Legendary investor Bill Gurley rejected Robinhood’s pitch because it made him feel ’emotionally bad’ and he thought the app mislead users

Bill Gurley
Legendary tech investor Bill Gurley

  • Bill Gurley did not invest in Robinhood because it made him feel “emotionally bad.”
  • Gurley told The New Yorker he thought the commission-free trading app was “misleading to people.”
  • Gurley has called to ban payment for order flow, a model Robinhood relies on to make money.
  • See more stories on Insider’s business page.

Venture capitalist Bill Gurley reportedly did not invest in Robinhood because it made him feel “emotionally bad.”

Gurley, a general partner at Benchmark who has invested in Uber, Zillow, and Stitch Fix, told The New Yorker’s Sheelah Kolhatkar he did not invest in Robinhood because of oppositions to the app’s business model. Robinhood gets money by using a third party to carry out individual buy or sell orders, called a “payment for order flow.”

“It made me feel bad. Emotionally bad. Because I think it is misleading to people.” Gurley told The New Yorker. “My issue with Robinhood is, I think their mission and what they say they stand for is not actually true.”

Robinhood is a commission-free trading app popular among first-time investors. The firm’s website said it’s aim is to “democratize finance for all.”

Read more: SCOOP: Boston fintech Capchase is in talks for new funding at about a $150 million valuation

But the app has high profile critics like Warren Buffett and Charlie Munger, and some markets experts recently told Insider the app “gamifies” trading through flashy animation and incentivizes risky betting.

Gurley called for the US Securities and Exchange Commission to ban payment for order flow models during the height of GameStop’s short squeeze. In early 2021, many retail investors, including those in the Reddit group WallStreetBets, pushed the price of GameStop up. Some said it was to burn hedge funds that bet against the stock.

Gurley, in the past, has said the payment for order flow practice “smells bad” and is already outlawed in the UK and Canada.

“If the SEC/government wants to “fix the plumbing” the number one thing they should do is ban Payment for Order Flow,” Gurley tweeted in January.

Gurley gained fame through backing Uber in 2011 with $10 million, which brought Benchmark $8 billion. Gurley did not participate in Benchmark’s latest fund, but will remain at the VC firm that he joined in 1999, Insider’s Bani Sapra reported.

Read the original article on Business Insider

One of Uber’s earliest investors says the billions it spent on self-driving were a ‘waste of money’

Uber ATG Self driving   Photo by
Uber launched its own self-driving team in 2015.

  • Early Uber investor Bill Gurley said the company “burned” billions of dollars on self-driving tech. 
  • That money would have been better spend on food delivery, he told journalist Eric Newcomer. 
  • Uber’s sold off its self-driving unit in late 2020 as it grappled with a revenue downturn.  
  • Visit Business Insider’s homepage for more stories.

Uber’s food-delivery business has been a massive boon for the company as the pandemic sent ride-hailing revenues down the tubes and takeout orders through the roof.

One early investor in the company, Benchmark’s Bill Gurley, says the company should have committed more investment to food delivery that it instead spent trying to build self-driving vehicles. 

In an interview with journalist Eric Newcomer in his newsletter Friday, Gurley lamented that Uber dumped so much capital into its self-driving unit, called the Advanced Technologies Group (ATG). Gurley’s firm, Benchmark Capital, first invested in Uber in 2011, according to Pitchbook data. Gurley sat on Uber’s board until 2017. 

“We probably burned $2.5 billion on autonomous that was a waste of money,” Gurley said, adding that in retrospect that sum would have been better spent on growing Uber Eats. 

However, he said, there still would have been major risks to investing heavily in delivery. 

“These ideas where you use capital as a weapon to build liquidity and then emerge out of it later is a really hard and dangerous game, and you need the capital markets to support it,” Gurley said. “And if we hadn’t gone from a frothy market five years ago to a super frothy market now, maybe you don’t make that gap.”

Uber has historically struggled to turn a profit – it reported an adjusted net loss of $8.5 billion in 2019, for example – leading it to double down on core businesses and trim some capital-intensive side projects as the pandemic slashed revenues. In December, the company announced plans to sell its ATG unit to the competing autonomous-vehicle firm Aurora, and its flying taxi program to Joby Aviation.

Read more: Uber ATG has been hobbled by a deadly crash, infighting, and balky tech – and investors are losing patience with the self-driving division

The appeal of self-driving vehicles for a ride-hailing service is clear: if Uber could develop robotaxis capable of reliably ferrying passengers around without intervention, it would theoretically save heaps on payroll and other costs associated with employing human drivers. But that’s much easier said than done. 

Since its founding in 2015, Uber ATG struggled to make significant headway toward building an autonomous taxi, falling behind competitors like Alphabet’s Waymo and GM’s Cruise. The firm was plagued by infighting, allegations that its lead engineer stole trade secrets from Google (he was later convicted and pardoned by President Donald Trump), and a fatal crash in 2018 that’s considered to be the first deadly incident involving a self-driving car. 

Read the original article on Business Insider