley who hope to grow and disrupt and fill in the blank. It’s also bad for everybody.

BILL GURLEY: Oh, it’s horrible for consumers. I mean, the US healthcare situation, which seems to be getting worse on a daily basis, is a huge example of regulatory capture. Somewhere in the past 10 years, they just told physicians they can’t run hospitals. They just eliminated… I mean, who other than a doctor is going to go start a new hospital? The amount of competition you eliminated in this one swoop is enormous, just enormous. That’s just a single example, but there’s hundreds of them in that area.

The Book’s Mission

TIM FERRISS: What would success be for this book six months after it comes out? What will lead you to have been happy with putting the time in? It’s taken a while. It’s taken a lot of work. What do you hope the outcome will be?

BILL GURLEY: It really started as a passion project and I have no financial goals for whatsoever. In fact, as we get to book launch, I’m going to launch a foundation that gives grants to people who want to chase their dream job but don’t have the financial wherewithal to do it. And so I’m going to start working on that in addition to P3.

For me, it’s all about how many people do I affect in the way that McConaughey’s dad did or that this book did for Seinfeld. Some of them saw the talk on YouTube from the UT presentation that I gave and have already reached out and said thank you, and they’ve shared how it changed their life. But the more people I can do that for, I would just be tickled pink. I’d just be so excited because I think when people get out of this pragmatic lane and go do these types of things, they tend to be unusually successful, which I think then has a bigger impact than just on them themselves.

The number of humans positively impacted by Danny Meyer’s success is in the thousands, I’m certain. And I’m not counting customers of Shake Shack.

TIM FERRISS: So people, check it out. I mean, I love your writing, Bill. You’re not just a commentator, right? You’ve been an operator. You’ve observed a lot of operators, studied outliers, and people who’ve chosen X instead of A, B or C. The book is Running Down a Dream: How to Thrive in a Career You Actually Love. Check it out folks. People can find you on X, Gurley. Of course, if they want to see just a landing page, they can go to benchmark.com. Anywhere else you’d like to point people or anything else you’d like to mention before we start to land the plane?

BILL GURLEY: Thank you so much for your time.

TIM FERRISS: Yeah, thanks Bill. And for everybody watching and listening, we will have a link to everything we mentioned. We mentioned a lot of things and a lot of references and resources. Just go to Tim Blog Podcast. You can check all that out.

And until next time, as always, be a bit kinder than is necessary to others and to yourself. But look for X when people give you a B or C, or when you think you’re limited to A, B and C.

Till next time, thanks for tuning in.

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