Mr. Gurley’s starkest warnings have been directed at the venture industry, now flush with more cash than at any time since the late 1990s. The flood of capital has allowed both good and bad companies to stay afloat, which Mr. Gurley said lets entrepreneurs engage in unsound business practices.-RW
For example, start-ups are encouraged to compete with one another with price cuts and discounts when investors are willing to subsidize them. In the long run, however, price cuts are not a sustainable way to keep customers.
Thanks to all the easy money in the start-up system, “it could take years to know which business models really work,” Mr. Gurley said. For investors, that could depress returns, he added.