Jeff Bezos, founder of private space company Blue Origin and the, visited the Los Angeles Air Force base, Space and Missile Systems center and spoke to the Airmen, Civilians, and Contractors at the Gordon Conference Center, Oct. 25, 2017.

Jeff Bezos has amplified the warning to investors of Bill Gurley, a general partner from Benchmark Capital. MarketWatch reports:

Onto our call of the day, which comes from Bill Gurley, general partner at Benchmark Capital and a venture capitalist who made a $11 million bet in Uber UBER, -4.37% in 2011. Several of his more than a half million followers on Twitter sat bolt upright after this Twitter thread:

“An entire generation of entrepreneurs & tech investors build their entire perspectives on valuations during the second half of a 13-year amazing bull run. The ‘unlearning’ process could be painful, surprising and & unsettling to many. I anticipate denial,” tweets Hurley, who adds three points to this:

  1. Previous ‘all-time’ highs are completely irrelevant. It’s not ‘cheap’ because it is down 70%. Forget those prices happened.
  2. Valuation multiples are always a hack proxy. Dangerous to use. If you insist, 10X should be considered AMAZING and an upper limit. Over that silly.
  3. You may be shocked to learn that people want to value your company on FCF [free cashflow] and earnings. Facebook trades at 14X GAAP & is growing 23%. What earnings multiples are you assuming?
  4. Revenue & earnings QUALITY matter.

Gurley linked to his blog from 2011, where he explained that discounted cash flows “are the true drivers of value for any financial asset, companies included,” and that price/revenue is a “dangerous technique because all revenues are not created equal.”

Among those reacting to Gurley was Amazon AMZN, -3.04% CEO Jeff Bezos, whose stock is facing its worst year since 2008, after the company’s first loss in seven years:

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