
Jeff Bezos Is Playing Chess - colinprince
http://m.techcrunch.com/2013/08/05/bezos-not-bozos/
======
badman_ting
> 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.)

~~~
rhizome
_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.

~~~
Zimahl
_but you do have to break a few eggs to throw the baby out before it 's
hatched._

"If we hit that bullseye, the rest of the dominoes will fall like a house of
cards. Checkmate!"

\- Zapp Brannigan

~~~
patrickdavey
Still laughing! Thank you :)

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jccalhoun
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...

~~~
EGreg
This. But Siegler does have a point sometimes.

~~~
rhizome
Noise in the system.

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ctdonath
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.

~~~
jeffasinger
I think if the ultimate goal was to integrate the WaPo with Prime, he may have
made the purchase as Amazon, instead of as a personal purchase.

There's something else going on here.

~~~
ctdonath
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.

~~~
tomkarlo
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.

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ojbyrne
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.

~~~
riggins
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.

~~~
ojbyrne
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.

~~~
czr80
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.

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venomsnake
Or we can KISS (keep it simple stupid):

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.

~~~
foobarqux
> 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.

[http://articles.washingtonpost.com/2013-07-24/politics/40860...](http://articles.washingtonpost.com/2013-07-24/politics/40860559_1_president-
barack-obama-amazon-high-wage-jobs)

~~~
rhizome
_Since Amazon is such a low margin business_

Even as a public company, I wouldn't be surprised if they're playing some
accounting tricks in order to maintain this as a facade.

~~~
foobarqux
The argument doesn't really depend on the business being low margin only that
Amazon is strongly motivate to control labor costs for whatever reason.

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neonhomer
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](http://market-
ticker.org/akcs-www?singlepost=3190940).

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raheemm
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?

~~~
o1iver
Did you read the article? The theory seems clear to me...

~~~
raheemm
I did. What is the theory?

~~~
roc
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.

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mikkom
> . The “problem”? Apple was too successful, too quickly. Because the iPhone
> was such a good business

"too quickly"? Apple? Are we talking the same Apple that was founded in 1976?

~~~
speeder
I think the "quick" does not refer to time since foundation, but the fact the
success was a spike instead.

~~~
dev1n
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.

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hosh
More like, while everyone thinks he is playing Chess, Bezos is playing Go.

Edit: Amazon and WaPo looks like this huge moyo play.

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ngoel36
Bezos has been playing chess far longer than we even knew a game was going on.
He just castled.

~~~
saraid216
Psh. Castling is a trick play, like the forward pass. Back in the old days, we
moved one piece at a time.

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malandrew
Jeff Bezos could turn it into a micropayment based newspaper. He could easily
have Amazon Prime be a gateway to WaPo articles.

Alternatively, he could send out a Kindle to every WaPo subscriber and kill
the print version tomorrow.

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Arallu
Alonzo Harris: This shit's chess, it ain't checkers

