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>The difference is Amazon saw what the marginal costs could be, and had a specific roadmap to drive investment into bringing them down. WeWork fundamentally has

>The difference is Amazon saw what the marginal costs could be, and had a specific roadmap to drive investment into bringing them down. WeWork fundamentally has no way to drive down the margin on real estate in any meaningful way. Especially as a lessee. That's what the article says: >At first, with companies like Walmart and Amazon, predatory pricing can seem smart. The entire retail sector might be decimated and communities across America might be harmed, but two day shipping is convenient and Walmart and Amazon do have positive cash flow. But increasingly with cheap capital and a narrow slice of financiers who want to copy the winners, there is a second or third generation of companies asking Wall Street to just ‘trust me.’ It's not that WeWork is the same as Amazon, it's that WeWork is symptomatic of a bubble caused by investors looking to copy Amazon's success without understanding why it succeeded.

hef19898 7y ago
Totally agree with the last pint, people completely tend to ignore the effort and attention to detail Amazon puts into executive and planning. That plus a very sound strategy. Also Amazon was profitable, even if just barely, for the most time while growing appr. 20% constantly. Not comparable to, say, WeWork from what I know. But it shows how powerful that narrative can be.
- streetcat1 7y ago
  The only difference between wework and amazon is the way they finance their money-losing ventures. Wework does that via the private market, hence the game is up when it needs access to the public markets. Amazon does that via AWS. AWS is the money that fuels the eCommerce side. The game will be up when: 1) Kubernetes will move AWS customers back to on-prem, or at least turn clouds into a commodity. Amazon knows that and this is the reason for the push toward lockin (aka lambda / serverless). 2) Amazon will be divided into two companies.
  - WalterBright 7y ago
    AWS did not become a product until Amazon had been around for several years.
    - unreal37 7y ago
      But today, AWS is hugely profitable and hides the money losing parts of the business.
  - rossdavidh 7y ago
    It's interesting that you bring up the importance of AWS to Amazon, nowadays, because...companies like Uber, Lyft, and WeWork spend a lot on AWS. In other words, like Yahoo getting a lot of their late-90's advertising from dot-com bubble companies that evaporated in 2001, AWS is massively exposed to the current bubble in "we have so much VC cash we don't know what to do with it" companies. When that goes away (i.e. the next downturn), AWS will lose a huge chunk of their business all at once. It will be interesting to see what Amazon's bottom line looks like at that point.
    - buboard 7y ago
      Amazon must know that and i guess thats why they dont give up the commerce biz
      - jethro_tell 7y ago
        Lol, or the bulk of the AWS income that is probably boring enterprise. Sure, less startups is less cpu cycles bought, but there are a shit tone of companies that aren't going to scale down in a massive way. yahoo was at risk because the BULK of their ad business was ads for a budding industry that was hit hard. Normal boring enterprise was still selling buying ads elsewhere.
    - streetcat1 7y ago
      So I am not sure. I think that startups (with all due respect) generate buzz, inversely correlated with their technical depth. So AWS is mainly composed of non tech companies. I also think that AWS did an excellent job locking its customers, so they cannot just "leave". The real treat here is kubernetes. If I program to kubernetes , I can, in theory, move the workload from cloud to cloud, or move the workload from on prem to cloud. This brings actual competition to the cloud space. The problem is how to provide all the high-level services that AWS provide, and this will have to be taken by future startups which would extend kubernetes.
  - hef19898 7y ago
    So tue. AWS is generating the biggest part of overall profits while contributing 10% of revenue (from top of my head, so numbers might be wrong). Only logic that one day Amazon would be split up. Might also partially explain the high valuation.
  - chx 7y ago
    Kubernetes is only a threat in that it is a buzzword much as cloud is a buzzword. The cloud and Kubernetes both are used to sell a triple fallacy: You need to care about scaling from day one, there is an easy way to scale, this way is the cloud/Kubernetes. For almost all startups their app would run comfortably on a single dedicated server. This has been true for many, many years but only the YAGNI greybeards would go with it. Maybe two HA but even HA is overhyped, it's cheaper to be down. Down is part of this industry, you will be down in many circumstances anyways so perhaps don't chase a unicorn? Of course, above a certain size, two servers make sense but ... don't overdo it even then. You don't need microservices, you don't need containers. All of this is unnecessary hype. (And yes, both of you who works at a large enough company where being down is enough of a problem that it worths engineering about: good for you. I have architected a Top 100 website myself and we still didn't use more than a dozen servers and that included the staging infra.) Gary Bernhardt of WAT fame from 2015 https://twitter.com/garybernhardt/status/600783770925420546?lang=en https://twitter.com/garybernhardt/status/600783770925420546?... > Consulting service: you bring your big data problems to me, I say "your data set fits in RAM", you pay me $10,000 for saving you $500,000. Very strongly related: a terabyte of RAM in just 16 modules so it fits most server boards is now under $5000 https://memory.net/product/p00926-b21-hp-1x-64gb-ddr4-2933-lrdimm-pc4-23466u-l-quad-rank-x4-replacement/ https://memory.net/product/p00926-b21-hp-1x-64gb-ddr4-2933-l... Final shot, codinghorror of StackOverflow fame: https://twitter.com/codinghorror/status/347070841059692545 https://twitter.com/codinghorror/status/347070841059692545
