Although the author is a bit harsh, I tend to agree with him on the aspect that Amazon is largely creating second rate products and ultimately wasting a lot of shareholder money
(their inventory write down on fire phone inventory was $170M).
The markets have been punishing them for their tactic of throwing it against a wall and seeing if it sticks. Ultimately, I think what allows a company like Apple to get ahead was the ability to say 'no', 'it isn't ready', 'do this better', 'redesign that', 'this sucks - can the project'. Bezos does not appear to run his company that way. It seems like he has a bunch of lieutenants building things, but nobody telling them 'NO!'
The author highlights one thing: Amazon is trying too hard to be everything to everyone, failing to excel in most ventures.
Don't get me wrong, I love their core business', use amazon prime, the web services have definitely been a game changer and the kindle makes my life on caltrain nice. But I'm certainly not going to invest in them until they start to show that they've learned to say 'no'.
How expensive are these bets, in reality? To me, they seem like long options. Minimal downside, but huge potential upside as they learn from each mistake and gradually improve and create more exposure to the potential of a hit.
But in reality, it's not the hits that Amazon counts on--it's the recurring revenue of Prime and Unlimited subscriptions and loyalty around lots and lots of low-margin purchases. To keep those memberships coming, you don't need to be a hit machine--you just need to keep offering incremental useful value, mediocre as it may be alone, to add value to the subscription.
I think that's the angle. It's not that Costco hot dogs are the best hot dogs in the industry for $1.50 (or $4.99 rotisserie chickens, or car buying services, etc.), it's just that these items add enough value to enough peoples' Costco experience that they renew memberships and spend a lot of cash on low-margin stuff.
The markets have been punishing them for their tactic of throwing it against a wall and seeing if it sticks. Ultimately, I think what allows a company like Apple to get ahead was the ability to say 'no', 'it isn't ready', 'do this better', 'redesign that', 'this sucks - can the project'. Bezos does not appear to run his company that way. It seems like he has a bunch of lieutenants building things, but nobody telling them 'NO!'
The author highlights one thing: Amazon is trying too hard to be everything to everyone, failing to excel in most ventures.
Don't get me wrong, I love their core business', use amazon prime, the web services have definitely been a game changer and the kindle makes my life on caltrain nice. But I'm certainly not going to invest in them until they start to show that they've learned to say 'no'.