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December 2020 - Do Androids Dream of Electric Sheep? (Blade Runner) by Phillip K. Dick

This month we read the classic sci-fi novel, Do Androids Dream of Electric Sheep? The book follows Rick Deckard, a bounty hunter searching out android robots who are pretending to be human beings. Along the journey, the reader is asked to consider: what does it mean to be alive? Philip K. Dick was a crazy sci-fi writer, producing many books and stories that became famous like The Man in the High Castle, Minority Report, and Total Recall. Although his writing career was prolific, Dick was a troubled individual. He was a heavy drug user, he married five times, he experienced drug-induced “paranormal activities” and he was physically abusive to at least two of his wives. While

Tech Themes

The common, modern depiction of a Turing Test

The common, modern depiction of a Turing Test

  1. Are you an android? In 1950, British computer scientist Alan Turing conceived of the Turing Test, a hypothetical test to determine whether a machine can display intelligent behavior. Turing asked the question, “Can machines think?” and attempted to define a test whereby a human might be tricked into believing a machine was human. The test design is fairly complex but involves a human asking written questions to a machine in another room. If the machine can convince the interrogator that it’s human, then machines can “think.” This Turing test is mirrored in the Voigt-Kampff test used throughout the book. It’s unclear if the test works, and Rick Deckard almost misdiagnoses Rachel in the book's early parts. At the end of the book, the test is turned on its head, with Rick impersonating John Isidore (another human), trying to convince machines (in another room) to let him in. This role-reversal and the questioning of who is an android happens throughout the novel - at times, Rick, Phil Resh, and Harry Bryant might all be androids. These questions are the centerpiece of sci-fi lore. They are also explored in a similar style in the famous movie Ghost in The Shell, where people have now have some organs and limbs replaced by electric parts. When a cyber-attacker named the Puppet Master takes over the machine network of technological parts, it’s unclear who is human, who is an android, and who is possessed by the Puppet Master. In the video game world, this idea has also recently been explored in Detroit: Become Human. In the game, which is set up in choose-your-own-adventure style, players can play as humans or androids and choose whether they stay in character or break out of their controlled, android state. The idea of an interrogator or bounty hunter snooping out rogue machines has been explored across books, film, and video games. As technology has become more prevalent in our lives, the cultural mediums may have changed, but the classic philosophical question - what does it mean to be alive? - remains.

  2. Predicting the future. The Blade Runner movie is famously set in Los Angeles, 2019, while the book is set in 1992 in San Francisco. The book itself was written in 1968, and the movie Blade Runner debuted 14 years later in 1982. In 2019, Blade Runner experienced a comic resurgence as its dark, bleak futuristic society of flying cars, fully intelligent artificial beings, and international space travel never happened. Today, predictions of computing and artificial intelligence abound. In his original Imitation Game paper, Alan Turing made one of the most famous AI predictions: “I believe that in about fifty years’ time it will be possible to programme computers, with a storage capacity of about 10^9, to make them play the imitation game so well that an average interrogator will not have more than 70 percent, chance of making the right identification after five minutes of questioning.” It’s tough to know if this prediction came true (other than the 10^9 part because that is only 1 GB), with some places claiming to have built algorithms that beat the Turing Test. Interestingly, one common theme emerges about these computing predictions - both experts and non-experts typically predict about 15-25 years out. In the Innovators, Walter Issacson posited that this was enough time to allow people to engage in imaginative thinking. Roy Amara, co-founder of the Institute for the Future, probably put it best: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” How long run is the long run, though? As John Maynard Keynes proclaimed: “In the long run we are all dead. Economists set themselves too easy, too useless a task if, in tempestuous seasons, they can only tell us that when the storm is long past the ocean is flat again.” It is seriously hard to estimate the combination of changing technologies and infrastructures, which unlock completely new and cost-effective ways of building things. Will we have self-driving cars in 20 years? Will we have Artificial General Intelligence? Will we have quantum computing? I have no idea.

