Could Amazon Do To VC Firms What It’s Still Doing To WallMart?

Social Capital CEO, Chamath Palihapitiya on Recode:

“Most of the practitioners are dated, in their philosophy, their framework and their capability,” he said. “These are people that grew up in a different time where the social signaling of where they went to school mattered enough that they could get these ‘prestigious’ jobs. The problem is, it’s not a ‘prestigious’ job, it’s a critical job.”
He criticized investors who take credit for successful entrepreneurs based on a “gut feeling,” rather than data and iteration, and said LPs will tire of having their money locked up in private securities for a decade or more as fewer companies go public. And the big disruptor, he predicted, could be a tech giant like Google, Microsoft or Amazon directly entering the fray.
“Most of the businesses are built on top of them,” Palihapitiya said. “It doesn’t take much to imagine a world where Amazon says, ‘Well, I’m renting you the computer, I’m renting you the storage, I’m renting you the algorithms, I’m renting you all of this stuff … Oh, I’ll just give you some money along the way, as well!’”

I think this is a prescient analysis. I don’t see a reason why VC firms should continue to run the way they do, and were I offered the choice between Amazon as provider/investor and going with a traditional fund…I think it’s an easy call.