Teten: Sell Amazon Stock Due to Weak Retail Pricing Power
David Teten · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · Dec 9, 2015 · at 21:00
David Teten, Partner at ff Venture Capital, evaluates Amazon's stock and long-term business model during a quick-fire segment on The 20 Minute VC in late 2015.
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“I would probably sell On the grounds that, ah, it's not clear to me if when they eventually turn on the monetization spigot, ah, it will be impossible for other people to compete with them. In other words, the whole theory of Amazon, not unlike a lot of early-stage startups, is build lots of infrastructure and then at some magic point in the future we turn on monetization. But if tomorrow they raise their prices 15% to turn on monetization, it's not clear to me if there wouldn't be new competitors like Jet that emerge. Right now Jet is in, I think, challenge Because they're competing head on against a company that, ah, keeps its margins very low. Ah, but if tomorrow Amazon raises prices significantly, someone would create jet number two. So I'm a little skeptical of them on their traditional side, but that said, on the Amazon Web Services side and other parts of their business, I think they've got great customer lock-in and a very powerful position.”
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More from David Teten
Teten: Traditional Two-Partner VCs Are Threatened by AngelList
“But I think that the modal VC, two partners, and an admin, and maybe an analyst, is under threat from AngelList, because they can't possibly have the level of granular knowledge of different sectors that individual angels do.”
Teten: Early-Stage VCs Spend 80% of Time on Deals They Reject
“One of the great frustrations of our friends who work at, ah, most other VCs at our stage is they spend 80% of their time talking with companies with whom they can't consummate an investment.”
Teten: AngelList Is Becoming the Operating System of Venture Capital
“We are certainly monitoring AngelList because there is no question that they are working up the food chain to make themselves the fundamental operating system of this asset class.”
Teten: Seed Stage VCs Should Be Generalists
“The philosophy of FF Venture Capital is that as seed stage investors, we should be generalists. We should keep our doors open wide to the broadest possible array of companies.”
Teten: ff Venture Capital Maintains a One-in-Six Portfolio Write-Off Rate
“We have a one out of six write-off rate, which is well below industry norms, and that attracts to us over 2000 inbound companies per year, and we filter through them for the approximately one dozen new companies per year in which we invest.”