  3. Technology and nature. One theme repeatedly explored throughout the novel is this balance or tension between technology and nature. World War Terminus has caused a layer of radioactive dust to fall over the world, killing animal life and changing the environment. Mechanical animals are the norm, and Rick dreams about procuring a real horse, ostrich, or goat one day. He regularly checks his Sidney’s Animal & Fowl Catalogue like a stockbroker checking the latest price change. A real animal is significantly more expensive than a mechanical version, despite it being nearly impossible to figure out whether an animal is real or fake. This mirror’s the book's whole premise - a real human is more important and valuable than an Android despite increasingly small differences between Androids and humans. Rick realizes this at the end of the book: “The spider Mercer gave the chickenhead, Isidore; it probably was artificial, too. But it doesn't matter. The electric things have their lives, too. Paltry as those lives are." Technology and nature have a tradeoff in today’s world as well. Cloud computing is certainly energy-intensive, but according to the companies that run those clouds (like Google Cloud or Microsoft Azure), it is significantly less intensive than having companies run their own data centers. Beyond the environmental impact, the behavior of nature is something to consider when operating a data center. A few years ago, Facebook data centers went down when a Snake chewed through a switchboard and took down all services. In 2014, a shark bit through an underwater Google fiber cable, and in 2012 a squirrel took down a Yahoo data center. Animals, technology, and nature are constantly interacting, sometimes in unexpected ways.

Business Themes

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  1. Status seeking and the growth of e-commerce. In the battle to achieve status, real animals are a highly sought after status symbol. Early on in the book, Rick engages in a jealous conversation over his neighbor’s real horse: “‘Ever thought of selling your horse?’ Rick asked. He wished to god he had a horse, in fact any animal.” After revealing that his sheep was electric, Rick’s neighbor kindly remarks that he won’t tell the other people in the apartment complex, suggesting that if people knew Rick had an electric sheep (rather than a real one), they would look down on him. While this interaction seems weird, it parallels so many interactions people have today. Vance Packard offered a description of “status seekers” in 1959: “People who are continually straining to surround themselves with visible evidence of the superior rank they are claiming.” As general consumption and wealth rose after World-War II in the US, luxury goods became more attainable for more classes. Globalization of supply chains also increased this trend. When commerce moved online, new shopping styles and behaviors emerged. E-commerce purchases can frequently replace feelings and there is even a psychological disorder caused by excessive purchasing: Buying-shopping disorder (BSD) is characterized by extreme preoccupations with and craving for buying/shopping and by irresistible and identity-seeking urges to possess consumer goods. Patients with BSD buy more consumer goods than they can afford, and those are neither needed nor frequently used. The excessive purchasing is primarily used to regulate emotions, e.g. to get pleasure, relief from negative feelings, or coping with self-discrepancy.” Dick may be signaling that humans seek status and importance compared to their reference groups, regardless of setting or what indicates that status to others, whether it be an expensive handbag or a goat.

  2. Buy goat now, pay-later. 2020 saw the emergence of buy-now, pay-later (BNPL) vendors like Affirm, Klarna, and Afterpay. These companies typically offer zero-interest loans to consumers and get paid a 5% merchant fee for increasing purchases at e-commerce stores. The stores (like Peloton for example) increase sales and the consumers benefit from not having to pay a significant upfront payment. The other way these companies make money is by charging interest payments on specific types of purchases (likely where the merchant doesn’t want to give away a fee). These interest rates can be really, really high - averaging around 10-30% depending on the purchase. This is not a new concept and the idea of payday loans at predatorily high-interest rates has been around for over 30 years. Luckily, the purchases that these BNPL providers are financing tend to not be really high-value products, but it’s still concerning that some people are buying things without understanding the true value they will have to pay in interest. When Rick purchases a real goat, after killing three androids, he finances it, paying $3,000 upfront and entering into a three-year payment contract. Rick’s wife Iran is outraged at the cost of the goat: "‘What are the monthly payments on the goat?’ She held out her hand; reflexively he got out the contract which he had signed, passed it to her. ‘That much,’ she said in a thin voice. ‘The interest; good god — the interest alone. And you did this because you were depressed. Not as a surprise for me, as you originally said.” With BNPL providers now securitizing these consumer loans and selling them off to banks, I wonder if we will see any new regulation come to bear for the benefit of consumers. If people are not careful, they could be locked into long contracts with significant interest over time.

