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Warren Buffett weighs in on interest rates and 'irrational competition'

Warren Buffett
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Warren Buffett

Interest rates have created "irrational competition," mogul Warren Buffett reportedly concurred in a meeting with a top venture capitalist.

Bill Gurley, a general partner at Benchmark Capital, tweeted that he met with the CEO of Berkshire Hathaway this week. In a short conversation, Gurley and Buffett commiserated about interest rates:


Gurley told Buffett that his business, raising money to invest in start-ups, was being impacted by interest rates. Buffett's business, a conglomerate of household names, is, too, he said. The two agreed that it creates "irrational competition," according to Gurley.

Bill Gurley
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Bill Gurley

Gurley didn't elaborate on the exact connection discussed between interest rates and competition.

But low rates have kept borrowing cheap and led to low returns in some asset classes, creating a phenomenon called "venture tourists" — who look from Wall Street to Silicon Valley in search of growth. Some investors have gone so far as to connect rising interest rates to previous technology bubbles.

Gurley himself has warned of other dangers within the venture financing space.

"In Silicon Valley boardrooms, where 'growth at all costs' had been the mantra for many years, people began to imagine a world where the cost of capital could rise dramatically, and profits could come back in vogue," Gurley wrote in his blog, "Above the Crowd." "Anxiety slowly crept into everyone's world."

It comes as the Federal Reserve is mulling a hike in interest rates, which have been historically low as the economy recovered from recession.

Buffett has said that raising interest rates will be a "tough decision" that may affect imports and exports very significantly. Berkshire Hathaway didn't immediately respond to CNBC's request for additional comment.