7 ms·

The Whale

95 points by madspindel 10y ago

Upvoter33 10y ago
I do agree Amazon is amazing and frightening all at once. However, I really hate all of this analysis based on market cap instead of revenue/profit/etc. It's just like so much fantasy.
- giarc 10y ago
  You've seen their numbers though right? Revenue 2012 - $61B Revenue 2016 - $136B Income 2012 - $15B Income 2016 - $48B
callmeed 10y ago
Good essay but I don't like it when people use market cap in these kinds of comparisons. Don't forget that Amazon has 2x the market cap of Wal-Mart–but only slightly above 1/4 of their the annual revenue.
- ska 10y ago
  Both parts of that statement are (about equally) interesting. What they should really do is not rely on a single indicator.
- Thaxll 10y ago
  And Walmart employs 2.1M people :o When you just think about it it's crazy.
- crimsonalucard 10y ago
  Whats the nav for both?
woliveirajr 10y ago
I'm curious on how Amazon will take the world. I can read and understand how the America buys a lot of stuff from it, how good the delivery is, etc., but in some countries they are barely beginning. And some local companies tried to do the same model and couldn't. They haven't bankrupted, but simply don't have the same size, same relevance as Amazon has in the US. Will that model still be applied worldwide?
EduardoBautista 10y ago
In my experience, the quality of Amazon is average at best. The only reason why they are winning is because they are cheap. The Walmart model basically: Cheap wins over quality.
- ng12 10y ago
  What is your metric for quality? Amazon sells almost everything I want at a good price and I have to spend minimal effort to get it -- sounds like a quality service to me.
- giarc 10y ago
  I would argue it's not the Walmart model. Walmart's model is to have a store in every town in America. Amazon (outside of a few book stores and experimental stores) doesn't have a single brick and mortar business. Amazon's model is to 1. power the internet and 2. put a store in everyone's home through their phone/computer.
  - exclusiv 10y ago
    Amazon does have brick and mortar stores - both bookstores and Amazon Go. Walmart's new model is to sell online, but they just aren't very good at it and I don't see Jet saving them.
    - coldtea 10y ago
      >Amazon does have brick and mortar stores - both bookstores and Amazon Go. And both are totally irrelevant to their operation, and a decimal point in their revenue. They could close them tomorrow and nobody would care. Whereas for Walmart their stores are essential to their operation.
      - ethbro 10y ago
        Walmart has the Microsoft Office problem. Anything that canabalizes physical store revenue is going to have to fight beauracratic headwinds. So while Walmart online may be necessary (in the same way Office 365 / on iOS & Android was), I don't have much faith on their being able to organizationally get there in a timely manner with sufficient resources. Far more companies seem to recognize changing marketplaces and then botch business transitions by not being aggressive enough vs simply missing the changing marketplace signals.
fela 10y ago
The current stock price (and thus market cap) already assumes future growth. The market cap would increase further only if growth exceeds the current expectations of investors. (Or due to other factors unrelated to growth).
bsder 10y ago
Except that suddenly there are lots of people NOT buying at Amazon anymore. In fact, most of my purchases go into 3 buckets: 1) Standard but I don't want crap--probably I'm going to a retailer website and picking it up (Target, Frys, etc. -- NewEgg is my exception to actually having brick and mortar). If I can pick it up, it's probably at least a notch or two above crap. 2) Total crap--probably ordering from Alibaba--not Amazon. 3) Something I need to go to a store for To me, Amazon is being used decreasingly by everybody around me.
- ng12 10y ago
  While we're being anecdotal, I live in NYC and almost all of my purchases are done through Amazon -- the only exceptions are perishable goods and things I absolutely 100% need today.
- giarc 10y ago
  That's an n of 1 story.
- ska 10y ago
  The plural of anecdote is not data.
- mastazi 10y ago
  I'm not American so I was wondering: do Target and Frys sell higher quality products than Amazon? Where I live (Australia) those large stores sell absolute crap, and I have to rely on online sources for quality items (example: it's almost impossible to find a good mechanical keyboard at a physical, big-chain store).
  - debacle 10y ago
    It really depends on the industry. * Just a few months ago, I was able to buy something at Best Buy for only 10% more (~$30) than it would have cost to order from Amazon. * On the other hand, I purchased a part for my clothes drier at 400% markup because I needed the part right away. * I bought a personal hygiene item on Overstock because it was 260% of the cost at Macy's. * We just started buying shampoo from Amazon because it's far cheaper (33%) than from Walgreens. * My wife buys all of our socks, underwear, and most of my children's clothes online for ~50% of the in-store price.
