Benchmark's Gurley Favors Direct Listings

The initial public offering system is broken. It’s been shown to hurt ordinary investors, provide less capital to the company going public than otherwise and allows more information to be shared pre-listing among a select few. There’s a better way: direct listings. So argues Bill Gurley, the legendary venture capital investor at Benchmark and this week’s guest on the Masters in Business podcast.

A direct listing, Gurley says, allows companies to capture more of their own value when going public. The current IPO system works well for institutional buyers, who gain access to fast growing companies at a substantial discount to actual value. Gurley’s investments include Grubhub, Nextdoor, OpenTable, Zillow and, most famously, Uber. He is a member of the Board of Trustees of the Santa Fe Institute, and is considered one of most influential dealmakers in the technology business. TechCrunch named him its Venture Capitalist of the Year in 2016.

Gurley began his career as an engineer at Compaq Computer, and became interested in trading stocks in the 1990s. He recalls how he “knocked on doors” looking for a job on Wall Street while attending the University of Texas’s McCombs School of Business. Credit Suisse First Boston offered him a job — the only firm to do so. He eventually moved to the buy side, joining Frank Quattrone at Deutsche Morgan Grenfell in Silicon Valley, ending up as the lead analyst on Amazon.com’s 1997 IPO.

His favorite books are here; A transcript of our conversation is available here.

You can stream and download our full conversation, including the podcast extras on iTunesSpotifyStitcherGoogleBloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Gary Chropuvka, the president of WorldQuant. The firm was spun out of Millennium Management in 2007, and manages about $7 billion. Chropuvka was previously the co-head of the quantitative investment strategies team at Goldman Sachs Asset Management.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

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