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