Amazon

“Walmart or Walgreens or a bunch of other kinds of retailers, which all of which sit with Amazon as what I would call retail as logistics. Like, you know what you want, you go to the place, you get the thing. And there's just an algebra of like retails cost per…”

“If you counted that as revenue, then about 60% of what gets sold on Amazon is actually sold by third parties. So Amazon is a platform for other people.”

“Yes, people will buy fashion online, but not with a grid of dresses. You need some, you need something about service, experience, discovery, recommendation, all the other sides of what retail are, retail can be.”

“What it used to be was that he would decide what was on the website and then he would pay UPS and USPS to deliver it. And now he doesn't decide what's on the website, but he delivers it and he charges you for delivering. So he's kind of moved downstream.”

“Originally in the early nine, whenever it was like, 94, when Bezos was thinking, was trying to set up Amazon, the original business plan was it was going to do drop shipping. So there'd be no website, no stock, no inventory no infrastructure.”

“Only about half of the revenue comes from Amazon selling stuff on its own behalf. The other half of it is partly AWS, but also a whole bunch of other businesses.”

“There's this interesting line called ads and other. And this you discover is really only appeared in the last couple of years. But it was close to fifteen billion dollars in 2019. And that's Amazon selling placement in search results.”

“The problem with Amazon is you have to know what you want before you go there. You can't go to Amazon and think, I want a book, or I want a lamp. You can't go to the search box and put lamps in, at least only if you want some like kind of pure commodity, but i…”

“Amazon has probably 40% of US e-commerce, but e-commerce is sort of 15 to 20% of US retail.”

“The alternative is the Digital Services Act, which just tries to define, like, the entirety of the tech industry. As being covered by a standardized set of rules, and it just doesn't really work. I mean, trying to cover how Amazon treats its suppliers, it's at…”

“Online-only retailers, which means Amazon and anyone else who only has a website, doesn't have a store, physical store, is about 50, 50 to 60% of total e-commerce.”

“In the US online clothing sales, online sales by clothing retailers. Doubled. That does, that's not telling you anything about what's happening in Amazon. That's just telling you traditional physical stores that also sell online. Yeah. Their online sales doubl…”

“Amazon is basically a database. Like you go and you type in the database, you ask what you want, they plug it in. Amazon is like a, it's a combination between database and a super specialized version of FedEx. You know what you want. They ship it to you. Done.”

“Amazon doing private label, like, yo, that's how retails work for the last hundred years. Like every retailer is 20% private label, but on the web somehow it's evil.”

“Which is that China has sort of many champions that compete with each other across many fields. Whereas, you know, Google doesn't have an e-commerce delivery business, and it doesn't really have a social network. And Amazon doesn't have a social network or a s…”

“It may be more efficient to just randomly distribute stuff, but it reduces your picking error by randomly distributing what it is.”

“This leaves Zuck as the only head of one of these giant companies who's the founder.”

“What Amazon did was they, if you look at the P&L for the last 25 years, they basically managed net income to zero. It was always zero, even as the revenue went up.”

“The theory of Amazon is that everything is an API. Everything is autonomous. Your financial metrics are visible internally. Your business metrics are accessible through an API. So when Germany does shoes, they hire five people, The German shoe team plugs into …”

“Do you want efficiency or do you want an experience? Because the reality is you probably can't have both. You can't have the nice e-commerce experience delivered straight to your door versus the efficiency.”

“Effectively, you've turned warehousing into a production line. Those same principles of specialization. What's a specialization? A specialization here is recognize object and grasp it. It's not walk 20 miles a day.”

“There's this cliche that e-commerce has infinite shelf space, and for Amazon it's more that there's one shelf that has infinite length. Everything has to fit on that one shelf. You can't have different kinds of shelves for different things. It all has to be th…”

“It seems very obvious to me that Amazon is a new Walmart, and worrying that Amazon will swallow all retail seems exactly like worrying that Walmart will swallow all retail.”

“Physical retailers sort of manage to persuade you that your time and your logistics cost is free and isn't costing you anything.”

“Shopify is like the standing rebuke to the idea that Amazon swallows everything. It's a completely different model.”

“The other thing that I've noticed recently is Amazon's advertising business, where they sell slots in search results. That is in its category called ads and other in the back of the report, where they disclose revenue but not profit. That did over twenty billi…”

“Number one is it shows how dumb it is to say you can, can't compete with Amazon. And this is absolutely competing with Amazon because it, and it's competing with Amazon by offering a completely different way to sell to customers.”

“Instead of thinking about e-commerce by category, like clothes are different from makeup, which is different from shoes, you should think about it in terms of the logistics model, Which is to say clothes, makeup, and shoes all work fine in roughly the same car…”

“If you're like a Japanese ceramic, selling Japanese ceramics, you're on Instagram, or you're on Shopify, but you can't sell that on Amazon. You would never sell that on Amazon. It doesn't work. You can't communicate, or, you know, it doesn't work in any way.”

