

Thomas Friedman: Amazon.you (1999) - cwan
http://www.nytimes.com/1999/02/26/opinion/foreign-affairs-amazonyou.html?pagewanted=all&src=pm

======
AndrewO
It never ceases to amaze me how "easy" everything is for Tom Friedman.
Especially given his complete lack of any real experience.

It was just a couple of months ago that he was talking about how "easy" it was
to design a product in the US, prototype it in Taiwan, manufacture it in
China, setup customer service in India, get a graphic designer off of
99designs, blah blah blah. (Come to think of it, he's been saying some
variation of that for an entire decade...)

International business is easy! Scaling to Amazon levels is easy! (And yes,
less of a challenge in 1999 than today, but still: not "easy"...)

How does this hack keep getting work? Bigger question: how many people have
been led astray by this pied piper of the globalized/information age?

~~~
StudyAnimal
The message I get from his article, is not that "scaling to amazon levels is
easy", but "scaling amazon size ideas down to a size where they are easier is
possible".

Isn't that part of the startup culture? That simple scaled down approaches are
not only credible alternatives to "big business" but are in many ways better
alternatives.

Bigger question: how many people have been motivated to try something by this
pied piper of the globalized/information age?

~~~
jonnathanson
I think you're giving his analysis too much credit. His point wasn't so much
that the field remains wide open to startups. It was that, in his estimation,
Amazon had no sustainable competitive advantage precisely because the barriers
to entry into its business were (ostensibly) very low.

This is a little like saying that anyone can beat Tiger Woods, because all you
need to do is pick up a golf club and practice for 10,000 hours, and golf
clubs are readily accessible. While nominally and theoretically true, it's
also a drastic simplification of many, many factors that have gone into making
Tiger as good as he is -- and that will keep him better than most of the
competition for quite some time.

Access to resources is only one very small part of business strategy. The rest
is what you make of those resources, and how the advantages compound when
you're making smart use of them. On the flipside, the beauty of startups is
that they can, and often must, use the resources in different ways.

Furthermore, he made the fundamental mistake of thinking that Amazon was just
a traditional retailer, but on the web.

------
davidmathers
Help. I may need an intervention for my curiosity problem. Here's the whole
story, found in this book: <http://books.google.com/books?id=HmyqbzrlVpkC>

Bezos's story resonated among the book-buying public, the investment
community, and beyond. At its peak, the story was so compelling that he was
Time magazine's 1999 "Person of the Year." Months before Bezos earned that
particular accolade, however, Friedman detected a flaw in the story. On
February 26. 1999. Friedman's column "Amazon.you," asked: What's so special
about selling books over the Internet? He introduced Lyle Bowlin, a professor
of small business at the University of Northern Iowa and founder of
Positively-you.com, a bookselling Web site. Bowlin, his wife, and his daughter
ran Positively-you out of their spare bedroom. This arrangement let
Positively-you cut its overhead even further than Amazon—according lo Bowlin,
down to about $150 a month—and thus to undercut Amazon's prices. Friedman's
conclusion? "For about the cost of one share of Amazon.com, you can _be_
Amazon.com."

Not surprisingly, Friedman's column was good for Bowlin's business. Within ten
days, Positively-you's business had grown by a factor of about thirty. Bowlin
moved its operations out of the spare bedroom and into the formal dining room.
Friedman responded with a follow-up column, "KillingGoliath.com," in which he
summarized Positively-you's success in a two-word reply directed at the
skeptical readers who'd questioned "Amazon.you." No, not those two words. This
was, after all, the op-ed page of the New York Times. Friedman's response was
a fully capitalized "YOU'RE WRONG."

That's where Scott Rosenberg entered the story. Rosenberg, the managing editor
of Salon.com, was one of the skeptical experts to whom Friedman had directed
his reply. In "Amazon vs. the Ants," Rosenberg explained that Friedman had
captured only half the logic of the online marketplace. That half, the low
cost of getting started, certainly allowed hobbyists like Bowlin to launch
commercial ventures. The other half, in Rosenberg's view, was what set Amazon
apart from Positively-you. He cited two fatal flaws with Positively-you's
business model. The first flaw stemmed from scalability. Positively-you's
overhead was lower than Amazon's precisely because it was a smaller operation.
As business grew, Bowlin would have to relocate yet again, likely to a
warehouse for which he might actually have to pay rent. He would also
eventually run out of unpaid family membeis and need to hire employees. These
costs would drive his overhead up and narrow if not eliminate any cost
advantage that he maintained over Amazon. The second flaw dealt with the
challenges and the expense of generating traffic comparable to Amazon's.
Rosenberg simply assumed that Bowlin couldn't rely upon the substantial free
publicity that he received by appearing in Friedman's columns. Rosenberg's
conclusion? "If I were Amazon's Jeff Bezos, I wouldn't be too worried."

