he made his name as a top tech analyst on wall street, leading the coverage of the amazon ipo. made his way to the promised land of silicon valley, launching a venture capitalist firm, joining venture capital in 1999. almost right away, the bubble burst. market upy road the and down, along the way making his early bets on some of the best names -- twitter, uber, snapchat, instagram. joining me today on "studio 1.0 ," seasoned venture capitalist

bill gurley. the alarmly sounded about startup and fund raising in silicon valley, saying that silicon valley is taking on an ,xcessive amount of risk "unprecedented since 1999." why? an abundanting amount of capital at the late stage of market. lately it is being pushed into startups. to problem is it is easier run a company like this. we have a lot of companies at high valuations that everyone says, hey, these are the breakout winners. i'm not so sure because we have not passed the test of proving the business model has legs in the long-term. >> which companies? >> are certain companies that are more prone to arbitrage. i think e-commerce is dangerous. the problem is nobody really

gives up. nobody says, oh, our numbers are not working, we should take out the deal. they just keep hoping it will get better in press. >> what are you most worried about? >> bad actors in the ecosystem. companies that may be do not have long-term economic models that are out there perverting the risks that people pay, the cost that you pay for employees, the market that may be in against a competitor where they may just try to spin to win. aboutant to talk more 1999, but first how you got here. born and raised in texas. what kind of kid were you, what did you want to be when you grew up? farm father grew up on a in north carolina playing with model airplanes. he got an error not all engineering degree -- he got an error not a goal engineering degree and went to johnson space worked for nasa.

half the fathers on my street were nasa fathers. when the apollo launches were happening, we would go to somebody's house, occasionally we would drive out three hours for a 32nd launch. -- for a 32nd launch. played college basketball. what did you learn in team sports? >> i struggled to hang on the end of the bench. i practiced more basketball then i played. not being a starter, not getting a lot of playing time is a humbling experience. it creates a drive. when i got to my next place, it probably pushed me to try to do harder. >> you studied engineering? what were you hoping for. >> right, my sister was employed. my first job out of college was at compaq. we were working on motherboard designed for desktop computers. the university of

florida, mba from the university of texas. these are not typical schools where silicon valley recruits from. on wallt to work street, being from texas, i was the odd duck among the group. dell, covered compaq, microsoft. tummy about the days as a tech analyst in the 1990's. >> one of my first experiences with the agenda conference. remember the first dinner walking into the tent. days you look around and there is bill gates and larry ellison michael dell. you could just walk up and talk to them. it was like, oh my god. >> even back then, did you know they were of greatness? >> i got invited when i was covering microsoft, they have this annual analyst meeting. my second trip out there somebody handed me a car and said you will be at bill's table

tonight. i was 27, 28. >> it does not matter if amazon never turns a significant profit? >> it only matters if wall street doubts that they can.

>> how do you become a top tech analyst? what does that involve? >> i was fortunate. the research was not generating as much profit on its own. i was experimenting with this premium model. that is when i started above the back then.a fax it's sort of way back then. ,> above the crowd, 6'9" playing on your height. >> i got a call out of the blue from frank want thrown -- from frank quatrone.

he said what you want to do long-term. i settled to be a venture capitalist. he said moved to silicon valley and i will introduce you to every venture capitalist i know. >> when did you become the lead analyst of amazon? >> shortly thereafter, we begot into a competition of it would be the lead banker of amazon. >> what was that like? >> it was exciting. getting exposure to somebody like jeff bezos at that moment in time and seeing what is accomplished was amazingly rewarding. i am been able to keep up with him. he is one of the smartest, quickest thinkers i've been exposed to. >> what has surprised you most about amazon and jeff bezos, now almost 20 years later? >> he has convinced wall street that he is playing this super long-term game, and they let him forgo profits for what is now 20 years. a kind of goes back to what we

