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Amazon makes no sense. It’s the most befuddling, illogically sprawling, and—to a growing sea of competitors—flat-out terrifying company in the world. No. It ma

Amazon makes no sense. It’s the most befuddling, illogically sprawling, and—to a growing sea of competitors—flat-out terrifying company in the world. No. It makes perfect sense. All economic activity is going to be intermediated digitally. Riches to those who get there first. Jeff Bezos saw this, and knew books were a good way to get his toe in the door. However, his aim was the railroad baron money all along. When Amazon went from selling books to selling everything, people said it didn't make sense. Even I said that. However, in retrospect, it makes perfect sense. (In the industrial revolution, people with far sight could predict that all economic activity would be intermediated through mechanized means of transportation. The analogy is perfect.)

tboyd47 9y ago
Yes, corporate America, it's terrifying when a company actually invests its profits in its own business instead of payouts to shareholders and stock buybacks, isn't it?
dalbasal 9y ago
"selling books to selling everything" seemed a reasonable change to me, and I think it was articulated as a strategy by bezos early on. As you say, books were a starting point. Selling books to selling computing on demand... That was a big leap, and the most profit generating "pivot" I can think of. Alexa, video streaming, kindle and ono...these are really Amazon becoming like Google. They're now defined as a business by the skills/abilities they have, not the services they provide. Technology company, not search company. ..this justifies investing more on self driving cars or nuclear power and less on search engines. For most companies this would just be pr/hr-speak, and impossible in practice. Usually companies have to spend most of their money on core products, because it takes money to deliver those products. Tesla or Walmart could define themselves however they want, but they'll never be able to spare more than a penny or two of car dollars on stuff that isn't related to making cars. The margin isn't there. To be a Google, you need a legitimate cash cow. Amazon now have one, aws.
- jeron 9y ago
  "Selling books to selling computing on demand... That was a big leap, and the most profit generating "pivot" I can think of." is it a pivot if that was the intention from the start?
  - joncrane 9y ago
    AWS was never an intention from the start. Some Amazonian in the mid 2000s saw the opportunity, wrote a three-pager about it, Jeff Bezos agreed, and now we have AWS.
    - drewmate 9y ago
      I’d be interested in reading more about this. That employee changed Amazon’s future (and indeed the future of computing in general) immensely. I hope he/she was fairly compensated and relaxing on a beach far from Seattle now.
      - philk10 9y ago
        Try this blog post - http://blog.b3k.us/2009/01/25/ec2-origins.html http://blog.b3k.us/2009/01/25/ec2-origins.html
      - pmiller2 9y ago
        I wonder what the actual likelihood of that is. The stock has increased at least 20x since 2008, so, assuming the employee had options beginning in 2004, they could have made a decent amount of money off that.
      - scarface74 9y ago
        Here you can find an interview of the Amazon CTO back in 2006. http://www.se-radio.net/2006/12/episode-40-interview-werner-vogels/ http://www.se-radio.net/2006/12/episode-40-interview-werner-...
  - dalbasal 9y ago
    I would say so, but that's mostly semantics. Define "pivot" however you like :) But, I don't think amazon of the 90s "planned" on aws in any meaningful way.
Invictus0 9y ago
The point the author is making is that it makes no sense from a traditional, conventional wisdom business perspective.
- stcredzero 9y ago
  The point the author is making is that it makes no sense from a traditional, conventional wisdom business perspective. Here's where Marx and Engels get it right: You have to analyze the change and the direction of change. (Many other things, they get dead wrong.) Look back at history for perspective on what's happening today, and it makes perfect sense!
deleted 9y ago
[deleted]
maxxxxx 9y ago
"Riches to those who get there first." I always hear that but it should be "Riches to those who do it right". A lot of first comers get killed by second comers.
- scarface74 9y ago
  Exactly. Apple didn't do the first personal computer, MP3 player, music store, smart phone, tablet, or smart watch. Whether they did it all right is a matter of opinion. But they did do it profitably.
  - maxxxxx 9y ago
    They did it "more right" overall than others. That's all that's needed. I don't think MS was ever first at anything either. But somehow they often managed to do things better than everybody else.
- Retric 9y ago
  IMO, unless you get their right you did not get there first. Myspace was not a social network even if people think of it in those terms looking back.
- reaperducer 9y ago
  >I always hear that but it should be "Riches to those who do it right". A lot of first comers get killed by second comers. You are absolutely correct. Apple didn't have the first MP3 player, but figured out how to do it right. Henry Ford wasn't the first automaker, but he figured out how to do it better. Facebook wasn't the first social network, but it figured out how to beat a slew of competitors. Silicon Valley wonks are always pontificating about "first mover advantage." It's a bunch of bunk from the same people who repeat the same cliches they hear bouncing around their echo chamber. What I discovered in my years of bouncing around the west coast dot-com industry is that it's 60% used car salesmen/fake-it-till-you-make-it posers, 38% grunts basking in the fictional glow of the dot-com mutual admiration society, 1% genuine leaders, and 1% innovators. A great example is the Amazon article, which states that LESS THAN 10% of buying is done online. I bet that came as a shock to a lot of people in SV, who imagine that we live in a world where brick-and-mortar is just dust-and-memories.
Nomentatus 9y ago
"Extending one's market power," to use the legal phrase, makes sense for that business (and profits), it's just illegal; tolerating it as it destroys a wide swatch of a previously competitive marketplace makes no sense. Traditionally, vertical integration has been a tolerated exception, but that doesn't match what Amazon is doing.
Florin_Andrei 9y ago
But - how do you know for sure that Bezos had a master plan all along? It could have been a series of cunning changes just as well.
220V_USKettle 9y ago
Also, Corporate America hosting more of their data with Amazon is not helping.
guscost 9y ago
Absolutely. The headline and the banal terror in that quote are all I need to see here. Buy some things from Walmart/Jet if you’re really that worried about a new player monopolizing new industries (for very good reasons). In the worst case there’s still going to be antitrust law.