    - rexarex 7y ago
      Cheaper to be down? I guess if you don’t have users sure.
      - chx 7y ago
        Having a hot spare, a database slave and a mirror of your assets so you can manually fail over? Probably a good idea. Architecting a very HA infra? Now wait and look hard at all the possible downtime causes (you have a DDoS provider for sure, Voxility or Cloudflare probably, what if they go down and so forth) and so and then look at what you are protecting against: a hardware failure which is exceedingly rare and again you can manually failover. The costs vs benefits will not come out in your favor up to a very large company size where even the smallest amount of downtime is so costly it doesn't matter how many engineering hours go into avoiding it.
  - imtringued 7y ago
    Operating a kubernetes cluster on-prem is much harder than you think. Kubernetes is an overcomplicated mess if you want to build a cluster yourself and it's a mess every time you want to upgrade to a newer version.
- WalterBright 7y ago
  I'm pretty sure Amazon was profitable all along - it's just that the profit was all spent on expanding the business. Hence, there was no taxable profit. Amazon was also able to make money selling products at little or no markup by taking advantage of the float. They'd collect money from the purchaser immediately, and would pay the vendor after 90 days. Then, Amazon would make interest on that money for the 90 days. I do the same thing on a (very) small scale. I buy with a credit card, and don't have to cough up the money until the credit card bill is due. That gives me free use of the money for 30 days. Pretty much all businesses do this, it's just that Amazon did it on a massive scale.
  - munk-a 7y ago
    Bookstores provide a lot of service value, a decent bookstore will allow you to find similar material, allow you to browse as you please (instead of the skimpy sample pages), usually contain an expert that can offer advice and allow you to walk out with your purchase. Additionally it's common to see a heavy effort at investing in the atmosphere. Amazon has succeeded at beating bookstores in none of these categories - but it has succeeded in greatly lowering the difficulty and impediments in case that a customer wants a specific book, the unfortunate thing for bookstores is that that user flow is extremely common and winning on that flow pretty much got them the market. W.r.t. the other flows... Amazon is still terrible, did you enjoy The Colour of Magic? Why don't you try Magic Eraser - guaranteed to get stains out of any fabric! Curious if this book is good? Why not try reading one of the hundred shill comments talking about how this book changed their life! I think the key here is to focus on winning a specific market segment (a significant one) and winning it hard if you can do that you too can be the next amazon.
    - WalterBright 7y ago
      I buy a lot more books from Amazon than I did before Amazon existed. The reasons are simple: 1. I can get pretty much any book ever printed, not just newly printed books. 2. Prices are usually better. 3. The friction to buying them is very low. If I want to buy books by the lot, such as every book in a series, I usually go to ebay.
- bsder 7y ago
  Amazon had an in-built 5-10% advantage for a very long time because they weren't required to pay tax. This clobbered small retail--and bookstores in particular. Now that they are on an equal footing and have to collect tax, Amazon's retailing isn't doing as good.
  - perl4ever 7y ago
    I don't understand this comment. Amazon didn't invent mail order. They never have had a monopoly on websites that sell stuff to be delivered by mail, either.
    - bsder 7y ago
      > Amazon didn't invent mail order. And were particularly bad at it for a long time. Selling books was the only thing keeping the company afloat during that span. > They never have had a monopoly on websites that sell stuff to be delivered by mail, either. Actually, they did on books. You seem like you may be young. In 1994-1996, credit cards were nowhere near as ubiquitous and certainly the online use of them was even less so. Online gift companies were still a big thing and not simply a given even into 1999-2000. The big bookstores at the time all had physical presence. If they attempted to ship you book and not charge tax, some taxman was going to show up at their door. This stifled the development of the online websites for those companies. Amazon had no presence that people could go after, so could skirt tax laws with far less danger. That gave them an in-built 5% advantage over everyone. And the small bookstores took it in the chin particularly hard. The success of people like Bezos becoming huge by skirting the law is why we have people like Kalanick who thought they can become huge by skirting the law.
      - perl4ever 7y ago
        Not paying sales tax on mail order was the norm. The time period you're talking about, Amazon, and the internet in general, hadn't penetrated to the general public. 1995-96 was just when a small minority of people were waking up to the idea they needed to be on the internet and getting their first direct PPP dialup account. People still went to physical book stores because, for one thing, you couldn't preview a book online. It wasn't at all obvious that Amazon would take over the world well into the 2000s. They looked like every other dotcom, particularly because they didn't consistently make GAAP profits and so people were just waiting for them to die. AWS, Kindle, Prime, Fresh, lots of stuff are recent developments. Absolutely nothing about the original concept could have told you what it would become or was in any way exclusive.
adharmad 7y ago
WeWork is a cargo-cult startup

