> Occasionally, you’ll have to show those cards and win a hand to prove that you can. But the rest of the time you call and fold, as you await the monster to take the entire pot.
Wait, just which game are we talking about here? I thought it was chess and checkers but now we're on to cards. I'm only sort of kidding -- Bezos certainly does seem like a genius to me, no argument there. But this is just the author going "No, you don't get it, he's so smart!"
(Also, as it happens, the above would tend to be a terrible poker strategy.)
No, man. You just don't get it! He's a master of the game. He's thinking 12 cards ahead and is going to uno your bishop with his Washington Post before you can even bingo your king of spades! It's so crazy it might just work!
I don't like the article. Full of sensationalist filler with little real content. What's his point? That stock price reflects the perceived expected value of the company now and in the future? He never really connects Amazon's investment into its infrastructure with Bezos' purchase of a newspaper. He talks about corporate profits as if they are a bad thing (and uses Apple as his sole example) - what about the second largest company in the world? Exxon Mobil hasn't had the same pattern as Apple at all. I'm sure there are plenty of other examples as well. So how does one data point prove his point that withholding profits is a good idea (and I'm not saying it isn't, I'm just confused by his argument)?
Anyways, yes Bezos is trying a strategy of targeting long-term growth. He makes that abundantly clear. Will it work out? Is he really a genius? Honestly, it's too early to really say definitively, isn't it? But that's boring, so no one would write an article saying that.
Theres a lot in the article about playing the long game with Amazon, but when it comes to WP, is just like, "trust me, he's doing the same with the Post" without any attempt to evaluate what the long game is with regards to a news entity.
Exactly. The Amazon backstory is interesting, but it does nothing to support his claim that WP is part of a strategy, or even say what the strategy might be.
In fact if we go by this article isn't Apple doing the same thing. He says Bezos/Amazon didn't show their cards for long and will eventually surprise people and win over. How does that not apply to Apple who is hoarding cash and not giving a hint of their future plans ?
But this is just the author going "No, you don't get it, he's so smart!"
I'm a little curious what TC thinks the purpose of insulting their readers in the title of their piece is. The hopelessly mixed metaphor is just icing on the cake, but you do have to break a few eggs to throw the baby out before it's hatched.
TC's purpose was probably to hide that once again they didn't scoop a big story so they put the call out for some me-two-three-four-five-six articles to cover it up.
Maybe I'm taking it personally, and the charitable read on the title is "While We (the editors, here at TC HQ) Are Trying To Follow His Game Of Checkers..."
"The goal is actually to not make a huge profit too early, and Bezos manages it perfectly. You want to avoid showing your cards too early as you continue to lay the groundwork for an ever-larger business"
That just doesn't sound right. 10 years in market is not too early. And because it is working for Bezos and Amazon, it doesn't mean that this strategy will work for others.
He might be a genius but not all genius can make a profitable business. I doubt that will be the case for Amazon eventually (I may well be one of the suckers heh) but let's remember that they just LOST money on the last quarter and consistently earn little to no profits.
That's part of the plan. Amazon make a loss in Q1-3 and turn a profit in Q4, this results in a slight profit over the year, a boatload of investment in infrastructure and it being almost impossible for competition to keep up.
When I saw the headline I said, "Ugh. That sounds like something MG Siegler would write." Then I saw that he had wrote it and I said, "I bet half of it is really about Apple..."
I guess if nothing else you know what you are going to get from Siegler...
A consistent problem I've seen with e-books and streaming video is lack of live content, in particular breaking & current news. Apple provides some live sports, and just added SkyNews, but that's all third-party encapsulated content limited to AppleTV. Google scrapes the Web for news, but just gives pointers to content instead of packaging it. Bezos isn't buying a newspaper, he's buying a content-gathering service - it might not be big, but the core infrastructure is in place to get the content and curate it without negotiating with a fiercely protective third party.
We've been observing the demise of news outlets. The demise continues so long as the owners fight to retain total control of their distribution to eyeballs; having given up, WP has finally given total control to someone who does control distribution of content to a whole lotta readers & viewers. Expect the rebranding of WP as Amazon News, and watch it explode onto the news scene giving CNN, Fox, etc a desperate run for their money.
Amazon per se may not be interested in WaPo per se under current conditions, but repackaged into a suitable form it may be. Bezos could make a tidy sum selling an Internet-future-ready news service to Amazon.
That's a potential nightmare of self-dealing that I don't think is Bezos (or Amazon's) style. You'd have to get some third party to come in and validate the transaction price as fair, etc. Amazon's done a number of transactions where it chose to maintain or transform the target as a separate entity (think Zappos, IMDb), so if he thought there was long term interest he would have just had Amazon buy it.
Almost as easily as I can imagine Kindle Newspapers being improved by this, I can imagine Prime Instant Streaming having a live news channel. I'd be down for it.
