SXSW: A Conversation with Bill Gurley and Malcolm Gladwell

Bill and Malcolm

 

One of Saturday’s most engaging sessions was a featured talk between two highly respected skeptics. Renowned VC Bill Gurley and New Yorker writer and best-selling author Malcolm Gladwell went head-to-head on the hottest topics of the day, from healthcare, to self-driving cars, to technological arms races.

 

The talk was spirited, informative and overall a great way to spend an hour of SXSW. A few thoughts to consider:

 

  • Healthcare: While the immediate reaction for a VC or entrepreneur is that healthcare is a segment ripe for innovation, Bill has found that this is not the case.
    • Electronic Health Records: A government incentive program has outlined the parameters of what compliance with EHR requires for doctors and pays them $44,000 to implement EHR within their practice. Another $17,000 is paid out to doctors who can prove “meaningful use” of their EHR system. The rub is that doctors aren’t involved in deciding what features of the system are relevant and hate using it, meaning $29 billion of tax payer dollars is going into a system that isn’t useful and can’t be improved upon without losing compliance.
    • Takeaway: “Healthcare requires radical reformation. The system needs to be simplified and market forces reinstated.” – Bill Gurley
    • Recommended book on the topic: Catastrophic Care
  • Uber vs. Self-driving cars
    • “Millennials view cars as a utility, not a social statement.” – Bill Gurley
    • Some stats: Uber is the largest job creator in the world: 300,000 jobs globally and adding 50K per month. 30% of traffic in San Francisco is people driving around looking for parking spots.
    • Both Bill and Malcolm believe the elderly and teenagers are a growth market for Uber.
    • On driverless cars: Bill is bearish on driverless cars, noting that people will be much less tolerant of machine error causing death than a human error, so a system would need to be nearly perfect. (It’s worth noting that Bill’s VC firm Benchmark is invested in Uber, so this opinion is certainly biased).
  • Technology arms race
    • Hacker1 is a company that helps companies run bug bounty programs, which pays hackers rewards for finding security holes proactively. The company is used by Twitter, Yahoo, Square and more.
  • Are we in a tech bubble?
    • “We’re not in an evaluation bubble, but a risk bubble. We’re taking on a level of risk we never have before. In ’99, there were a lot of people backing businesses that weren’t really businesses, but now they’re putting billions of dollars into companies that haven’t had the time to mature. Having constraints of profitably actually helps you make more creative decisions, but the number of companies making poor decisions and burn rates are high. There are more people employed in Silicon Valley by money-losing companies than ever before and if the capital dries up then the companies go down.” – Bill Gurley

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