untilHellbanned 10y ago
Just my opinion, but Amazon, FB, Apple, and all these companies that these thought leaders like MG Siegler, Stratchery, and Gruber write about aren't interesting. They won at the same game by outcompeting others at selling commodity junk. Great. How? Same way. They had leaders whose business won the lottery and simultaneously didn't care about other humans to the same infinitesimally small way necessary to win that big (one can lose big with that give-no-f*cks mindset too, hence the lottery). Selling crap isn't interesting. Show me somebody that makes a similar-sized dent in human health, the environment, or world peace then I think the fawning Medium articles will be worth it.
- coldtea 10y ago
  >Just my opinion, but Amazon, FB, Apple, and all these companies that these thought leaders like MG Siegler, Stratchery, and Gruber write about aren't interesting. They won at the same game by outcompeting others at selling commodity junk. First of all, all 3 companies have very different business models. Second, Apple never sold "commodity junk". The company sold (and sells) on the high end of the market, they take a different approach to design than competitors, use more expensive materials, machining, etc., design lots of their own internals (from logic board part to processors, even their own OS and programming languages, and create their products end to end (hardware to software), and come to market with lots of firsts (e.g. from small stuff like magsafe or the best trackpad in PC-land, to hi-dpi etc). And of course have won all kinds of design, quality awards. Third, Facebook doesn't sell anything (except ads). What's the "commodity junk" they sell? Their service is junk? Compared to what? MySpace and similar competitors, whose websites were crap even at the time? What's the better social network people aren't on? Fourth, Amazon? Has a first tier store, a first tier web service business. What's the commodity junk they sell? If you mean actual products on their store, then they sell everything, from expensive high end stuff to mass market cheap products. And of course, for ages, they started with books -- where there's nothing "commodity crap" about them, books are books, whether a high end bookstore sells them or Amazon does. >Same way. They had leaders whose business won the lottery If your explanation of 3 of the biggest companies on earth is "won the lottery" then you're missing a lot. Might a well invoke God. >Selling crap isn't interesting. Show me somebody that makes a similar-sized dent in human health, the environment, or world peace then I think the fawning Medium articles will be worth it. You conflate businesses with NGOs or revolutionary parties. Which is a valid comparison for some aspects, but not one that can conclude that "businesses are not interesting" when speaking about business.
deleted 10y ago
[deleted]
kolbe 10y ago
The author regularly conflates Amazon's price and Amazon's value. I understand articles like this getting traction on pump and dump finance forums, but I'm a little disappointed to see it on the front page here.
- coldtea 10y ago
  >The author regularly conflates Amazon's price and Amazon's value. That's because the price is also important, it's not some 1850's world, where value is everything. People can sell on the price and make billions.
  - kolbe 10y ago
    Hence my use of the word 'conflates'. Price isn't irrelevant. Price is extraordinarily important, but it's not the same thing as value.
debacle 10y ago
I'm intrigued by the coming future of the megacorp. Philip K Dick wrote many stories where the giant corporation is the tribal, protect-our-own protagonist against the faceless, authoritarian government. Paycheck being the most memorable example. It's going to be interesting when companies don't even have to pretend to be subservient to the government anymore.
- deleted 10y ago
  [deleted]
- coldtea 10y ago
  >It's going to be interesting when companies don't even have to pretend to be subservient to the government anymore. There are many places where that has been happening for over a century... https://en.wikipedia.org/wiki/Banana_republic https://en.wikipedia.org/wiki/Banana_republic
nl 10y ago
It's weird to see all the people here complaining about how the article is about the market cap, when that's not only what the article is about. Sure, the market cap is interesting, but this is an interesting article because it makes a compelling case that a $400B company is cheap even when Walmart outsells it and FedEx out delivers. It was only a few years ago people complained about how Amazon didn't make any profits because they would reinvest them all in growth, and how that was impossible to sustain that. They were right, but not in the way they thought. It does seem to be impossible to keep investing all the profits in growth - they are just making too much! So, it's the combination of this growth AND the market cap that is unprecedented. No one can tell if it is overvalued, but complaining about talking about the Cap is missing a pretty amazing story.