hef19898 7y ago

Totally agree with the last pint, people completely tend to ignore the effort and attention to detail Amazon puts into executive and planning. That plus a very sound strategy. Also Amazon was profitable, even if just barely, for the most time while growing appr. 20% constantly. Not comparable to, say, WeWork from what I know. But it shows how powerful that narrative can be.

streetcat1 7y ago
The only difference between wework and amazon is the way they finance their money-losing ventures. Wework does that via the private market, hence the game is up when it needs access to the public markets. Amazon does that via AWS. AWS is the money that fuels the eCommerce side. The game will be up when: 1) Kubernetes will move AWS customers back to on-prem, or at least turn clouds into a commodity. Amazon knows that and this is the reason for the push toward lockin (aka lambda / serverless). 2) Amazon will be divided into two companies.
- WalterBright 7y ago
  AWS did not become a product until Amazon had been around for several years.
  - unreal37 7y ago
    But today, AWS is hugely profitable and hides the money losing parts of the business.
- rossdavidh 7y ago
  It's interesting that you bring up the importance of AWS to Amazon, nowadays, because...companies like Uber, Lyft, and WeWork spend a lot on AWS. In other words, like Yahoo getting a lot of their late-90's advertising from dot-com bubble companies that evaporated in 2001, AWS is massively exposed to the current bubble in "we have so much VC cash we don't know what to do with it" companies. When that goes away (i.e. the next downturn), AWS will lose a huge chunk of their business all at once. It will be interesting to see what Amazon's bottom line looks like at that point.
  - buboard 7y ago
    Amazon must know that and i guess thats why they dont give up the commerce biz
    - jethro_tell 7y ago
      Lol, or the bulk of the AWS income that is probably boring enterprise. Sure, less startups is less cpu cycles bought, but there are a shit tone of companies that aren't going to scale down in a massive way. yahoo was at risk because the BULK of their ad business was ads for a budding industry that was hit hard. Normal boring enterprise was still selling buying ads elsewhere.
  - streetcat1 7y ago
    So I am not sure. I think that startups (with all due respect) generate buzz, inversely correlated with their technical depth. So AWS is mainly composed of non tech companies. I also think that AWS did an excellent job locking its customers, so they cannot just "leave". The real treat here is kubernetes. If I program to kubernetes , I can, in theory, move the workload from cloud to cloud, or move the workload from on prem to cloud. This brings actual competition to the cloud space. The problem is how to provide all the high-level services that AWS provide, and this will have to be taken by future startups which would extend kubernetes.
- hef19898 7y ago
  So tue. AWS is generating the biggest part of overall profits while contributing 10% of revenue (from top of my head, so numbers might be wrong). Only logic that one day Amazon would be split up. Might also partially explain the high valuation.
- chx 7y ago
  Kubernetes is only a threat in that it is a buzzword much as cloud is a buzzword. The cloud and Kubernetes both are used to sell a triple fallacy: You need to care about scaling from day one, there is an easy way to scale, this way is the cloud/Kubernetes. For almost all startups their app would run comfortably on a single dedicated server. This has been true for many, many years but only the YAGNI greybeards would go with it. Maybe two HA but even HA is overhyped, it's cheaper to be down. Down is part of this industry, you will be down in many circumstances anyways so perhaps don't chase a unicorn? Of course, above a certain size, two servers make sense but ... don't overdo it even then. You don't need microservices, you don't need containers. All of this is unnecessary hype. (And yes, both of you who works at a large enough company where being down is enough of a problem that it worths engineering about: good for you. I have architected a Top 100 website myself and we still didn't use more than a dozen servers and that included the staging infra.) Gary Bernhardt of WAT fame from 2015 https://twitter.com/garybernhardt/status/600783770925420546?lang=en https://twitter.com/garybernhardt/status/600783770925420546?... > Consulting service: you bring your big data problems to me, I say "your data set fits in RAM", you pay me $10,000 for saving you $500,000. Very strongly related: a terabyte of RAM in just 16 modules so it fits most server boards is now under $5000 https://memory.net/product/p00926-b21-hp-1x-64gb-ddr4-2933-lrdimm-pc4-23466u-l-quad-rank-x4-replacement/ https://memory.net/product/p00926-b21-hp-1x-64gb-ddr4-2933-l... Final shot, codinghorror of StackOverflow fame: https://twitter.com/codinghorror/status/347070841059692545 https://twitter.com/codinghorror/status/347070841059692545
  - rexarex 7y ago
    Cheaper to be down? I guess if you don’t have users sure.
    - chx 7y ago