  3. Two case studies in electric animals. Electric animals have actually been invented and while they may not be the equivalent of Goddard from Jimmy Neutron yet, they are pretty funny and interesting case studies. Sony released the AIBO dog in 1999 after many years of research. The original robot dog cost $2,100 (~$3,500 in today’s dollars) and sold about 65,000 units. The programmable software allowed the dogs to be used in a variety of situations including an AI soccer world cup. The initial popularity of the dogs waned, and price wars with new rivals caused sales to decline. In 2006, the AIBO dog was discontinued. In 2018, it made a resurgence and is now a barking flexible model that you can pet, play games with, and feed. Another tale of odd mechanic animals is Boston Dynamics. The company that spun out of MIT in 1992 produced massive quadruped animals including one called BigDog, that was capable of balancing, walking up-hill, and carrying significant amounts of equipment. The Company had trouble selling products though and was acquired by Google in 2013 for an undisclosed sum. This came at a time when Google was pushing heavily into robotics with Google Glass and what would become Waymo - they literally titled this Project Replicant (the name used for Android in the Blade Runner film). After some more years of underperformance, Google sold Boston Dynamics to Softbank in 2017. After years of development, the company finally released a product to consumers for a whopping $75,000. The dog is still pretty creepy and comes without a real face, unlike the Aibo. In 2020, it was announced that Hyundai had acquired an 80% stake in the business at a $1.1B valuation. We are still years away from having electric animals that mimic real-life animals and that may be a good thing.

Dig Deeper

  • Blade Runner: How Its Problems Made It a Better Movie

  • Does Buy Now, Pay Later Threaten Credit Card Issuers?

  • Predicting a Future Where the Future Is Routinely Predicted

  • An Overview of the latest Affirm Consumer Loan Securitization

  • Snakes in a Facebook Data Center

tags: Alan Turing, Ghost in the Shell, Blade Runner, Philip K. Dick, Sony, AI, AGI, Google, Microsoft, Yahoo, BNPL, Affirm, Klarna, Afterpay, e-Commerce, Securitization, Jimmy Neutron, AIBO, Boston Dynamics, Softbank, Hyundai, Facebook, Waymo, Rick Deckard, Detroit: Become Human, Los Angeles, San Francisco
categories: Fiction
 

July 2019 - Alibaba: The House That Jack Ma Built by Duncan Clark

This is an excellent book to understand Jack Ma, Alibaba and the Chinese tech ecosystem.

Tech Themes

  1. Start with a Team: Alibaba’s 18 founders. At a young age, Jack Ma taught himself English by offering tours of his hometown Hangzhou to locals coming from English speaking countries. Jack went on to study English at Hangzhou Teachers Institute where he graduated in 1988. Following graduation, he taught English for a few years and because of his English skills, he was selected to go on a trip to America, on behalf of the Hangzhou government. While there, he tried using the internet to look up “beer” and noticed there were very few Chinese web pages. When he got back to China, he started China Pages, a custom website development shop for Chinese businesses. The business received funding from the Ministry of Foreign Trade and Economic Cooperation but was losing out to rival telecom company Hangzhou Communications that had recently started a competitor. China Pages was struggling to help customers realize return on their investments because there was so little business happening online at that time in China. Frustrated by competition and worried about the long-term effects of being funded by the government, Jack rounded up a group of 17 people - some were former students, some colleagues in the government, some employees at China Pages - and started Alibaba. Jack also met and recruited Joe Tsai, the first Taiwanese graduate of Yale Law School, who was then working at Investor AB on private equity investments, to join as CFO and founding board member. The team focused on the business to business market which they felt should gain more traction before business to consumer focused companies like Amazon.