were talking about with the overfunded startups. he gets to play a different game because he has convinced them it is ok. >> is it ok? >> every investor gets to decide that on a daily basis. i think there were multiple times in amazon's life where people doubt it whether the model had long-term legs and they forced him to show more profitability, which she did, and then backed off of. >> does it matter if amazon never turns a significant profit? >> it only matters if wall street doubts they can. >> will amazon have the confidence of wall street indefinitely? >> boy, i bet they will for a long time. imagine when we did the ipo they were only selling books, right. i have been fortunate to work with a number of companies that have made a pass just being successful to where they have an hardand it is remarkably from that point to create a second and third act. i think there are very, very few executives, and of course larry has proven he can do it. >> larry page. >> and even larry ellison has

proven that. where they don't let the game be defined by where they started. but most people cannot do it. >> what about google? eric schmidt, chairman of google, said amazon is their biggest rival in search. >> to qualify, he made the comments during an antitrust meeting. to highlightivized the competition, obviously. but i think there is some truth to it. the nature of search is changing. if you were to search for an item to buy from an e-commerce search on amazon, you know where the reviews are, you know the category, you know how to select prime or not. you don't need those features. google is doing something interesting. they are taking on this endeavor ,alled google shopping express which i cannot make the math work. i am waiting for somebody in the press to follow her around one of these vehicles and add up how many stops. i don't see how it can work.

>> and they are also trying to do delivery drugs as well. >> don't get me started on drones. i think drones are a distraction to keep the media from talking about the topics we just talked about. >> you are not a fan of it? whole drone thing distracting. amazon today, than they did it, ups did it. >> what about self driving cars? >> i'm more skeptical than most using artificial intelligence across a broad away. it is really hard. a self driving car is right 99 % of the time. is that good enough? how about 99.99%? they will be held to a much higher bar than a human. human air people expect. >> you are skeptical about some of these things, self driving

cars, drone deliveries. what about google's long-term future? >> google has done one thing that is remarkable, which is they have developed android. spent 2 billion, $3 billion making it come true. and they have taken over whatever, it 80%, 85% of the most critical operating system in the next 20 years. i think it might be one of the most ambitious and successful business efforts of all time. amazon,en google, apple, facebook, these are companies referred to as before today. who has the most to worry about? >> i would say amazon's position with prime is pretty remarkable. i would probably put them in the safe camp. i think google with the profitability of the search business and this insane foot print of android, i would put them in the safe camp, too. on facebook, i think they're

working in interesting challenge. they have lost the trust of their user. if you ask someone, do you have is seeing the facebook content, 90% of the people would say no. that creating zaidi. i think it made room for snapchat, which we are an investor in. because that lack of trust limits what you can do next. >> and apple? >> i think apple's only problem is android. and google. and google's willingness to be aggressive. apple should have paid anything. flat out. if you're going to pay $3 company,or a headphone $2 billion is a no-brainer. i think they should i found a way to broadcast. i have a deep respect for tony fidel. >> should apple by twitter? >> i don't know if they would know what to do with it, and that is why i would probably say

no. >> twitter is one of your company's? >> yes, and i think they have one of the most amazing moats. they have the most important people in almost any field in the world remarkably committed to their own persona within the system. a venture capitalist criticized twitter, calling it , probably "aanaged lot of pot smoking going on over there." how do you respond to that? >> i think he is on a book tour, correct? i would leave it at that. once you make a statement like that about a management team that has created a $30 billion company, taken in public, grown revenues a billion dollars, i think you lose all credibility yourself. uber do?else can i what is next? ♪

>> what is the myth of bill

gurley and what is the reality? >> i don't know if i can separate the two. i love being an investor. over the past five years, people have made a big deal out of, do you have operating experience as a vc. think in the next five years, if the markets play out like i think they will, we should be asking do they have investor experience, because that is what the job is after all. some will only hire partners who were former ceos. when aof the time venture capitalist opens their mouth, they are speaking to the entrepreneur they have not funny yet. there is a lot of marketing messages out there. >> it is said you have a generational shift between old and new. >> when i came into the business, john doerr and mike moritz were the legends of the game. on theted with them

google deal and it messed it up. >> why? >> they presented it and we were like, oh, let it go. biggest mistake of my career. >> what did 1999 look like compared to now? >> all i said is i think risks are too high. i never said valuations are too high. see -- i look at facebook or google and they are 'sading at very low p/e actually. my bigger concern has to do with the large fundraisers. >> if it does not pop, what happens, is there a downswing? >> there are two things that could cause a correction. one is a macroeconomic. very hard to predict. the second would be the firms that are doing the late stage investments might change their criteria little bit. i think that is probably the more likely near-term catalyst for something like this, where they start to ask questions about do these companies really