Lyle Bowlin and Positively-you then proceeded to fall from public view for
about a year. They reappeared March 3, 2000, in columns written by Friedman
and by Rosenberg. Friedman's "Saga of an Online Pioneer" told of Bowlin's
attempt to leverage his early publicity into a real business. He raised
$90,000, took a leave from his teaching position, rented office space, hired
employees—and went out of business. Friedman considered Positively-you's
failure instructive. He cited a number of lessons that he had learned about
e-commerce. The two most significant of them were the difficulty of scaling
costs and the challenge of driving traffic to a Web site. Rosenberg's column
basically said "I told you so," which, of course, he had.

------
SwellJoe
In some ways he's right. He happened to pick a couple of poor examples, since
Amazon turned out to be run by one of the most savvy founder/CEOs of the past
several decades, and the company has managed to adroitly maneuver from one
business to the next, leveraging existing resources to build into the next. It
would have been difficult to predict _which_ of the seemingly outrageously
priced stocks in 1999 were going to stand the test of time. Most of them
didn't, Amazon was one that did.

But, there have been numerous big Internet companies from the first boom/bust
who have been displaced by smaller competitors. In fact, it's probably more
common than the alternative.

So, was Friedman wrong? Yeah, about these two companies. But, if you're
viewing it as an example, and you take a look at a few dozen other comparably
valued tech companies of the same age during the same time period, I'm certain
you'll find most of them are mere shadows of their former self or long-since
defunct.

~~~
RockyMcNuts
+1 - Amazon is the one left standing because they totally changed their
business model from being a store to being a platform.

Plus, their stock is huge because of stuff like Kindle and AWS, not because of
selling books.

If Amazon had kept doing what they had been doing, Friedman would have been
right.

The only place he was wrong is not realizing Amazon is a great company with
the ability to foresee and adapt.

~~~
pragmatic
Yes and no.

Amazon is not _a_ store it is _the_ store. Once you get Amazon Prime, retail
is dead to you. My personal experience (and several colleagues) of course, but
once someone gets hooked on Amazon great service, 2 day shipping, easy
returns, etc, you just can't use retail or even another web store. They just
_suck_ in comparison.

Amazon is fantastic at what they do, more so than any other company I can
think of. Maybe Apple, but Amazon is _cheaper_ than the competition not 50%
more expensive.

The platform is just a bonus. They found out a way to do infrastructure right
and now they are even making money on what is normally "just" a cost center.

------
hboon
Looking at
[http://replay.web.archive.org/20071123051120/http://positive...](http://replay.web.archive.org/20071123051120/http://positively-
you.com/):

1998 - 2001 Book store

2003 Redirect to porn-looking domain name

2005 - 2009 Self-(book)publishing site

2009 Content site or directory of links for dating

2011 Redirect to a MFA site

If the site had been sustainable, it would have to grow into a niche or grow
in size, the latter which would become Amazon or the likes anyhow.

~~~
decklin
I find it amusing that that the current domain-squatter-template's tag line is
"Without books there would be no history!"

------
schrototo
How could Friedman not see that Mr. Brodlin's business could not possibly be
sustainable at any kind of larger scale? His wife is mailing the books by
hand! It may be a nice little family business, but to compare it with Amazon,
even in 1999...

~~~
pmcginn
Friedman has not made a career out of being consistently correct.

I don't generally agree with Matt Taibbi, but he does a great job dismantling
T.L.F. here:

<http://www.nypress.com/article-19271-flat-n-all-that.html>

~~~
numeromancer
This guy's writing ain't so hot, either. I'll leave it to the readers to find
his bad analogies, parallelism-failures, jarring subject changes, etc.

------
jasonwatkinspdx
Keep in mind that at the time Friedman was writing this, his in-laws had a
billion dollar empire of shopping malls. His dire predictions for investing in
Amazon start looking quite self serving. His wife's family fortune hasn't
fared nearly as well as Amazon since then...

