November 17, 2003
Gurley: Persuasion, Differentiation Crucial to Success in Business
By Erica Grieder
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Only ten years after earning his MBA at the McCombs School of Business, in 1993, Bill Gurley has made a name for himself in several endeavors. He is a partner at Benchmark Capital, a global venture capital firm with close to $2 billion under management. He has been a top-ranked research analyst on Wall Street, authored a monthly investment column for Fortune magazine, and also serves on the Advisory Council for McCombs.
On November 13, 2003, Gurley spoke to current MBA students at McCombs as part of the MBA Executive Speaker Series. Key points in his discussion included the importance of differentiating oneself in business, the undervaluation of persuasion skills, and the relative merits of Texas over Michigan.
Background
Gurley began his talk by giving a brief outline of his life thus far. He grew up in Houston, where his father worked for the space program. After graduating from the University of Florida with a degree in computer science, he worked as a design engineer at Compaq. Two years in, he was disenchanted by the myopia he saw in the tech sector. “After you work on about two technology products,” Gurley said, “you see all this other stuff going on, and you’re like, isn’t the world bigger than this? So I decided I had to go to business school.”
His decision to come to McCombs was motivated by a variety of factors. Ultimately, Gurley said, “it was really down to Texas versus Michigan for me. I flew up to Michigan—it was like April 15th, and it was sleeting, so I got the hell out of there and enrolled at UT.”
Right away, Gurley’s interest was captured by the stock market and those analysts who research it. He remembered thinking: “This looks like a great job! You pontificate, you move stocks, you’re on TV. This is fantastic, I wanna do that!”
Gurley credited his success in finding his first job on Wall Street to “a great deal of serendipity and luck” as well as the fact that he differentiated himself from other candidates with “an amount of passion and focus that [his interviewers] found very compelling.” He ended up at CS First Boston, training to be an equity analyst. Two weeks after he started, the head PC analyst resigned. “Now I’d come from that industry,” he said, “So I spent the whole weekend in a crammed New York studio apartment writing, like, a fifteen-page analysis so I could argue for the job. I went in to the research director and he was swayed and let me do it.”
“So,” noted Gurley, with characteristic dry humor, “literally two years and three months after I had left Compaq as some lowly engineer I was back for a meeting interviewing the CEO, the COO—which I’m sure they disliked.”
Gurley excelled in his fledgling career. He was the lead analyst on the Amazon.com IPO and twice a member of the Institutional Investor All-American Research Team. Although he found his work as a sell-side analyst rewarding, Gurley found himself, only a few years out of school, considering a move due to the various pressures of the business.
“It’s not as if someone’s leaning on you saying, ‘I want you to push the envelope’ or ‘I want to test your ethics.’ But about six constituencies in that job expect you to optimize your behavior for what they want, and it’s impossible to please everybody, so you’re kind of constantly displeasing everybody,” Gurley said.
Shortly thereafter, Gurley was given the opportunity to get involved in venture capital. The industry was one which had piqued his interest during his time at McCombs, but several roadblocks along the way had diverted him to being an analyst. He had not lost his interest in the industry, however, and spent two years as a partner with Hummer Winblad Venture Partners.
In 1999, Gurley accepted his current position at Benchmark Capital, a venture firm with offices in California, London and Israel and close to $2 billion in assets under management. He praised the firm for its unique, non-hierarchical structure and camaraderie.
Beyond his work at Benchmark, Gurley keeps himself busy with several notable extracurricular activities. For the past seven years, he has authored the “Above the Crowd” newsletter, which focuses on current issues in high-technology business. “It was just a platform to have networking opportunities, basically,” said Gurley. The column used to be carried by Fortune magazine and CNET.com; currently, it comes out as an email newsletter with some 20,000 subscribers. It has indeed helped him build a prominent reputation.
Gurley also serves on the McCombs School of Business Advisory Council, which was founded in 1960 to help the Dean, faculty and staff of the business school sustain and enhance its reputation.
Lessons Learned
In addition to describing some highs and lows of his own career, Gurley shared several lessons he has learned in the past ten years. One point he emphasized was the importance and underappreciation of persuasion skills, such as being comfortable giving presentations and having good salesmanship. He estimated that he spends 90% of his time persuading.
“I can’t tell you how odd it seems to me,” Gurley said, “you look at an [organizational] chart, there’s a marketing function, a finance function—all these different functions that are studied in business school. And there’s this whole thing called “sales” that’s just tremendously important to the success of the company, and you almost never talk about it in business school.”
Even when selling is not literally the task at hand, Gurley said, salesmanship is paramount. For example, it facilitates innovation. “Even if you have some thought that’s so differentiating it’s going to change the course of the company, if you can’t give that thought to management in a constructive way, it’s not going to be effective,” he said.
He noted that the Plus Program at McCombs is a good example of something positive being done to develop these persuasion skills in business school.
Leadership, Gurley emphasized, is another area in which MBAs should seek to differentiate themselves. “As you leave business school and go out to compete with other people like yourself, if you have aspirations of moving up through the ranks—there are natural leaders that are out there.”
