Jeff Bezos Annual Shareholder Letter

If you look at the progress of Amazon as a company between 1997 and 2017 when the latest shareholder letter was published it is quite remarkable.

I have said this before but if you want to see a great example of very long term thinking – read these letters. Amazon as a business has very good cash flows it just decides to invest these in the future. You really can’t fault that as a manager or shareholder.

If at first you don’t succeed…..

I am constantly reminded how hard startups are. Your job as a founder is to knuckle down and try and figure out all the hard things that others can’t.

I experience this every time we launch a brand at MoveFresh. We are always over optimistic about how easy it will be to enter a new market or segment and the reality is that once you launch you get hit by all the things you didn’t know. There are a couple of things you can do – KBO (Keep Buggering On) or pivot and try something else or a new marketing channels.

Founders (Including me) are very tempted to give up or try something new – what I am learning to do is to keep going and refining the proposition. Online marketing gives you a great way to test multiple offers, audiences, target markets and landing pages – use this to test your proposition. If you get an offer or product to work in one marketing channel you have a great testbed to try other channels.

Lots of founders who I meet prefer to try something new, but the same problems will be encountered in other segments, so learning to KBO is one of the best traits in a founding team that you can find!

Startups are hard – cash doesn’t solve the problems!


I meet with lots of founders of startups pretty much everyday. The ones that are successful realise that starting a company isn’t about glamour or fun its a seriously difficult thing to so.

I have been involved (either as a founder or investor) in a bunch of startups, there are always highs and a lot of lows. The one thing that is universal is the struggle and difficulty from taking an idea from a discussion in a coffee shop or pub to a self sustaining business that doesn’t require your constant supervision.

A huge amount of entrepreneurs think that funding is the solution to becoming a successful business, but most successful businesses don’t need a vast amount of funding if they have a successful strategy.

Spending time on the strategy and discussing the obstacles around this strategy is much better than working on a funding document and deferring the strategic discussion until there is money in the bank.

Technology has become massively easier over the last decade and building a product or service for the web has virtually no cost apart from time. Trends talk about “product/market fit” as having a product that customers are willing to use and pay money for.

So as a founder – don’t think that raising money is the best use of your time, bootstrapping your business until you have good product market fit is a much better use of your time resource. It has the advantage of keeping the equity pie complete. If you really have no choice than to raise money leave this as late as possible. Focus on the product!

Unicorpses – who cares?


There is much talk about valuation and the “Death of the Unicorn”. It just proves to me one thing, I am getting old!

I lived and preached the value of the new frontier in the late 90’s, many people scoffed at the “Tech Bubble” of the dotcom era. We then turned our attention to bankers, bashed them and now we are bashing the next wave of technology companies.

Valuation at any point in time is just a reference to what a group of investors think the potential cash flow of a business will be in the future. It can be modelled in a number of ways and we can agree or disagree (by investing or passing) on the number.

Technology investing is not for the faint hearted, if you want something with less risk (and reward) then think about another sector, perhaps something that you know lots about. I don’t know much about anything but I have seen lots of technology and I do really love the “New New Thing”.

So I choose to invest in technology, if I knew more about property I might invest in that, but my public and private investments are very heavily skewed to technology, mainly because it is something I think I know something about.

I am also a realist, things that go up must also come down and historic valuation metrics are no indication of future ones. It takes time for most people to catch up and I continue to see astounding valuations for businesses that have little revenue, let alone future cash flows. This, as my mother used to say – “Will end in tears”. It might not be this year or next, but it will at some point.

I have a philosophy of investing with at least a decade as my view point. I have never managed to “flip” an investment and generally prefer to invest early rather than later. It isn’t a great philosophy if you are a fund manager, but as a private investor I can stick to my investment diet and not worry about what others think.

Realistically the only thing I am learning from all the press about Unicorns (or death of) is that I am really getting old. (Kevin Dorren, Age 47)

Elon Musk, he is Iron Man!

This interview with Elon Musk, the billionaire founder of SpaceX and Tesla Motors shows how deeply he thinks about the tech projects he kicked off.

Tesla was the laughing stock of the motor industry for a number of years, but has become the leader in electric transportation. More importantly it has kick started Apple and a number of other companies into the space.

Watch this video and see what you think…!

