Bill Gurley is one of the greatest venture capital investors of all time. An early investor in eBay during the first dot com bubble, Gurley has become famous in the past few years for his early investment in Uber. In the wake of the FTX collapse, Gurley has published this list of red flags to look out for.
While it is aimed at venture capital investors, many of these red flag similarly apply for smaller public companies.
Some of the red flags are present in the biggest companies in the world (e.g. Alphabet has a dual-class voting structure). But as Gurley writes, they are just warning signs. And the more warning signs, the more wary you should be.
For example, WeWork of the mid-2010’s under Adam Neumann ticks a number of Gurley’s red flags (to be clear – WeWork then, not WeWork today). There were overlapping corporate interests, where Adam Neumann personally owned some of the property WeWork was leasing. And they also had unique financial data presentations, including the much-ridiculed “community-adjusted EBITDA”.
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