Plug: why Amazon has a load of terrible products http://constantbetasoftware.com/2015/12/11/bezos-amazon-cult...

I skimmed the video and read the notes. Pretty interesting. Makes sense.

Amazon can fail a lot because money for private companies is a lot more expensive and harder to get than for public companies. Musk is playing on hard mode because he wants to retain control.

Musk claims he won't take SpaceX public because public investors have short attention spans and would require profit/return too soon. Because he wants goals set out further than the next quarter, he has kept the company in the hands of like minded investors.

That may just be bloviating on his part, but it does seem at least sensible on the surface.

Dell voiced something similar when he took his namesake company private after years of being publicly traded.

And it appears the quality of their consumer products rose dramatically afterwards.

Branson said the same thing about the Virgin Group when he turned it from a public to a private company.

My understanding is that Musk wont take it public until the strategy of getting to Mars is protected.

Musk is not wrong about this. Space exploration is not a moneymaking venture. It's very risky. The odds are probably worse than gambling.

>That may just be bloviating on his part, but it does seem at least sensible on the surface.

His biography definitely seemed to emphasize keeping SpaceX private until Mars starts to unfold

It what sense does Bezos lack control?

Being public means that the company is transparent, not that it is out of control.

It means the shareholders decide who is control. This is not about having control now, it's about retaining control.

Musk doesn't want to be beholden to shareholders because their interests (profit) might not align with his objectives (Mars). Presumably Bezos does not fear any such misalignment of interests between himself and his shareholders.

that is completely not actual reality.

it depends on who the investors/share holders are and the balance between lots of small investors and a few large investors.

as long as investors see a way to make money out of the ceo (dividends or rock-star growth pushing share price up) they are happy.

and all of that pushes thinking towards making targets for the quarter or year.

and if it get's bad enough -> not enough money being made -> people being put on the board to mind things -> eventual ousting.

do you want a visionary to spend their time thinking of the next great idea or how to keep the money people happy?

You need both. A visionary alone needs the discipline that comes from having to choose which vision of many and finish it. A financial focused manager will never bet on any but the most obvious ideas and thus lose when someone else makes something work.

Ideas are easy. Implementation is hard. The least creative person has enough ideas to bankrupt even the biggest company if you start a team to implement them all as the idea occurs (a car obviously takes more people than a paper notepad, but you should expect to have all those ideas)

A visionary who never thinks about money will eventually run out, or worse bounce between ideas and never finish one. The person who only thinks about money will not invest in the things required to continue making money.

I've heard it stated that you need a visionary CEO and a close second who is a financial realist. The visionary has lots of great ideas, the financial realist reigns them in and forces the visionary to choose which vision(s) to focus on and finish; and let the others go. This works great until the visionary CEO steps down (dies, retires...), when you put the realist second in charge all the visionary projects are stopped, for a couple quarters the company makes more money, but there are no visionary things in the pipe so the company dies a slow death.

This is what happened to LucasFilm/Arts... when Lucas left, the CFO got control...

Yes, and that sounds rather like Apple now

If you are not failing, then you are not trying enough new things. Amazon has been successful a lot, a LOT more often than they have failed.

I think that is probably false. They have way more failures than successes, but the successes far outpace the losses in output.

I think more failures than successes can be interpreted as a healthy appetite for product experimentation. The other option in todays world would be not to innovate except through purchases of established product families from other companies and acquisitions.

Amazon phone, lol.

So yes the phone failed, but how about the 50 services they offer on AWS? Failures on their part are heavily publicized, but successes move along silently.

Or AWS itself. Doesn't seem like a good fit for a company like Amazon.

What you describe is exactly how you come to dominate retail business and become monopoly power online.

Amazon's reference point is Wal-Mart. They are in ever expanding price cutting small margin business.

Another good comparison in Microsoft in 80's and 90's. MS dominated over IBM, Apple and others several decades with sup-par product everybody hated by attacking and destroying potential competitors, not by improving products.

Bezos knows what he is doing.

> They are in ever expanding price cutting small margin business.

If you sink all of your profits into expansion, then on the books you made zero profit. If you made zero profit, you pay zero taxes. This is a common tactic with farmers. They use this year's returns to buy next year's supplies. If amazon stopped growing and suddenly reaped their profits, there would be a big tax bill to go with it.

There's a middle ground: don't grow as much, and pay some taxes. Not saying it's optimal (for any party, or on any axis), but it's not like there's just this binary choice of "growth consumes all profit" and "don't grow at all."

This isn't how accounting works. You can't just buy a warehouse and expense it in year one. You have to depreciate it overtime. You can look at their FCF its about 10 billion. Their market is 50x of that. For comparison walmart is ~20 billion and they are worth half of Amazon.

At some point that will happen. Companies can't experience exponential growth indefinitely.