  2. Open Door Policies: How China became an economic powerhouse. In 2009, China became the World’s biggest exporter, a trend that until recently, seemed all the more likely to continue. But how did we get to this point in China? In 1979, Deng Xiaoping began a series of economic reforms in China that set the stage for enormous growth. The first major act was allowing Chinese individuals to start businesses, a practice that had been strictly forbidden during the previous political era. Next, Deng announced an Open Door Policy, to allow foreign business and investment to flow into specific, Special Economic Zones. This investment spawned incredible growth in now-famous Chinese regions including Shenzhen, which grew GDP on average of 40% per year from 1981 to 1993 and by 2005 became the world’s 3rd busiest port. This incredible growth has created massive companies and seen incredible innovation but has also created global pollution. How sustainable is this great economic expansion?

  3. Right Place at the Right Time: The Importance of Timing in Innovation at Alibaba. When trying to build a business, timing can often be more important than the product itself. This can work in a number of ways - during the internet bubble, several entrepreneurs became millionaires on the backs of grandiose ideas without business models. Alibaba is the perfect example of excellent timing. Alibaba was founded in 1999, right as the internet bubble started to heat up. As valuations rose, institutional investors saw returns skyrocketing; this led Goldman Sachs to open up a dedicated Asia Tech fund, focused on investing small amounts into growing Chinese tech companies. Goldman led Alibaba’s first round in 1999 (a $3.3M fundraise), which allowed Alibaba to grow to significant scale with their tight founding team. The internet bubble also attracted a now re-famous Masayoshi Son, and his software distributor turned VC firm, Softbank, to start investing heavily in the internet. Aliababa was by no means the only fast growing Asian Tech company: Sohu (Founded in 1996 by Charles Zhang), Sina (founded in 1998 by Charles Chao who pioneered the Variable Interest Entity designation in China), and NetEase (Founded in 1997 by Ding Lei) were the famed Asian tech darlings of the day. In March 2001, right before the bubble burst, Softbank led a $20M round into Alibaba (which we discuss more below) that allowed Jack the flexibility to weather the internet bubble storm and keep Alibaba private despite growing losses. Sohu, Sina, and NetEase all needed to IPO and limped out into the public markets at poor valuations (Sohu dropped below $1 per share at one point), which caused a long-term drag on their stock prices and business performance. While Alibaba clearly had reached product-market fit by that time, their fortuitous timing (much like that of Amazon’s bond offering) allowed the Company to stay in business during a tough financial time.

Business Themes

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  1. Different Approaches to Similar Problems: Amazon vs. Alibaba. Alibaba is often hailed as the Amazon of China, but it’s actually, quite different in many major aspects. As discussed recently in this Stratechery article, Amazon’s core e-commerce business is about controlling inventory and logistics. Amazon buys at whole sale prices from brands, keeps the inventory in their 400+ warehouses and ships them out to customers. Retailers pay Amazon a fee on the sale as commission. While this revenue model is similar to Alibaba’s Tmall, a major brand e-commerce site that charges commissions on sale, Alibaba does not retain any inventory in the process. Furthermore, on Alibaba’s Taobao, independent small merchants can list any item for sale and pay no commissions, instead they pay for higher ranking on the site’s internal search engine, similar to Google’s revenue model. While Amazon boxes are delivered nationwide, primarily by Amazon, in China, Alibaba leverages a slew of 3rd party logistics providers to deliver packages any way possible: via bike, motorcycle, car, or on foot. This impacts profit margins as Amazon has to employ its entire logistics operation (350,000+ people) whereas Alibaba is comparatively smaller at 50,000 employees. Beyond their core e-commerce businesses, both Alibaba and Amazon have cloud computing offerings – as discussed before, AWS is the biggest platform in North America, and Alibaba is the biggest in China. While cloud in China is now growing more quickly than North America, it remains a much smaller piece of the overall global cloud landscape.

