During his recent interview with Barry Ritholz on the Masters In Business Podcast, legendary venture-capital investor Bill Gurley discusses why investors should close their eyes and forget about their winners. Here’s an excerpt from the interview:
RITHOLTZ: Really interesting. And our final question, what do you know about the world of venture capital and technology today that you wish you knew when you were starting out at Benchmark back in 1999?
GURLEY: This is a really hard question, and the reason it’s really hard is because that all of my initial answers that I want to give you, Barry, really violates the premise of the question because I could say, well, I should’ve invested in Google, right, or, you know, hold Amazon forever, but — but those things are just hindsight (inaudible) …
RITHOLTZ: Right, right.
GURLEY: They’re not — they’re not (inaudible).
RITHOLTZ: I was going to say, no, don’t make me call Mike Mauboussin on you.
GURLEY: Exactly, right, like — so I — my answer, which — which I guess will be confirming of — of probably every guest you had on and — and makes it not that original because I’ve heard many other great investors say that it’s just — the power of compounding for some of these platforms is so, so huge that, you know, if you invest in an Amazon or whatever, like the hardest thing to possibly do is just close your eyes and forget it. And the only thing analysis that’s going to cause you to do is sell the stock. You know, you — you’re not going to run analysis, you know, for the fourteenth time and go, hmmm, I should keep holding like that. And that is so hard, so, so hard to implement — easy to say, very hard to implement.
RITHOLTZ: Yeah, that’s a fascinating answer. You know, the — the problem with conceptualizing compound is that it takes place over years and decades, and — and humans live in seconds and minutes, and it’s so challenging to conceptualize that exponential leap. There’s no doubt.
You can listen to the entire interview here:
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