“The whole cookie apocalypse thing and the privacy thing and all of this stuff is actually only about sort of a quarter to a third of online advertising because there's YouTube. Which is where video advertising is, there's, well, let me put it another way, ther…”

“The sort of text structure in The rest of the world is you tend to have vertical winners. So Google won search, and there's a couple of other people trying to do search. Amazon won sort of generalized e-commerce, not market-specific e-commerce, won general e-c…”

“When I worked at Andreessen Horowitz, we saw three or 4000 companies a year. You know, I don't think we ever said, you know, what if Google does this? Or, you know, you can't invest in that because Microsoft might do that or because Amazon might do that.”

“And so there's, for our incidentally for Facebook, just indeed is for Amazon, which is why things like Kindle Fire and Alexa exist. It's they have this platform dependency that is a sort of a strategic threat.”

“If all you can do is tell me that one barbarian king defeated another somewhere in the Central Asia what use are you to the public? What does this tell me? Who cares? So if all you can tell me is that Amazon has ads now, Or that there's a new fast fashion app …”

“This quarter, what had previously been sort of implicit in their results, so they have this line in the back of the account, it's called a breakdown of their revenue, and they had this line called other, which they say is predominantly advertising, and this qu…”

“There's an awful lot of fifty, hundred, two hundred billion dollar tech companies out there. You know, how does that model account for everything from Coinbase to Stripe to Shopify to Spotify to you know, Okta to Databricks to UiPath to, you know, there's doze…”

“You know, you can have 10 different department, you can have 50 department stores, and you can have 10 different supermarkets, but it makes no sense to have 10 different Amazons. However, it does make sense to have a hundred different sake brands, or a hundred…”

“Clearly a whole bunch of these aren't going to work. A whole bunch of these are going to get aggregated up into Amazons and so on. A whole bunch of them will reach a point scaling point where they need to get bought by Sephora or Procter & Gamble or whoever it…”

“What you see when the Amazon screen loads is not just a database output, there's an awful lot of work in that, and so, sorry, I'm being very incoherent here, but like, I don't think you can separate the client from the data like that. Certainly in, on the web,…”

“They want to turn it, particularly for Google, Facebook, Amazon, they want to turn it into automated self-service software. And if it turns out that you kind of can't do that, and you need a bunch of salespeople, or you need a bunch of offices, or you need a b…”

“So they build Prime as a way of reinforcing your loyalty to the platform, and that means they buy TV shows. That's not because they want to be in the TV business, it's because they want to drive Prime, which drives the core Amazon business.”

“Fifteen billion dollars a year, which is what Netflix, for the sake of argument, what Netflix spends, and close to what Amazon spends. It's also what Disney spend, if you exclude sport. That's more than production budgets for the top, all broadcasters in the t…”

“A very large part of buying a book is you don't know what book you want. And so the job of the retailer is not to be, can some retailers at the end point to a logistics chain? Other retailers, they are providing something else, which might be service or experi…”

“From Walmart's results, latest results, Walmart's ad business was two billion dollars. In the last quarter, obviously Amazon's is thirty one billion dollars, but they're quite a lot further down that down that road.”

“Piper Sander does this study of US teenagers, and so what's the favorite brand, and for the last, like, four quarters, Shein, you could see it marching up every quarter, or every, every, every six months, it's a six-monthly survey, and the last two or three su…”

“Where is the money coming from to buy that thirty one billion dollars of advertising on Amazon? Well, it's mostly coming from trade marketing. It's not coming from TV ads.”

“And so Amazon did thirty-one billion dollars of advertising last year, which makes it roughly the same size as YouTube.”

“The core Amazon business, Is packetized warehouse logistics. So they don't know what, and we've talked about this in different things, like they don't know what anything is in the warehouse in a sort of fundamental sense. The whole model is that the makeup and…”

“Amazon has probably a ten billion dollar budget for buying TV shows, which exists as a way to get people to keep their prime subscription and to retain the prime.”

“It's not about putting medicine in boxes and shipping it to you. Even the medicine part isn't about the putting it in the boxes part. It's the, what are you paying? And why does insulin cost a thousand dollars in America and 50 bucks everywhere else on earth? …”

“Basically she claimed Amazon was losing money, which was This wasn't true. Or she claimed Amazon was selling below cost, which wasn't true.”

“There's no possible basis on which you can say One Medical has any kind of meaningful market power in the US healthcare industry.”

“It's got 40% of e-commerce and like a tiny percentage of US retail, but it has this large market share.”

“That didn't get eaten by Google, or Amazon, or Apple. It's a generic iPad in a case, and then there's However many software companies, a bunch of software companies that go and solve, this is what restaurants need.”