  2. A Lesson in Investing: Analyzing Goldman, Softbank, and Yahoo’s Returns. Alibaba’s funding history is long and complex but illustrates a common dilemma faced by investors and shareholders in startups. Alibaba’s first funding round was led by Goldman Sachs at a $5M pre-money valuation. The next round was a $20M investment in Alibaba, led by Softbank to acquire 1/3 of the Company. At the next funding round in 2004, Softbank invested in an $82M round and Goldman sold its shares, thereby inking a 6.7x return in about 5 years, which by all means is a great investment. However, if Goldman had held on to that share, as Softbank did with its share, at IPO it would have been worth $12.5B, a 3,600x+ return. This is the dilemma faced by several VCs – do I sell now, ink a great return, and make my limited partners happy? Or do I risk it, let my winners ride and realize a potentially career changing win? Yahoo is another example of this complex dilemma. Yahoo invested $1B in Alibaba in 2005 for a 40% stake in the Company (a funding round that was allegedly hashed out over golf at Pebble Beach). After rebuffing Microsoft’s $44.6B offer to buy the Company, Yahoo’s stock price plummeted. A difficult fight with activist investors ensued, and Jerry Yang was eventually fired. This all set up nicely for new CFO, Scott Thompson to come in and promptly offload half of its Alibaba stake for $7.1B, two years later that would be worth $51B. Yahoo, now owned by Verizon, sold its remaining stake earlier this year, and its expected to net shareholders roughly $40B in value.

  3. The Everything Companies: The Holdings of Chinese Internet Giants. The number and variety of companies owned by the major tech giants in China is simply staggering. Alibaba has bet big on a wide variety of companies including delivery giant Meituan-Dianping, Lyft, Snap, bike sharing startup Ofo, Chinese ride-hailing company Didi (which recently merged with Uber’s China business), fintech spinoff Ali-Pay and several others. Tencent, creator of the famous all-in-one application, WeChat, has invested in JD.com, League of Legends creator Riot Games, Fortnite creator Epic Games, and many more. Alibaba and Tencent are so competitive with one another that in recent years, the Companies have made thousands of investments trying to fund the next phase of growth in Chinese Tech. As the economist writes, “Tencent has a portfolio of 600 stakeholdings acquired over the past six years (see chart), many unannounced. There is barely a trace of bombast when Jack Ma, Alibaba’s founder, says that he eventually hopes to see former Alibaba employees running 200 of the top 500 Chinese firms.” It will be interesting to see how these investments mature – in 2018 rival delivery firms Meituan and Dianping had to merge to avoid going bankrupt despite billions in funding from Alibaba and Tencent.

Dig Deeper

  • The Rise of China's Innovation Machine by WSJ

  • Detail on the Uber-Didi ride-sharing merger in China from Business Insider

  • 9:00am - 9:00pm, 6 days a week (9-9-6) is what Jack Ma wants out of his employees

  • Jack Ma hated eBay

  • Tencent’s Investment in Epic Games / Fortnite

tags: Alibaba, Jack Ma, e-Commerce, Internet, IPO, China, Goldman Sachs, Investing, strategic investors, Yahoo, Tencent, Cloud Computing, batch2
categories: Non-Fiction
 

May 2019 - The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

This book is a great deep dive on the history of Amazon and how it became the global powerhouse that it is today.

