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August 27 - September 8, 2019
7,8,9,10Apple’s cash on hand is nearly the GDP of Denmark.11,12
Our love affair with retail and the nostalgia we feel when a legendary retailer files for bankruptcy (notice that it doesn’t make the news when a venerable oil equipment leasing firm goes under) is a function of our historic affection for retail, which has been baked into our culture.
My experience in traditional firms is that anything new is seen as innovative, and the people assigned to it, like any parent, become irrationally passionate about the idea and refuse to acknowledge just how stupid and ugly your little project has become.
Amazon demonstrates real discipline around not ramping up investment until they know something is working.
Today’s successful companies may have the assets, cash flow, and brand equity, but they approach risk differently than many tech firms that have seen their death. They live for today and acknowledge that great success only comes with significant, even existential, risk.
if you google “biggest mistakes in business history,” the majority of results are risks that firms failed to take, such as Excite and Blockbuster passing on acquiring Google and Netflix, respectively.
Amazon has access to capital with lower return expectations than peers.
In 2015, Amazon spent $7 billion on shipping fees, a net shipping loss of $5 billion, and overall profits of $2.4 billion.54 Crazy, no? No. Amazon is going underwater with the world’s largest oxygen tank, forcing other retailers to follow it, match its prices, and deal with changed customer delivery expectations. The difference is other retailers have just the air in their lungs and are drowning. Amazon will surface and have the ocean of retail largely to itself.
As Bezos also wrote in that first annual letter: “Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.”
while the world still thinks of Amazon as a retailer, it has quietly become a cloud company—the world’s biggest.
In early 2016, Amazon was given a license by the Federal Maritime Commission to implement ocean freight services as an Ocean Transportation Intermediary. So, Amazon can now ship others’ goods.
allow Amazon’s Chinese partners to more easily and cost-effectively get their products across the Pacific in containers.
Shippers charge $1,300 to ship a forty-foot container
Amazon can deploy hardware (robotics) and software to reduce these costs.
Amazon is building the most robust logistics infrastructure in history.
The truth is that the death of physical stores has been vastly overstated. In fact, it’s not stores that are dying, but the middle class—and, in turn, the businesses that serve that once-great cohort and its neighborhoods.
Death, for brands, has a name . . . Alexa.
The reason Jeff Bezos is advocating a guaranteed income for Americans is he has seen the future of work and, at least in his vision, it doesn’t involve jobs for human beings.
Human beings, example: me
Entrepreneurs create jobs, right? No, they don’t. Most entrepreneurs, at least in tech, leverage processing power and bandwidth to destroy jobs by offering more for less.
The guy who has the greatest insight and influence into the future of the world’s largest business (consumer retail) has come to the conclusion that there’s no way the economy will be able to create, as it has done in the past, enough jobs to replace those being destroyed.
Amazon’s triumph will mean a lot of losers—not just individual companies, but entire industry sectors.104,105,106 Obviously, grocery is one of those doomed sectors.
In 1984 it was possible to be a remarkably unremarkable kid with a part-time job and pay your way through a tier-1 university.
Like the rest of retail, grocery will bifurcate into “scale” stores, with robots, giving you 90 percent of a great store for 60 percent of the price, using robotics, cheap capital, software, and voice.
Consumers no longer go to stores for products, which are easier to get from Amazon. They go to stores for people/experts.
we need business leaders who envision, and enact, a future with more jobs—not billionaires who want the government to fund, with taxes they avoid, social programs for people to sit on their couches and watch Netflix all day.
Judges issue search warrants every day. They comply with search-and-seizure laws that prevent indiscriminate searches, and order homes, cars, and computers searched for evidence or information that might prevent or solve a crime. Yet, somehow, we’ve decided the iPhone is sacred. It isn’t obliged to follow the same rules as the rest of the business world.
The unsung hero of Apple’s success is Napster founder Shawn Fanning, who scared the music industry into the arms of Apple, and who set about partnering with them similar to the way a vampire partners with a blood bag.
Luxury
combines our instinctive need to transcend the human condition and feel closer to divine perfection, with our desire to be more attractive to potential mates.
For millennia, we’ve knelt in churches, mosques, and temples, looked around and thought, “There is no way human hands could have created Reims/Hagia Sophia/Pantheon/Karnak. No way mere humans could have created this alchemy of sound, art, and architecture without divine inspiration. Listen to how transcendent the music is. That statue, those fresc...
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the caveman, thinking with his genitals, will sacrifice a lot (pay an irrational price) for the chance to impress.
I’ve been advising luxury brands for twenty-five years and believe these firms, from Porsche to Prada, share five key attributes: an iconic founder, artisanship, vertical integration, global reach, and a premium price.
Dying removes the icon from the inevitable judgment of everyday existence, including aging, and elevates persona to legend—ideal for a brand.
The world needs more homes with engaged parents, not a better fucking phone.
stores operated by the brands become temples to the brand.
Fill a room with middle-class people from around the world, and you have diversity. They eat different food, wear different clothes, and can’t understand each other’s languages. It’s anthropology on parade. The global elite, by contrast, is a rainbow of the same damn color. That’s why it’s easier for luxury brands to permeate geographic boundaries than mass market peers.
If Apple’s the standard, how much does a person’s attractiveness to the opposite sex suffer when he or she boots up a Dell or pulls out a Moto X to snap a picture?
The decision to pay a premium comes from an ancient and primal urge from the lower body—even while the brain yammers on about the rational stuff.
Steve Jobs’s decision to transition from a tech to a luxury brand is one of the most consequential—and value-creating—insights in business history.
Chanel will outlive Cisco, and Gucci will witness the meteor that sets Google on a path to extinction.
Apple has by far the best genetics and, I believe, the greatest chance of seeing t...
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Nokia, at its peak, represented 30 percent of Finland’s GDP and paid almost a quarter of all of that country’s corporate taxes.
Nokia’s fall pummeled the entire economy of Finland.49 The firm’s share of the stock market shrank from 70 to 13 percent.50
Apple should launch the world’s largest tuition-free university.
A sector’s vulnerability is a function of price increases relative to inflation and the underlying increases in productivity and innovation.
I’m good at what I do, but walking in each night, I remind myself we (NYU) are charging kids $500/minute for me and a projector. This. Is. Fucking. Ridiculous.
Apple has the cash, brand, skills, and market opening to really dent the universe. Or . . . they could just make a better screen for their next phone.
Facebook, by analyzing every bit of data about us, might come closer to understanding us than our friends. Facebook registers a detailed—and highly accurate—portrait from our clicks, words, movements, and friend networks.
Your Facebook self is an airbrushed image of you and your life, with soft lighting and a layer of Vaseline smeared across the lens. Facebook is a platform for strutting and preening. Users post about peak experiences, moments they want to remember, and be remembered by—their weekend in Paris or great seats at Hamilton. Few people post pictures of their divorce papers or how tired they look on a Thursday.
However, the camera operator, Facebook, isn’t fooled. It sees the truth—as do its advertisers.