“Like, it's all about a very, very small narrow margin, and that's also the story for Amazon, and it's a story for grocery delivery, it's a story for all these one-hour grocery things, it's a story for restaurant delivery, it's a story for dark kitchens it's a …”

“And the thing about, talking about this with the internet, like the internet is completely interoperable, At the lower levels of the stack with IP and HTTP and SSL and so on. But once you're in the browser, like if you're building Amazon, you don't need to wor…”

“And they did, I think, thirty one billion dollars last year, and they've done like 36, thirty seven billion dollars in the last 12 months which gets them to being like a top three, top four media owner. Globally. It's like Alphabet, Meta, ByteDance and then I …”

“So it's got to have at least the same margins as Alphabet, which is like 60% operating margin if you exclude the R&D. And there's no CapEx. There's no incremental CapEx. So this thing is almost certainly producing significantly more cash flow than AWS.”

“Looking up the numbers say now about a 1.8000000000 dollar company. With 50 or 60% gross margins and 10% net income, because all the rest of the money is going to a combination of Amazon and advertising.”

“And the vast majority of them were less than 10 people, and less than ten million dollars.”

“They bought iRobot, which prompted some absolutely hilariously, kind of delusionally paranoid things about, oh my god, Now Amazon is going to have a millimeter scale accurate model of your house, and just think what they could do with that. Now their advertisi…”

“The DOJ basically goes to court in order to protect the position of a monopolist. Now that was actually what happened. What they said they were, or thought they were doing, was protecting low consumer prices, which was also what was happening. But the low cons…”

“It's got sort of 40% of U.S. E-commerce, which is about five percent of U.S. Retail and yet has low prices and it uses market power such as it has to push prices down rather than push prices up.”

“Everyone from Amazon to YouTube are designing their own chips instead of just buying them off the shelf.”

“The invention is how to scale, but most of what it actually does is stuff that retailers were doing in 1950 or 1900, or even like 1860, 18, 70. Like, private label goods was always a hilarious thing. I mean, that, the freak out around private label goods has n…”

“This is effectively a way for Amazon to squeeze more margin. Out of its suppliers as much as it is advertising”

“And if you're going to pay to be there, then the odds are that there's an ROI on that, and the reason there's an ROI is that If you pay to be there, people buy it. And, you know, that is actually a kind of a quality filter.”

“And thirty eight billion dollars is bigger than the global newspaper industry, which of course is now much reduced. It's also bigger than Amazon Prime.”

“So if you apply that to 40, forty billion dollars, you get whatever it is, 20, over twenty billion dollars which is roughly the same as AWS, so roughly equivalent operating profit as AWS, And without AWS's 10 or twenty billion dollars of capex attached to it.”

“They were old gatekeepers, and they were generally much bigger and much more powerful than Google or Amazon which is kind of a counterintuitive thing to say, but, you know, we came from a world in which there were three TV stations, and mostly Most cities in A…”

“Amazon has 354 hundred and fifty million scoops. It has sufficiently many scoops that it's actually not a very meaningful number because an awful lot of that is just stuff that doesn't exist until someone orders it.”

“What's happened in the last decade or so is product search has moved almost entirely from Google to Amazon.”

“Clearly both Amazon and YouTube have unbundled Google in that sense that you go to Amazon for product and you go to YouTube for not just for quote unquote video, but for a lot of other stuff that might previously have been text.”

“Amazon is overrun. You know, if you saw this link, if you search, search Amazon for I'm sorry, that would break open AI terms of service. And you just got huge numbers of marketplace products where literally the name of the product is, I'm sorry, I can't name …”

“Tech has basically not been a problem for the book industry. You know, obviously lots has changed, and they've got Amazon as this one giant customer, but we did not move to a model in which everybody gets all the books they want, and all the books are digital,…”

“And so you look at the stats from Ofcom, the UK regulator and UK, 16 to 24 watch more subscription video than everything from the PSB and some public service broadcasters, which is the traditional analog broadcasters. More 16 to 34 watch more stuff from basica…”

“And Amazon did fifty billion dollars of advertising last year by selling ads on Amazon to appear in search results.”

“And Apple is being paid twenty billion dollars a year not to do anything else here. So they're being paid twenty billion dollars a year not to say this is a hotel's query, maybe we'll send you straight to booking.com. They're being paid twenty billion dollars …”

“Amazon has a three, has a fifty-five billion dollar ad business.”

“Microsoft, Google, Amazon, and Meta are funding it out of cash flow, Meta less so than the others, whereas OpenAI has to do these innovative funding structures because it has no cash flow, and Oracle is basically going to borrow a hundred percent of revenue to…”

“The big four companies, platform companies, spent four hundred billion dollars on capex last year. This year, they've said they'll spend 650, more or less. Microsoft hasn't been given full year guidance. But Meta and Google and Amazon have more or less doubled…”

“There are some cases where internet is not more efficient, like groceries, which is why Walmart is still a giant business, because it's actually more efficient to drive to the supermarket Than it is to deliver all of that product with the cold chain, and the s…”

“Amazon has seven, eight, 900, Amazon has seven or eight or nine hundred million schools, so they can't do recommendation.”