Tech Themes

  1. The Birth of AWS. We’ve looked at the software transition from on premise, license maintenance software to SaaS hosted in the cloud, but let’s dive deep into how the cloud came to be. The first ideas of AWS go back to 2002 when Bezos met with O’Reilly Media, a book publisher who in order to compete with Amazon, had created a way to scrape the latest book rankings off Amazon’s website. O’Reilly suggested creating a set of tools to let developers access Amazon’s rankings, and in 2003 Amazon launched Amazon Web Services (AWS) to create commerce API’s for third parties. Around this time, Amazon had centralized its IT computing resources in a separate building with hardware professionals operating and maintaining the infrastructure for the entire company. While parts of the infrastructure had improved, Amazon was struggling internally to provision and scale its computing resources. In 2004, Chris Pinkham, head of the infrastructure division, relocated to South Africa to open up Amazon’s first office in Cape Town. His first order of business was to figure out the best way to provision resources internally to allow developers to work on all types of applications on Amazon’s servers. Chris elected to use Xen, a computer that sits on top of infrastructure and acts as a controller to allow multiple projects access the same hardware. This led to the development of Elastic Compute Cloud (EC2). During this time, another group within Amazon was working on solving the problem of storing the millions of gigabytes of data Amazon had created. This team was led by Alan Atlas, who could not escape Bezos’ laser focus: “It would always start out fun and happy, with Jeff’s laugh rebounding against the walls. Then something would happen and the meeting would go south and you would fear for your life. I literally thought I’d get fired after everyone one of those meetings.” In March 2006, Amazon launched the Simple Storage Service (S3), and then a few months later launched EC2. Solving internal problems can lead to incredibly successful companies; Slack, for example, originally started as a game development company but couldn’t get the product off the ground and eventually pivoted into the messaging giant that it is today: “Tiny Speck, the company behind Glitch, will continue. We have developed some unique messaging technology with applications outside of the gaming world and a smaller core team will be working to develop new products.”

  2. A9. In the early 2000s, Google arrived on the scene and began to sit in between Amazon and potential sales. Around this time, Amazon’s core business was struggling and a New York Times article even called for Bezos to resign. Google was siphoning off Amazon’s engineers and Bezos knew he had to take big strategic bets in order to ward off Google’s advances. To do that, he hired Udi Manber, a former Yahoo executive with a PhD in computer science who had written the authoritative textbook on Algorithms. In 2003, Udi set up shop in Palo Alto in a new Amazon subsidiary called A9 (shorthand for Algorithms). The new subsidiary’s sole goal was to create a web search engine that could rival Google’s. While A9.com never completely took off, the new development center did improve Amazon’s website search and created Clickriver, the beginning of Amazon’s advertising business, which minted $10B in revenue last year. Udi eventually became VP of Engineering for all of Google’s search products and then its Youtube Division. A9 still exists to tackle Amazon’s biggest supply chain math problems.

  3. Innovation, Lab126 and the Kindle. In 2004, Bezos called Steve Kessel into his office and moved him from his current role as head of Amazon’s successful online books business, to run Amazon Digital, a small and not yet successful part of Amazon. This would become a repeating pattern in Kessel’s career who now finds himself head of all of Amazon’s physical locations, including its Whole Foods subsidiary. Bezos gave Kessel an incredibly abstract goal, “Your job is to kill your own business. I want you to proceed as if your goal is to put everyone selling physical books out of a job.” Bezos wanted Kessel to create a digital reading device. Kessel spent the next few months meeting with executives at Apple and Palm (make of then famous Palm Pilots) to understand the current challenges in creating such a device. Kessel eventually settled into an empty room at A9 and launched Lab126 (1 stands for a, 26 for z – an ode to Bezos’s goal to sell every book A-Z), a new subsidiary of Amazon. After a long development process and several supply chain issues, the Company launched the Kindle in 2007.

    Business Themes

  4. Something to prove: Jeff Bezos’s Childhood. What do Jeff Bezos, Steve Jobs, Elon Musk and Larry Ellison (founder of Oracle) all have in common? They all had somewhat troubled upbringings. Jobs and Ellison were famously put up for adoption at young ages. Musk’s parents divorced and Elon endured several years of an embattled relationship with his father. Jeff Bezos was born Jeffrey Preston Jorgenson, on January 12, 1964. Ted Jorgenson, Bezos’s biological father, married his mother, Jackie Gise after Gise became pregnant at age sixteen. The couple had a troubled relationship and Ted was immature and an inattentive father. The couple divorced in 1965. Jacklyn eventually met Miguel Bezos, a Cuban immigrant college student, while she was working the late shift at the Bank of New Mexico’s accounting department. Miguel and Jacklyn were married in 1968 and Jeffrey Jorgenson became Jeffrey Bezos. Several books have theorized the maniacal drive of these entrepreneurs relates back to ultimately prove self-worth after being rejected by loved ones at a young age.

