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Bill Gurley at the 2013 GeekWire Summit. (Photo by Eugene Hsu)
Bill Gurley at the 2013 GeekWire Summit. (Photo by Eugene Hsu)

All good things must come to an end.

And Benchmark’s Bill Gurley — one of the most successful venture capitalists on the planet — thinks the current tech boom is starting to show signs of the dot-com boom (and bust).

What worries the backer of Zillow, Uber, NextDoor and Opentable?

Burn rates are rising at startups, and companies are feeling as if they need to raise huge piles of capital in order to compete.

“Every incremental day that goes past I have this feeling a little bit more,” Gurley tells the Wall Street Journal in a wide-ranging interview. “I think that Silicon Valley as a whole or that the venture-capital community or startup community is taking on an excessive amount of risk right now. Unprecedented since ‘’99. In some ways less silly than ’99 and in other ways more silly than in ’99.”

Gurley goes on to surmise that burn rates — the amount of money that a company is spending — at venture-backed companies are now at an all-time high. He also suggests that more people “are working for money-losing companies than have been in 15 years,” and that many of the entrepreneurs today don’t have the “muscle memory” of what happened in the late 90s.

“So risk just keeps going higher, higher and higher. The problem is that because you get there slowly the correcting is really hard and catastrophic. Right now, the cost of capital is super low here. If the environment were to change dramatically, the types of gymnastics that it would require companies to readjust their spend is massive. So I worry about it constantly.”

Interestingly, when I interviewed Gurley at last year’s GeekWire Summit, which took place last September, Gurley didn’t sound quite as cautious in his remarks. At one point, I asked him about Benchmark’s investment in Webvan — perhaps the greatest example of 1990s dot-com hubris — and he noted that the firm likely would invest in the concept again.

“They got too ambitious. They tried to do too much, too fast and then the bubble happened,” he said. “If you have a high-capital business and you are being overly aggressive and you surf over a financial reset, you are dead.”

Just like Webvan’s crash, Gurley predicts that we’ll see some high-profile failures in the next year or two, something he says will be healthy for the tech ecosystem as a whole.

You can read the full interview here.

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