2015 – A year in review


2015 end of year review

It seems that the year has flown, so it’s worth looking back to see what was achieved in 2015.

Diet Chef

When we started Diet Chef we never thought it would get to the scale it has. It has massively out performed our expectations both from a customer perspective and financially. We were faced with a very tough decision in 2015 either to sell Diet Chef as we had a (great) private equity investor that required an exit or buy the company ourselves.

There were many hours of discussion on this, but standing back from things, most diet companies have been around for over 15 years and none of the macro economic factors would suggest that there is any likelihood of a company like Diet Chef disappearing overnight. So funded by a large chunk of debt we have bought out our existing investors and plan to keep Diet Chef for the longterm.

That doesn’t mean there hasn’t been changes, most of the infrastructure investments we have made (people, systems and geographic) have been reversed over the last 6 months. We are back to a controllable cost base and our plan for 2016 is about growth. This is coming from two areas – acquiring more customers and making the ones we have happier!

There was a drive for profitability over the last 12 months which was the right thing to do if we were seeking an exit with third party, but we lost a lot of our customer focus in this drive. This has been reversed and the customer has become king again within the organisation and our drive is all about making the customer experience better and allow our customers to self serve as much as possible.

In addition we have launched another brand (Diet Now) that allows customers who cannot afford Diet Chef to be able to buy a product from us. As we have grown our costs of marketing have grown, so getting more bang from the buck on our marketing spend is pretty important. Our market entry strategy for this is very much like Diet Chef in the early days. Test, learn, listen to customers, iterate!

So I am very excited to be hitting the 2016 diet season ahead of expectations and with most of the important infrastructure issues fixed.

Investments – Private

It’s been a bit of a rollercoaster of a year on this front. As you have followed I love investing in really early stage tech or consumer businesses. I was looking at a very health return on Fanduel based on they’re recently reported $1b valuation, but the power of TV (more on that later) has put them into the regulators crosshairs. I am sure this is nothing more than a blip, but pushes any return off for a bit (not that I am really worried about this, it’s a great business led by an outstanding team)

TVsquared continues to go from strength to strength. An amazing team with tons of experience are making it look easy to grow quarter on quarter (significantly!) with more depth into existing customers. I think this could be another significant investment but really the time to ramp up the sales organisation to cope with the demand. (see here)

Flavourly continues to grow and has significant cash resources following its successful crowdfunding last year. Like all businesses it is dealing with the growth factors in terms of physical space, staff and product. Looking very promising in 2016!

I am currently looking for one investment for 2017, same characteristics, ideally consumer focused with an international market opportunity.

Investments – Public

Have disposed of some of the investments in my portfolio in 2015. Mainly Lloyds Bank, Tesla & Nestle which I have reinvested fully in Amazon. I am currently sitting on a large position in Amazon and Alphabet (formerly Google) both have had exceptional performance (49% and 51% respectively). Electronic Arts is up 19% (thanks DJ for the tip), The only loss for the year is Jardine Matheson Holdings, down 14%, it’s a very long term hold so no plans to sell any of these stocks in 2016. Remember that this is not a short term investment strategy.

The outstanding investment for me this year is Amazon. They are growing both in terms of traditional retail, but also AWS (Amazon Web Services) is a significant growth driver. I love the fact that Bezos has a very long term view and is re-investing in the business for growth and efficiency (Amazon Logistics, Cargo Planes, Same Day Delivery) all to improve the customer experience.

Crowdfunding for Debt

I have been following the crowdfunding market very closely over the last 12-18 months.

One area that has fascinated me is the use of crowdfunding for debt products. Interest rates at 0.5% don’t really support the income requirements of lots of individuals in the UK. Crowdfunding (which I accept is more risky than bank deposits) is an interesting area for consumers who feel that they are willing to take a little more risk.

The size of business and the serviceability have been a big issue over the last 12 months, but we are seeing more mainstream businesses adopting crowdfunding for their needs. This is a classic example of disruption of financial services (traditionally people and infrastructure heavy) to marketplace models.

Although not for everyone we managed to complete a £1.5m debt finance with LendingCrowd recently that helped fund a management buyout. We were attracted by the ability to introduce funders that would normally have to provide the whole part of the debt to the deal.

You can read more about this at The Scotsman.

There is an excellent video about the future of crowdlending by Samir Desai