Gurley also noted the importance of good listening skills. He said, “One of the things that becomes very important is learning how to work with people in a constructive way, in an empathetic way, where you’re understanding of what they’re doing. And not trying to micro-manage—that’s a standard, classic mistake.”
“Pontificating”
Much of the lunch hour was devoted to a question and answer session, during which Gurley extemporized on everything from the stock market (“I have a hard time looking at the current market and getting excited”) to bringing in a CEO to replace the founder of a company (“it has about the same rate of success as a heart transplant”).
At several points, Gurley wryly bemoaned that each of his jobs had involved far less “pontificating” than he had expected. By the end of the hour, however, it was apparent that Gurley has done plenty of deep thinking over the years, even if it was in an unofficial capacity. His insightful essays for “Above the Crowd,” as well as his thought-provoking opinions on topics ranging from recruiting to “Reg FD,” the new legal sanction against insider trading, testify to that.
Notable Soundbites:
On finding a job:
“If you want to truly succeed or differentiate yourself, or if you’re hell-bent on a particular industry or role, then you really want to take a rifle approach as opposed to a shotgun approach…and these days, getting jobs is harder than ever, so I would say that’s even more true these days.”
On the analyst industry:
“The analyst industry has gone through quite a number of changes since I was involved. I’m not sure I would have done very well during the [internet] bubble and luckily I had gotten out. But, it was a very rewarding job. I was extremely autonomous…the notion that these 25 to 30-year-olds can kind of, fly around the country and waste management’s time at very large, public companies seems unreasonable, but it’s definitely what goes on.”
“These days, the stuff that I see on Motley Fool is as good of research as I see coming out of Wall Street.”
“You know, I had this perception of getting quoted in the Wall Street Journal and pontificating on stocks and…there’s a whole bunch of ugly mess that’s involved in that job. Marketing, you travel two weeks a quarter visiting buy-side funds and basically pitching your view of the industry and it’s back-to-back meetings, from a breakfast meeting all the way through a dinner meeting, with no time scheduled for you to eat. And it’s so redundant. You’re just saying the same thing over and over and over. And you come up with these lame jokes, and the sales person’ll be there. You know, you feel so stupid because you’re telling the same joke, and he’s sitting there, and he pretends to laugh. So…it was, once again, very rewarding; but there was a lot of hard work involved that wasn’t apparent at the time.”
On working in venture capital:
“If any of you have those aspirations, you get diligent, you set up a meeting with someone, and they tell you, “go work for 20 years and then think about it.” I had hit a few of those roadblocks and so…I was very fortunate to have the opportunity come four years later to join venture capital.”
“There’s a lot of people who say, training a venture capitalist is like training a fighter pilot—you have to wreck a 30 million dollar jet before you get any experience. There’s a lot of truth to that. Until you’ve invested through a whole cycle, you really don’t understand all the elements of the term sheet or why certain structures are done certain ways.”
“I don’t know that it’s for everybody; it’s a wild ride and there’s a lot of failure inherent in the system. Specifically, for even the most successful venture firms, out of ten deals, five will fail, three will be nice returns and you’ll have one or two being winners, and that’s been kind of standard for the past 30 years. Getting comfortable with that amount of failure is not something that’s for everyone.”
“One of the really painful things about being a venture capitalist is, if you rank the top fifty funds of all time, you’d find that of the fifty, forty-seven of them are because of one single deal. It’s so much a probability game of trying to be in on that one deal and it makes almost everything else you do a waste of time. Our firm made a mistake a few years ago when Google was coming around. We were in there, and I was meeting with Larry and Sergey [Page and Brin, the founders of Google]. The bubble had popped, and stock prices were falling fast; it was the fifth search engine; they had absolutely zero revenue. They didn’t even have a revenue model at the time. All the intuition in the world said, ‘Walk away.’…The two capitalists who eventually stepped up, as a result, are going to have the two top funds of this 5-10 year period.”
Leadership:
“Leadership—you know, that’s probably my weakest skill. I grew up as, not only an engineer, but, in every class I took I’d immediately go to the back row. I rarely went to events like this, and I didn’t join a lot of clubs and in retrospect, I probably should have…Luckily, I’m in more of a service role now so that lack of skill doesn’t kill me.”
“The entrepreneurs that are 30 years old that we look at and say, ‘Boy, that’s someone we’d like to mature into a CEO position even though they’re really young,’ they’re typically the kind of people that can create so much loyalty when they’re running an organization that they can move mountains. And that’s what you need.”
“You want to see a leadership test, live through the crash of the bubble. If an individual can keep morale high while cutting headcount two or three times in a two year period—that’s tough.”
On Focus:
“The number one cause of failure in startup plans is focus. I see more startups die of indigestion than starvation. I mean, everyone tries to boil the ocean. It happens over and over again. And partially, it’s because you’re trying to raise money, so you want to present to the world that you’re gonna do all these things. But you can’t. You have a limited amount of capital, a limited amount of resources.”
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