95 points by madspindel 10y ago

I do agree Amazon is amazing and frightening all at once. However, I really hate all of this analysis based on market cap instead of revenue/profit/etc. It's just like so much fantasy.

giarc 10y ago
You've seen their numbers though right? Revenue 2012 - $61B Revenue 2016 - $136B Income 2012 - $15B Income 2016 - $48B

callmeed 10y ago

Good essay but I don't like it when people use market cap in these kinds of comparisons. Don't forget that Amazon has 2x the market cap of Wal-Mart–but only slightly above 1/4 of their the annual revenue.

ska 10y ago
Both parts of that statement are (about equally) interesting. What they should really do is not rely on a single indicator.
Thaxll 10y ago
And Walmart employs 2.1M people :o When you just think about it it's crazy.
crimsonalucard 10y ago
Whats the nav for both?

woliveirajr 10y ago

I'm curious on how Amazon will take the world. I can read and understand how the America buys a lot of stuff from it, how good the delivery is, etc., but in some countries they are barely beginning. And some local companies tried to do the same model and couldn't. They haven't bankrupted, but simply don't have the same size, same relevance as Amazon has in the US. Will that model still be applied worldwide?

EduardoBautista 10y ago

In my experience, the quality of Amazon is average at best. The only reason why they are winning is because they are cheap. The Walmart model basically: Cheap wins over quality.

ng12 10y ago
What is your metric for quality? Amazon sells almost everything I want at a good price and I have to spend minimal effort to get it -- sounds like a quality service to me.
giarc 10y ago
I would argue it's not the Walmart model. Walmart's model is to have a store in every town in America. Amazon (outside of a few book stores and experimental stores) doesn't have a single brick and mortar business. Amazon's model is to 1. power the internet and 2. put a store in everyone's home through their phone/computer.
- exclusiv 10y ago
  Amazon does have brick and mortar stores - both bookstores and Amazon Go. Walmart's new model is to sell online, but they just aren't very good at it and I don't see Jet saving them.
  - coldtea 10y ago
    >Amazon does have brick and mortar stores - both bookstores and Amazon Go. And both are totally irrelevant to their operation, and a decimal point in their revenue. They could close them tomorrow and nobody would care. Whereas for Walmart their stores are essential to their operation.
    - ethbro 10y ago
      Walmart has the Microsoft Office problem. Anything that canabalizes physical store revenue is going to have to fight beauracratic headwinds. So while Walmart online may be necessary (in the same way Office 365 / on iOS & Android was), I don't have much faith on their being able to organizationally get there in a timely manner with sufficient resources. Far more companies seem to recognize changing marketplaces and then botch business transitions by not being aggressive enough vs simply missing the changing marketplace signals.

fela 10y ago

The current stock price (and thus market cap) already assumes future growth. The market cap would increase further only if growth exceeds the current expectations of investors. (Or due to other factors unrelated to growth).

bsder 10y ago

Except that suddenly there are lots of people NOT buying at Amazon anymore. In fact, most of my purchases go into 3 buckets: 1) Standard but I don't want crap--probably I'm going to a retailer website and picking it up (Target, Frys, etc. -- NewEgg is my exception to actually having brick and mortar). If I can pick it up, it's probably at least a notch or two above crap. 2) Total crap--probably ordering from Alibaba--not Amazon. 3) Something I need to go to a store for To me, Amazon is being used decreasingly by everybody around me.

ng12 10y ago
While we're being anecdotal, I live in NYC and almost all of my purchases are done through Amazon -- the only exceptions are perishable goods and things I absolutely 100% need today.
giarc 10y ago
That's an n of 1 story.
ska 10y ago
The plural of anecdote is not data.
mastazi 10y ago
I'm not American so I was wondering: do Target and Frys sell higher quality products than Amazon? Where I live (Australia) those large stores sell absolute crap, and I have to rely on online sources for quality items (example: it's almost impossible to find a good mechanical keyboard at a physical, big-chain store).
- debacle 10y ago
  It really depends on the industry. * Just a few months ago, I was able to buy something at Best Buy for only 10% more (~$30) than it would have cost to order from Amazon. * On the other hand, I purchased a part for my clothes drier at 400% markup because I needed the part right away. * I bought a personal hygiene item on Overstock because it was 260% of the cost at Macy's. * We just started buying shampoo from Amazon because it's far cheaper (33%) than from Walgreens. * My wife buys all of our socks, underwear, and most of my children's clothes online for ~50% of the in-store price.