  5. Anti-Competitive Amazon & the Story of Quidsi. Amazon has an internal group dubbed Competitive Intelligence, that’s sole job is to research the products and services of competitors and present results to Jeff Bezos so he can strategically address any places where they may be losing to the competition. In the late 2000s, Competitive Intelligence began tracking a company known as Quidsi, famous for its site Diapers.com, which provided discount baby products that could be purchased on a recurring subscription basis. Quidsi had grown quickly because it had customized its distribution system for baby products. In 2009, competitive intelligence reached out to Quidsi founder, Marc Lore (founder of Jet.com and currently the head of Walmart e-commerce) saying it was looking to invest in the category. After rebuffing the offer, Quidsi soon noticed that Amazon was pricing its baby products 30% cheaper in every category; the company even tried dropping prices lower only to see Amazon pages reset to even lower prices. After a few months, Quidsi knew they couldn’t remain in a price battle for long and launched a sale of the company. Walmart agreed in principle to acquire the business for $900M but upon further diligence reduced its bid, which prompted Lore to call Amazon. Lore and his executive team went to meet with Amazon, and during the meeting, Amazon launched Amazon Mom, which gave 30% discounts on all baby products and allowed participants to purchase products on a recurring basis. At one point, Amazon’s prices dipped so low it was on track to lose $100M in three months in the diapers category alone. Amazon submitted a $540M bid for Quidsi and subsequently entered into an exclusivity period with the Company. As the end to exclusivity grew nearer, Walmart submitted a new bid at $600M, but the Amazon team threatened full on price war if Quidsi went with Walmart, so on November 8, 2010, Quidsi was acquired by Amazon for $540M. One month after the acquisition, Amazon stopped the Amazon Mom program and raised all of its prices back to normal levels. The Federal Trade Commission reviewed the deal for four months (longer than usual), but ultimately allowed the acquisition because it did not create a monopoly in the sale of baby products. Quidsi was ultimately shut down by Amazon in 2017, because it was unable to operate it profitably.

  6. The demanding Jeff Bezos and six page memos. At Amazon, nobody uses powerpoint presentations. Instead, employees write out six page narratives in prose. Bezos believes this helps create clear and concise thinking that gets lost in flashy powerpoint slides. Whenever someone wants to launch new initiative or project, they have to submit a six page memo framed as if a customer might be hearing it for the first time. Each meeting begins with the group reading the document and the discussion begins from there. At times, especially around the release of AWS, these documents grew increasingly complex in length and size given the products being described did not already exist. Bezos often responds intensely to these memos, with bad responses including: “Are you just lazy or incompetent?” and “If I hear that idea again, I’m gonna have to kill myself” and “This document was clearly written by the B team. Can someone get me the A team document? I don’t want to waste my time with the B team document.” Its no wonder Amazon is such a terrible place to work.

Dig Deeper

  • How Amazon took the opposite approach that apple took to pricing EC2 and S3

  • The failed Amazon Fire Phone and taking big bets

  • The S Team - Amazon’s intense executives

  • The little-known deal that saved Amazon from the dot-com crash

  • Mary Meeker, Amazon and the internet bubble: Amazon.bomb: How the internet's biggest success story turned sour

  • Customer Centric: Amazon Celebrates 20 Years Of Stupendous Growth As 'Earth's Most Customer-Centric Company

tags: Amazon, Cloud Computing, e-Commerce, Scaling, Seattle, Brad Stone, Jeff Bezos, Elon Musk, Steve Jobs, Mary Meeker, EC2, S3, IaaS, batch2
categories: Non-Fiction
 

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