tboyd47 9y ago

Yes, corporate America, it's terrifying when a company actually invests its profits in its own business instead of payouts to shareholders and stock buybacks, isn't it?

dalbasal 9y ago

"selling books to selling everything" seemed a reasonable change to me, and I think it was articulated as a strategy by bezos early on. As you say, books were a starting point. Selling books to selling computing on demand... That was a big leap, and the most profit generating "pivot" I can think of. Alexa, video streaming, kindle and ono...these are really Amazon becoming like Google. They're now defined as a business by the skills/abilities they have, not the services they provide. Technology company, not search company. ..this justifies investing more on self driving cars or nuclear power and less on search engines. For most companies this would just be pr/hr-speak, and impossible in practice. Usually companies have to spend most of their money on core products, because it takes money to deliver those products. Tesla or Walmart could define themselves however they want, but they'll never be able to spare more than a penny or two of car dollars on stuff that isn't related to making cars. The margin isn't there. To be a Google, you need a legitimate cash cow. Amazon now have one, aws.

jeron 9y ago
"Selling books to selling computing on demand... That was a big leap, and the most profit generating "pivot" I can think of." is it a pivot if that was the intention from the start?
- joncrane 9y ago
  AWS was never an intention from the start. Some Amazonian in the mid 2000s saw the opportunity, wrote a three-pager about it, Jeff Bezos agreed, and now we have AWS.
  - drewmate 9y ago
    I’d be interested in reading more about this. That employee changed Amazon’s future (and indeed the future of computing in general) immensely. I hope he/she was fairly compensated and relaxing on a beach far from Seattle now.
    - philk10 9y ago
      Try this blog post - http://blog.b3k.us/2009/01/25/ec2-origins.html http://blog.b3k.us/2009/01/25/ec2-origins.html
    - pmiller2 9y ago
      I wonder what the actual likelihood of that is. The stock has increased at least 20x since 2008, so, assuming the employee had options beginning in 2004, they could have made a decent amount of money off that.
    - scarface74 9y ago
      Here you can find an interview of the Amazon CTO back in 2006. http://www.se-radio.net/2006/12/episode-40-interview-werner-vogels/ http://www.se-radio.net/2006/12/episode-40-interview-werner-...
- dalbasal 9y ago
  I would say so, but that's mostly semantics. Define "pivot" however you like :) But, I don't think amazon of the 90s "planned" on aws in any meaningful way.

Invictus0 9y ago

The point the author is making is that it makes no sense from a traditional, conventional wisdom business perspective.

stcredzero 9y ago
The point the author is making is that it makes no sense from a traditional, conventional wisdom business perspective. Here's where Marx and Engels get it right: You have to analyze the change and the direction of change. (Many other things, they get dead wrong.) Look back at history for perspective on what's happening today, and it makes perfect sense!

deleted 9y ago

[deleted]

maxxxxx 9y ago

"Riches to those who get there first." I always hear that but it should be "Riches to those who do it right". A lot of first comers get killed by second comers.

scarface74 9y ago
Exactly. Apple didn't do the first personal computer, MP3 player, music store, smart phone, tablet, or smart watch. Whether they did it all right is a matter of opinion. But they did do it profitably.
- maxxxxx 9y ago
  They did it "more right" overall than others. That's all that's needed. I don't think MS was ever first at anything either. But somehow they often managed to do things better than everybody else.
Retric 9y ago
IMO, unless you get their right you did not get there first. Myspace was not a social network even if people think of it in those terms looking back.
reaperducer 9y ago
>I always hear that but it should be "Riches to those who do it right". A lot of first comers get killed by second comers. You are absolutely correct. Apple didn't have the first MP3 player, but figured out how to do it right. Henry Ford wasn't the first automaker, but he figured out how to do it better. Facebook wasn't the first social network, but it figured out how to beat a slew of competitors. Silicon Valley wonks are always pontificating about "first mover advantage." It's a bunch of bunk from the same people who repeat the same cliches they hear bouncing around their echo chamber. What I discovered in my years of bouncing around the west coast dot-com industry is that it's 60% used car salesmen/fake-it-till-you-make-it posers, 38% grunts basking in the fictional glow of the dot-com mutual admiration society, 1% genuine leaders, and 1% innovators. A great example is the Amazon article, which states that LESS THAN 10% of buying is done online. I bet that came as a shock to a lot of people in SV, who imagine that we live in a world where brick-and-mortar is just dust-and-memories.

Nomentatus 9y ago

"Extending one's market power," to use the legal phrase, makes sense for that business (and profits), it's just illegal; tolerating it as it destroys a wide swatch of a previously competitive marketplace makes no sense. Traditionally, vertical integration has been a tolerated exception, but that doesn't match what Amazon is doing.

Florin_Andrei 9y ago

But - how do you know for sure that Bezos had a master plan all along? It could have been a series of cunning changes just as well.

220V_USKettle 9y ago

Also, Corporate America hosting more of their data with Amazon is not helping.

guscost 9y ago

Absolutely. The headline and the banal terror in that quote are all I need to see here. Buy some things from Walmart/Jet if you’re really that worried about a new player monopolizing new industries (for very good reasons). In the worst case there’s still going to be antitrust law.