Notes
Pleasantly surprised with this podcast with Bill Gurley and Michael Mauboussin. Will definitely follow them from now on.
More than a couple of great insights that I got to myself:
AI is sustained or disruptive innovation? looks more sustained as it is coming mainly from the incumbents (non-LLMs AI) and they are not getting their eyes from the ball.
One should separate AI and LLMs, look like different beasts.
New technology and how it impacts companies:
1st wave → helps productivity and efficiency
2nd wave → its embedded in the daily operations and changes how companies work and generate value.
How can you increase the margin utility of your customers via network effect or others is paramount to your business
The importance of strengthen your WTP and WTS (economies of scale) and then you can capture it via pricing (or you increase the consumer surplus).
Pricing power is not the key issue in a company profitability or valuation, instead is if the WTP is increasing every single day to the customer, as Pricing Power is just a derivative of the WTP function (see image below on Value-Based Strategy by Brandenburger and Stuart).
Recombination of ideas framework and its importance - how to manipulate the inputs of a production function, mainly on technology & ideas, the residual on the Solow’s economic model, that allows to have a greater output.
The number of public companies has shrunk significantly (46%), Would need what is the comparison period.
Wright's law to predict cost dynamic →says that for every doubling of cumulative output, your cost per unit goes down by 20%
Since 1926 60% of public companies could not earn at least treasury bill rates!
2% of public companies generated 90% of the total value generated in market!
My guests today are Bill Gurley and Michael Mauboussin. Bill is a General Partner at Benchmark, and Michael is the Head of Consilient Research for Counterpoint Global. While they are longtime friends with one another, I’d never heard them appear somewhere together so it was a real treat to be able to do this with the two of them. They are two of the leading minds in their fields, and we combined their decades of expertise into one wide-ranging conversation. We discuss the different kinds of increasing returns to scale, the issue of regulatory capture, AI, and hardware. Please enjoy this great conversation with Bill Gurley and Michael Mauboussin.