That doesn't align with the actual history at all. One of the extremely well known, defining characteristics of Microsoft in the 1980s and 1990s, was releasing a weak product that they then improved substantially over several versions. Your premise is they didn't improve products as a means to conquer, when that's exactly how Windows took its market share after a horrible initial release that flopped: it got a lot better; ditto for plenty of other examples such as IE vs Netscape.

It applies to at least: MSDOS, Windows, Office and most of its products, Internet Explorer, SQL Server

In fact it was so well known that's how things worked, it was a saying that they only finally got things right by version three.

Do you think NT4 was a worse product that netware ?

You remember only the end.

MS-NET, LAN Manager and MS/IBM joint effort with OS/2 LAN Server were all inferior to Netware. MS battled decades against Novell with inferior products and shady market practices eating their profits. Finally Novell was taken down and crumbled when networking became a core system component in PC operating systems.

Throwing money against to superior product from smaller competitor until you can eat their lunch is proven tactic.

So what you're saying is you can displace an entrenched competitor by putting in enough money to end up with a superior product?

That seems... reasonable.

Not at all and you know it.

No, I don't know it. What do you mean?

The guy who does 100 things and wins at 10 still comes out above the guy who does 2 things and wins at 2. This is despite the previous guy having a failure rate of 90% and latter guy having a success rate of 100%.

Depends on the cost of failure and the benefits from winning. Fewer bets tends to mean larger bets which can pay off more.

Being the richest man in the world shows some level of success ;-) Also allows him room for a lot of failures.

Well, he also has his stock in a company with a P/E ratio of 257.38, that's one very large bet. Cranking up earnings is clearly possible, but Amazon is also showing signs of imploding as for example people simply don't trust fulfilled by Amazon to mean anything.

Every book I've bought for the past 8 years has been on kindle.. I don't think they're doing that bad..

The Kindle is good and Echo is great. Every other hardware product they've ever made has been complete dogshit, which is why the packaging for most of them advises buyers to set them on fire.

The newer kindles are kinda shitty for the consumer, much better for Amazon no doubt.

The switch to touch screen and adverts all over your library & store is really jarring. So much so that my tech friends now just buy second hand kindle 4s when their old ones break.

It's possible that library lock in will stop them migrating away from kindles when the supply of kindle v4s runs out but not I think certain.

If so, point them to Calibre. While I currently use the Kindle app to read my books, I have made it my "policy" to on each purchase ensure that I am still able to break the DRM and store a backup copy in a non-DRM'd format. The moment that changes, I'll stop buying Kindle books.

Some purists would prefer to avoid buying DRM'd products in the first place (and I do when I have an alternative), but this is "second best" to me - I'll tolerate easily breakable DRM, but not one I can't remove.

The upside is reduced lock-in - it may affect usability (the Kindle app is still the best reader app I've used for Android as well - if anyone has recommendations for any actually usable ebook reader Android apps I'm all ears) but I know I can read all my books on any device, using free/open apps.

That makes incredible sense. What tool do you use to back up your books?

Calibre, as I mentioned [1]. I don't know if I should link directly to DRM removal tools here, but if you search for DRM plugins for Calibre they're readily available.

[1] https://calibre-ebook.com/

A while back I stopped using kindle and migrated my library to epubs. Apple's ibooks reader is much better and I didn't find much benefit out of eink devices. With ibooks you can sideload your own epubs, so it isn't much of an issue. Adobe reader also has a good reader mode for pdfs. Also I have iCloud library for my sideloaded books, so it's all cloud synced.

The only real benefit of kindle is the library selection and prices. The ereader software itself is mediocre.

I agree with that last point. Beyond that the reader and the store could be better integrated. It's surprisingly difficult to, say, find out if any of my ten favorite authors has released a book since the last one I read.

I don't mind the touch screen. I very much do mind ads, but you can pay $20 more to not have any. If anyone says they don't like ads but isn't willing to pay slightly more money to not have any, then I have to question their sense of priorities.

Well, i know another company (G) with just 2 or 3 good products. Most others don't have even one.

>Amazon is successful because they are fine with taking losses, only just recently making a small amount of profit compared to their scale.

I thought this tired narrative was almost over? For decades Amazon chose to invest in infrastructure and logistics.

Now they're "making a small amount of profit compared to their scale"? Who's at that same scale setting the bar for profit? Remember that "scale" doesn't equal revenue.

I think Amazon cloud is a mixed bag of excellent and terrible.

I love EC2 but not a big fan of their other more advanced services. I tried Azure, Digital Ocean, GCE... for IaaS and they just didn't have the same richness of features and flexibility as EC2.

Not sure Google home is looking to surpass the Echo from here.

http://static3.uk.businessinsider.com/image/59123ef6dd089554...

Maybe, but how can you tell from that chart? It lists an overall delta and the current breakdown. There's no way to know the relative deltas.