I thought that was a pretty poor article - no real argument and essentially a mixed metaphor between the title (chess) and the body of the article (cards/poker). The bit about "negative cash cycles" seems hopelessly outdated - comparing Amazon to bricks and mortar companies seems appropriate to 2002, not 2013.
I wouldn't agree that a negative cash cycle is outdated. However I would disagree with the author's inference that a low profit business with negative working capital is as good a high profit business.
As evidence, I'd point to a great negative working capital businesses. Dell. No one's arguing that Dell is a super business thanks to the cash it generates because of its negative working capital cycle.
Bezos is obviously brilliant. It's possible that he made the decision to stick to low margin businesses because he knows that won't attract competition. That would be counter-intuitive and pretty brilliant if you're certain you can out-execute your competitors in the low margin space.
I just meant that the comparison to bricks and mortars companies who have to pay for their inventory up front, then collect cash 15, 30, 45 days down the road is outdated. Amazon isn't competing against mall bookstores anymore, it's competing against other online companies - eBay, Apple, B&N (online), etc.
Large brick and mortar retailers also usually have negative working capital, it's nothing to do with being an online company, rather it's about bargaining power vs suppliers.
1. Next time a law surfaces Amazon tax they will have much bigger mallet with which to hit the gong. WaPo has amazing team and journalists.
2. Right now content is king - Amazon lacks much original content. Newspapers are dying, but the market for quality journalism will always be there. And he learned a lesson from Apple books.
3. He could just be Citizen Kane - just for the fun of it and the challenge to bring it to the digital world.
> Next time a law surfaces Amazon tax they will have much bigger mallet with which to hit the gong. WaPo has amazing team and journalists.
No need to wait until next time, Amazon labor conditions have been making headlines recently and even Obama is making gestures to do something.
Since Amazon is such a low margin business raising wages could be crippling so there is an immediate and critical need for Amazon to start doing public relations and lobbying.
An important media analysis would be to compare WaPo coverage of Amazon, especially the labor conditions issue, before and after the acquisition. It would also be interesting to know how much Amazon has increased lobbying funding and political contributions recently.
I'm not sure i buy into the whole idea that they are spending so much money on infrastructure and then they will "turn on a switch" to be profitable. Google is building, but they are still profitable. Here's an interesting dissection of amazon's earnings (complete opposite perspective from the article): http://market-ticker.org/akcs-www?singlepost=3190940.
He said the same thing in all the paragraphs as in the headline - Bezos is playing a smart game that the rest of us don't get. So what exactly is that game?
I can't speak for the writer, and one can only speculate, but here goes:
Two suggestions seen (here on HN?) recently: (a) Washington Post is influential "inside the beltway" (b) its book reviews can influence buying on Amazon.
These putative purposes may be in tension with the idea that print newspapers are going away, but may be viable if Wapo will stay in another form (at least the website).
Also maybe adding some sort of news service into Amazon-related products, a subscription or such.
(The article is convincing about Amazon playing a smart or fortunate business strategy, but doesn't live up to the headline.)
Apparently that you want to manage your business so as to avoid being the target of the press and the stock traders, as opposed to, say, executing your business plan to realize the goals of the company owners.
The entire theory seems to rest on accepting that Apple has made some mistake, not in any rational business sense; as it admits they've been wildly successful at making products people love and tens of billions of dollars from those products, but because analysts and journalists are writing ridiculous articles about their being in flux.
What it seems it ignore, is any consideration that, absent Apple, the press would just descend on the next big target with mass-market cachet, regardless of their fundamentals, or business model. [1] [2]
So the theory assumes the press is irrational (e.g. writing nonsense articles about Apple that are completely divorced from business reality) but then supposes you can avoid their gaze, by relying on them to act rationally according to rules you perceive. (e.g. they will not chatter about you, if you don't make too much profit too quickly)
Lost in any of this, is any measure of whether it actually matters one whit whether traders, analysts or journalists use emotional manipulation of the larger public to create business opportunities for themselves.
[1] Traders exist to trade. Mismatch between perceived value and price creates profit. If there is no mismatch, they create some. See: Jim Cramer
[2] The press exists to sell newspapers. Controversy creates profit. If there is no controversy, they create some. See: Every article written about Apple that has no basis in reality.
Elaborating on this, Apple giving consumers a glimpse into some very impressive technology for 2007 and then again with the price drop with the 3G gave consumers an expectation of Apple to consistently push boundaries every year with new, groundbreaking technology. Technological developments simply don't evolve as drastically as the introduction of the iPhone in 2007 made it seem.
Wait, just which game are we talking about here? I thought it was chess and checkers but now we're on to cards. I'm only sort of kidding -- Bezos certainly does seem like a genius to me, no argument there. But this is just the author going "No, you don't get it, he's so smart!"
(Also, as it happens, the above would tend to be a terrible poker strategy.)