The Everything Store

by Brad Stone

Great book about the founding and journey of Amazon.

What I found surprising were two things - first, that despite having significantly worse valuations than eBay, Amazon’s investments started to pay exponentially more dividends compared to eBay’s investments. eBay’s business model was fundamentally better than Amazon’s to start and had much higher revenues and profits. Yet all that free cash flow didn’t translate into investments that secured eBay’s future.

Second, retail really sucks. I felt the lesson personally with my previous startup but reading about the experience of publishers really pushed it home for me. The key to any business is in owning the distribution which represents the connections with customers. Amazon captured this connection in such a way that even with millions of VC funding, DTC startups haven’t been able to achieve terminal velocity in any niche. Publishing is similar, they joined Amazon as leverage against larger brick and motar chains but after Amazon was able to force greater concessions from publishers as it grew in scale.

In that vein, while most of us blame the rise of Chinese manufacturers on the ever receding market share by traditional manufacturers in low cost (<$100) industries; perhaps the deeper reason is that without a connection to their customers, these manufacturers have lost their brand power with customers and can only compete on price now which in turns decimates their margins while helping Amazon build its customer first platform.


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