      Having a hot spare, a database slave and a mirror of your assets so you can manually fail over? Probably a good idea. Architecting a very HA infra? Now wait and look hard at all the possible downtime causes (you have a DDoS provider for sure, Voxility or Cloudflare probably, what if they go down and so forth) and so and then look at what you are protecting against: a hardware failure which is exceedingly rare and again you can manually failover. The costs vs benefits will not come out in your favor up to a very large company size where even the smallest amount of downtime is so costly it doesn't matter how many engineering hours go into avoiding it.
- imtringued 7y ago
  Operating a kubernetes cluster on-prem is much harder than you think. Kubernetes is an overcomplicated mess if you want to build a cluster yourself and it's a mess every time you want to upgrade to a newer version.
WalterBright 7y ago
I'm pretty sure Amazon was profitable all along - it's just that the profit was all spent on expanding the business. Hence, there was no taxable profit. Amazon was also able to make money selling products at little or no markup by taking advantage of the float. They'd collect money from the purchaser immediately, and would pay the vendor after 90 days. Then, Amazon would make interest on that money for the 90 days. I do the same thing on a (very) small scale. I buy with a credit card, and don't have to cough up the money until the credit card bill is due. That gives me free use of the money for 30 days. Pretty much all businesses do this, it's just that Amazon did it on a massive scale.
- munk-a 7y ago
  Bookstores provide a lot of service value, a decent bookstore will allow you to find similar material, allow you to browse as you please (instead of the skimpy sample pages), usually contain an expert that can offer advice and allow you to walk out with your purchase. Additionally it's common to see a heavy effort at investing in the atmosphere. Amazon has succeeded at beating bookstores in none of these categories - but it has succeeded in greatly lowering the difficulty and impediments in case that a customer wants a specific book, the unfortunate thing for bookstores is that that user flow is extremely common and winning on that flow pretty much got them the market. W.r.t. the other flows... Amazon is still terrible, did you enjoy The Colour of Magic? Why don't you try Magic Eraser - guaranteed to get stains out of any fabric! Curious if this book is good? Why not try reading one of the hundred shill comments talking about how this book changed their life! I think the key here is to focus on winning a specific market segment (a significant one) and winning it hard if you can do that you too can be the next amazon.
  - WalterBright 7y ago
    I buy a lot more books from Amazon than I did before Amazon existed. The reasons are simple: 1. I can get pretty much any book ever printed, not just newly printed books. 2. Prices are usually better. 3. The friction to buying them is very low. If I want to buy books by the lot, such as every book in a series, I usually go to ebay.
bsder 7y ago
Amazon had an in-built 5-10% advantage for a very long time because they weren't required to pay tax. This clobbered small retail--and bookstores in particular. Now that they are on an equal footing and have to collect tax, Amazon's retailing isn't doing as good.
- perl4ever 7y ago
  I don't understand this comment. Amazon didn't invent mail order. They never have had a monopoly on websites that sell stuff to be delivered by mail, either.
  - bsder 7y ago
    > Amazon didn't invent mail order. And were particularly bad at it for a long time. Selling books was the only thing keeping the company afloat during that span. > They never have had a monopoly on websites that sell stuff to be delivered by mail, either. Actually, they did on books. You seem like you may be young. In 1994-1996, credit cards were nowhere near as ubiquitous and certainly the online use of them was even less so. Online gift companies were still a big thing and not simply a given even into 1999-2000. The big bookstores at the time all had physical presence. If they attempted to ship you book and not charge tax, some taxman was going to show up at their door. This stifled the development of the online websites for those companies. Amazon had no presence that people could go after, so could skirt tax laws with far less danger. That gave them an in-built 5% advantage over everyone. And the small bookstores took it in the chin particularly hard. The success of people like Bezos becoming huge by skirting the law is why we have people like Kalanick who thought they can become huge by skirting the law.
    - perl4ever 7y ago
      Not paying sales tax on mail order was the norm. The time period you're talking about, Amazon, and the internet in general, hadn't penetrated to the general public. 1995-96 was just when a small minority of people were waking up to the idea they needed to be on the internet and getting their first direct PPP dialup account. People still went to physical book stores because, for one thing, you couldn't preview a book online. It wasn't at all obvious that Amazon would take over the world well into the 2000s. They looked like every other dotcom, particularly because they didn't consistently make GAAP profits and so people were just waiting for them to die. AWS, Kindle, Prime, Fresh, lots of stuff are recent developments. Absolutely nothing about the original concept could have told you what it would become or was in any way exclusive.

adharmad 7y ago

WeWork is a cargo-cult startup