~~~
mattraibert
Do you have a source?

~~~
georgecmu
[http://www.vanityfair.com/online/daily/2008/11/thomas-
friedm...](http://www.vanityfair.com/online/daily/2008/11/thomas-friedmans-
world-is-flat-broke.html)

... based on the bad news coming out of shopping-mall owner General Growth
Properties [GGP], it is no wonder Friedman is feeling crankier than usual.
That’s because the author’s wife, Ann (née Bucksbaum), is an heir to the
General Growth fortune. In the past year, the couple—who live in an
11,400-square-foot mansion in Bethesda, Maryland—have watched helplessly as
General Growth stock has fallen 99 percent, from a high of $51 to a recent 35
cents a share. The assorted Bucksbaum family trusts, once worth a combined
$3.6 billion, are now worth less than $25 million.

------
gojomo
I suspect a series of "Thomas Friedman, 12 years ago" looks back would
generate a lot of yuks. Friedman offers a lot of goofy predictions, phrasings,
and oversimplifications with an easy, unearned confidence.

But some of this is the fault of the form: NYT op-ed columnists have to spit
out something at least mildly discussion-worthy and topical, fitting neatly
into 800 words, with an authoritative tone befitting the Gray Lady, like
clockwork multiple times a week. So all the columns can't be gems, or even
fully-baked.

(We're now spoiled by blogs, which can vary in frequency, length, and tone
with the topic matter, and speculate and self-correct via rapid iteration with
readers and other correspondents.)

To Friedman's credit, he reported Positively-You's failure – despite the boost
of NYT coverage – almost exactly a year later:

[http://www.nytimes.com/2000/03/03/opinion/foreign-affairs-
sa...](http://www.nytimes.com/2000/03/03/opinion/foreign-affairs-saga-of-an-
online-pioneer.html)

Though, the lessons he draws from the failure are a mixed bag, and mostly boil
down to: they couldn't afford advertising once their free media wore off.

------
sjariri
Don't forget that he is talking about "investing in Amazon.com" in 1999 a bad
thing, not "Building an Amazon.com"

------
Androsynth
It turns out this article has nothing to do with Amazon:

A random guy has an idea about how to take on the giant corporation. He fails
when it turns out that ideas are much less important than execution.

Friedman was right for cheering the guy on and admonishing late 90's ecommerce
in general. He just got the details wrong.

------
InclinedPlane
This error highlights a rather important point actually.

The migration of large chunks of commerce onto the web has hidden away a lot
of the complexity of doing business, which can (as seen in this example) lead
to massive errors of judgement due to ignorance. Nobody would imagine that
owning a single bookcase stocked with books is equivalent to the operation of
a brick and mortar bookstore. Yet here we see Friedman making the same error
in comparing amazon with a one man operation.

In a sense they are comparable, and that's one of the things that makes the
web so wonderful, it's possible for very low overhead business to exist on the
web, and it's possible for them to look very professional. However, underneath
they are as different as a home kitchen and a commercial restaurant line. Just
because you can cook doesn't mean you can be a chef or run a restaurant. Just
because you can pack, label, and ship boxes doesn't mean you can match the
logistical capabilities of a company like Amazon.

Certainly many companies tried. Amazon built itself up quite rapidly with a
heavy focus on logistics at scale and product fulfillment. A lot of companies
mistakenly believed that you can get away with unorganized chaos and just
putting together a bunch of guys with a bunch of boxes in a room and you'd get
the same results. Those companies were very wrong, many of them have gone out
of business.

Amazon, even going back to 1999, has several unique qualities which put it
ahead of its competition, not least of which have been melding a high-tech web
store on one end to an equally high-tech logistics and fulfillment process on
the back end. If you look at a web business and you can't see what's going on
with enough fidelity to tell a home maker's kitchen from a commercial
restaurant kitchen then you really ought to avoid commenting on the subject.

~~~
astrofinch
He didn't make that error.

There are some industries, like restaurants, that are dominated by small-time
entrepreneurs. As knowledge of web technology spread, Friedman was guessing
that the internet would be one of these.

------
rgrieselhuber
It almost reads like an article from The Onion.

------
kenjackson
In fairness its pretty easy to go back 12 years and pick apart a prediction.
I've known some really bright guys who after using the web the first time said
something like, "Not bad, but not sure why I'd use this over gopher, ftp,
archie, etc...".

------
dlevine
Looks like the site pointed to in that column is now owned by a domain
squatter. I guess that Amazon had the last laugh...

------
ck2
So _positively-you_ domain went under sometime before 2002.

