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January 8 - January 17, 2018
By achieving a paradoxical goal in business—a low-cost product that sells for a premium price—Apple has become the most profitable company in history.6 The equivalent is an auto firm with the margins of Ferrari and the production volumes of Toyota.
As measured by adoption and usage, Facebook is the most successful thing in the history of humankind. There are 7.5 billion people in the world, and 1.2 billion people have a daily relationship with Facebook.
Google: About one out of six queries posed to the search engine have never been asked before.
The insights into consumer behavior Google gleans from 3.5 billion queries each day make this horseman the executioner of traditional brands and media.
Your new favorite brand is what Google returns to you in .0000005 second.
General Motors created economic value of approximately $231,000 per employee (market cap/workforce).20 This sounds impressive until you realize that Facebook has created an enterprise worth $20.5 million per employee
Soper, Spencer. “More Than 50% of Shoppers Turn First to Amazon in Product Search.” Bloomberg.
Google signaled the end of the brand era as consumers, armed with search, no longer need to defer to the brand,
Amazon is Google’s largest customer, but it’s also threatening Google in search—55 percent of people searching for a product start on Amazon (vs. 28 percent on search engines such as Google).
don’t have the skills—maturity, discipline, humility, respect for institutions—to work in a big firm
an economy where it’s never been easier to be a billionaire, but it’s never been harder to be a millionaire.
FORTY-FOUR PERCENT OF U.S. households have a gun, and 52 percent have Amazon Prime.
Half of all online growth and 21 percent of retail growth in the United States in 2016 could be attributed to Amazon.
Hunting and gathering, humanity’s first and most successful adaptation, occupies more than 90 percent of human history.
Paleolithic and Neolithic people spent just 10–20 hours a week hunting and gathering the food they needed to survive.
The gatherers, in most cases women, were responsible for 80–90 percent of the effort and yield.
Men tend to be better at evaluating at a distance—where prey is first spotted.
By comparison, women are typically better at taking stock of their immediate surroundings.
Gatherers also needed to be more thoughtful about wha...
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The hunter, by comparison, needed to act fast when the opportunity for a kill presented itself. There was no time for nuance, just speed and violence.
Observe how women and men shop and you’ll see that not much has changed.
Women feel fabric, try on shoes with a dress, and ask to see things in different colors. Men see something that can sate their appetite, kill (buy) it, and get back to the cave as fast as possible.
So, over-collecting was a smart strategy: the downside of too much stuff was wasted effort. The downside of under-collecting was death from starvation.
Take our affinity for salty, sugary, and fatty foods. It was a rational strategy in humanity’s early days, as these ingredients were the most difficult to come by. Not so anymore.
In the 1990s, e-commerce was a shitty, unrewarding business for almost every pure-play firm (it still is). The key to success in e-commerce wasn’t execution but creating hype around a company’s potential, and then selling it to some rich sucker before the house of cards caved in.
Amazon can scale to hundreds of millions of customers, and scale across almost every retail industry, without the traditional drag of having to build brick-and-mortar stores and hire thousands of employees.
On Amazon, Bezos realized, every page can be a store and every customer a salesperson. And the company could grow so fast that there wouldn’t be any corners left for competitors to carve out a niche.
Bezos chose the name “Amazon” as an indicator of the scale of the flow of merchandise he envisioned. However, another name he considered (he still owns the URL) was more appropriate: relentless.com
Brands are two things: promise and performance.
… books. Easy to recognize, kill, and digest.
Sellers, content with the massive customer flow, feel no compulsion to invest in retail channels of their own. Meanwhile, Amazon gets the data and can enter any business (begin selling products themselves) the moment a category becomes attractive.
This kind of experimentation and aggression is what the military calls the OODA loop: “observe, orient, decide, and act.”
In the all-important holiday season (November and December 2016), Amazon captured 38 percent of online sales. The next nine largest online players captured 20 percent combined.
Amazon has become the Prince of Darkness for retail, occupying a unique position—inversely correlated to the rest of the sector.
With the announcement of Amazon Go, a cashier-less convenience store, the firm entered the brick-and-mortar business.
Other retailers, once again rocked back on their heels, are now scrambling to eliminate their own checkout processes. Whom does this latest Amazon maneuver put at risk? The 3.4 million Americans (2.6 percent of the U.S. workforce) employed as cashiers.38 That’s a lot of workers—close to the number of primary and secondary school teachers in the United States.
Alexa is its artificial intelligence, named after the library of Alexandria.
Amazon’s customers trust it so much that they’re allowing the company to listen in on their conversations and harvest their consumption data. This will give Amazon deeper penetration into the private lives and desires of consumers than any other company.
In the short term, Go and Echo suggest that the company is headed toward zero-click ordering across its operations. Leveraging big data and unrivaled knowledge of consumer purchasing patterns, Amazon will soon meet your need for stuff, without the friction of deciding or ordering.
Amazon made a move in the direction of zero-click ordering when it launched its Wardrobe service in June 2017, allowing customers to choose clothes and accessories to try on at home before deciding which to keep. Customers have seven days to make a decision and are only charged after they’ve made their selection.
Amazon’s core competence: storytelling. Through storytelling, outlining a huge vision, Amazon has reshaped the relationship between company and shareholder.
Until now, the contract companies have with shareholders is: give us a few years and tens of millions of dollars … and then we’ll begin returning capital to you in the form of profits. Amazon has exploded this tradition, replacing profits with vision and growth, via storytelling. The story is compelling and simple—the power couple of messaging.
Most retailers trade at a multiple of profits times eight.46 By comparison, Amazon trades at a multiple of forty.
Amazon has trained the Street to hold them to a different standard—to expect higher growth but lower profits.
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 project and refuse to acknowledge just how stupid and ugly your little project has become. As a result, traditional companies not only have less capital to invest but fewer swings at the plate.
“Given a 10 percent chance of a hundred times payout, you should take that bet every time.”
My nightmare job is the “invisible until you fuck up” position.
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.
History favors the bold. Compensation favors the meek.