untilHellbanned 10y ago

Just my opinion, but Amazon, FB, Apple, and all these companies that these thought leaders like MG Siegler, Stratchery, and Gruber write about aren't interesting. They won at the same game by outcompeting others at selling commodity junk. Great. How? Same way. They had leaders whose business won the lottery and simultaneously didn't care about other humans to the same infinitesimally small way necessary to win that big (one can lose big with that give-no-f*cks mindset too, hence the lottery). Selling crap isn't interesting. Show me somebody that makes a similar-sized dent in human health, the environment, or world peace then I think the fawning Medium articles will be worth it.

coldtea 10y ago
>Just my opinion, but Amazon, FB, Apple, and all these companies that these thought leaders like MG Siegler, Stratchery, and Gruber write about aren't interesting. They won at the same game by outcompeting others at selling commodity junk. First of all, all 3 companies have very different business models. Second, Apple never sold "commodity junk". The company sold (and sells) on the high end of the market, they take a different approach to design than competitors, use more expensive materials, machining, etc., design lots of their own internals (from logic board part to processors, even their own OS and programming languages, and create their products end to end (hardware to software), and come to market with lots of firsts (e.g. from small stuff like magsafe or the best trackpad in PC-land, to hi-dpi etc). And of course have won all kinds of design, quality awards. Third, Facebook doesn't sell anything (except ads). What's the "commodity junk" they sell? Their service is junk? Compared to what? MySpace and similar competitors, whose websites were crap even at the time? What's the better social network people aren't on? Fourth, Amazon? Has a first tier store, a first tier web service business. What's the commodity junk they sell? If you mean actual products on their store, then they sell everything, from expensive high end stuff to mass market cheap products. And of course, for ages, they started with books -- where there's nothing "commodity crap" about them, books are books, whether a high end bookstore sells them or Amazon does. >Same way. They had leaders whose business won the lottery If your explanation of 3 of the biggest companies on earth is "won the lottery" then you're missing a lot. Might a well invoke God. >Selling crap isn't interesting. Show me somebody that makes a similar-sized dent in human health, the environment, or world peace then I think the fawning Medium articles will be worth it. You conflate businesses with NGOs or revolutionary parties. Which is a valid comparison for some aspects, but not one that can conclude that "businesses are not interesting" when speaking about business.

deleted 10y ago

[deleted]

kolbe 10y ago

The author regularly conflates Amazon's price and Amazon's value. I understand articles like this getting traction on pump and dump finance forums, but I'm a little disappointed to see it on the front page here.

coldtea 10y ago
>The author regularly conflates Amazon's price and Amazon's value. That's because the price is also important, it's not some 1850's world, where value is everything. People can sell on the price and make billions.
- kolbe 10y ago
  Hence my use of the word 'conflates'. Price isn't irrelevant. Price is extraordinarily important, but it's not the same thing as value.

debacle 10y ago

I'm intrigued by the coming future of the megacorp. Philip K Dick wrote many stories where the giant corporation is the tribal, protect-our-own protagonist against the faceless, authoritarian government. Paycheck being the most memorable example. It's going to be interesting when companies don't even have to pretend to be subservient to the government anymore.

deleted 10y ago
[deleted]
coldtea 10y ago
>It's going to be interesting when companies don't even have to pretend to be subservient to the government anymore. There are many places where that has been happening for over a century... https://en.wikipedia.org/wiki/Banana_republic https://en.wikipedia.org/wiki/Banana_republic

nl 10y ago

It's weird to see all the people here complaining about how the article is about the market cap, when that's not only what the article is about. Sure, the market cap is interesting, but this is an interesting article because it makes a compelling case that a $400B company is cheap even when Walmart outsells it and FedEx out delivers. It was only a few years ago people complained about how Amazon didn't make any profits because they would reinvest them all in growth, and how that was impossible to sustain that. They were right, but not in the way they thought. It does seem to be impossible to keep investing all the profits in growth - they are just making too much! So, it's the combination of this growth AND the market cap that is unprecedented. No one can tell if it is overvalued, but complaining about talking about the Cap is missing a pretty amazing story.