Bill Gurley, GP of Benchmark Capital said, “The best ways to protect against the downside is to enjoy every minute of the upside.” Markets have cycles and it’s difficult to time the market. One way to protect against downside risk is to take full advantage of the upside. That way, your returns cushion the inevitable downturn.
- This is the opposite of the avoiding losers investment strategy or as Howard Marks would say “picking winners”
- Investors like to say the best companies are started in a downturn so running a startup during a recession is also positioning yourself to participate in the upturn
- Many startups will run out of cash starting end of 2023
Links to this note
Venture capitalist Bill Gurley, when talking about losses reminds people that a fund can lose it’s money 1x on a failed investment in a business that goes under but can miss out 10,000x if they fail to invest in a big winner.