have a business model that can go the distance. we are more cautious. we are still making new investments, but we are more picky for sure. >> what does being more picky mean? >> you will see the uber for this or that. the items that are a fraction away from something else on the dial, that is a bad sign. i think anything that is too close to the big thing might be something the big thing does one day. so it's another way of saying look for things that are universally different. board,are on uber's early investor. how did you get into the deal? >> i met with brian entrap us before they raised their seed round and cannot convince my partner. it 6, 9 months. then we ran in and did what we could. >> and then they were convinced. >> yes. the thing that separates the return of the best firms is the

single company that goes forever , the google, the facebook of the world. >> you have not sold any shares of uber? >> no, and neither has travis, which i think is interesting. >> how big could they could become? investment,ade the it appears that uber, with its convenience and price points, will be competitive at some level against the first thing is rental cars. we are now anecdotally meeting lots of riders who say they have gotten rid of their car. that is something that was never in our original investment thesis, but opens up an as atunity about as large business opportunity could be. workingis life like with travis, and how does he compare with all the ceos you have worked with in your day? >> if you're going to compare

him to people that built companies that are $100 billion or more, that is pretty audacious. i would say, if i look along the vector, it would be most like bezos and the business is most like amazon. it is not a facebook. it is an operational intensive business. what i find him to be most like jeff. the thing that is least well understood about travis is he is an insanely good recruiter. jeff was always going into walmart and getting their cio, going in and getting the best people he possibly could. that is what travis has done. >> when you think about competitors like halo, just got yft of the u.s. market, l and sidecar, do they stand a chance? >> i don't know. first of all, a lot of the money goes to the driver. it is a lower margin business. i think it is tough to compete.

i think travis is very competitive. >> what else can do bird do? -- what else can uber do? >> when they raised money, the deck had zero slides on these kinds of things. the companies say are not interested. they are testing food delivery, they have done flower delivery on valentines. i think it is something they are watching. i think for the time being, everyone knows focus is critical to great execution, and the opportunity in front of us is immense. >> what about taking on fedex or ups? >> i would say we are not as well situated for that type of thing as we might be for a quick -- i know people that have put objects in uber. snapchat is another company you have gotten into early. how do you know it is not just a fad? >> when we were looking at the

investment, we talked to a number of kids and they said facebook to us is like linkedin to you. i think there is an element that the younger generation wants to be able to communicate, have fun, and not worry about the permanence. so the numbers are staggering. i think evan is doing a great job. mature into a rockstar ceo? >> i think so. it is interesting because he has had some issues, and other people we have worked with have. one of the things we try to do is we want to be a partner with the entrepreneur over a long time. i think there is a growing trend in silicon valley that i'm not a fanned of -- not a fan of, which is trial by social media. our job is to help them through situations like that, not a band of even though the press is pounding them. evan in particular is a special person. he has a keen sense of product

features that matter to his constituency that i think has been a common trait among some of the most excess full entrepreneurs. >> is there more or less in silicon valley than there was before? >> there is probably more than 1999. and i think people have learned from 1999. even though a lot of the young entrepreneurs today were not around, there are still lessons learned. >> how do you make sure that you are getting into the next snapchat, the next uber? >> we have to hold ourselves accountable. one of the things that differing age ourselves, we don't have this huge large staff. i would say of our pierce at we are probably the leanest of anyone out there. we have often had our competitors ask us, how do you get so much coverage with so few people. i think the answer is we are doing it all day long. if you have a staff of 100 people, you have to look after them. we are just out in the field. >> bill gurley, thank you so much for joining us.

it is so great to have you. >> thank you. >> thanks. ♪

>> hello, i'm pimm fox. this is what i'm taking stock of. what a week for stocks and oil frie. friday was no different, crude oil falling 12% lower for the week. the s&p with the worst performance in more than two years. all are not glum. chief executive gary kelly is positive about the drop in oil and what it means for the air carriers. >> we may have a billion dollars in less fuel costs in 2015. >> janus capital's