Comment by Animats | Hacker News Reader

Comment by Animats | Hacker News Reader

The section under "People move from bits to atoms without realizing the change in underlying fundamentals" is important. He writes (condensed):

"Many tech investors are shifting from investing in bits-driven business (software) into atoms driven businesses (anything you need to manufacture). ... investors are applying tech multiples expectations to these radically different types of businesses. This is unlikely to end well. ...

"If you are merely using software but the business fundamentals have not shifted - than the startup ... will not merit tech multiples. A software-enabled, network connected, crowd funded, smart toaster is, when all is said and done, still just a toaster."*

Birchbox. Soylent. Maybe Uber. You can think of others.

(Uber may be a bubble. They've raised and spent a huge amount of money underselling competitors. It's rumored that only in SF is Uber profitable.)

(Amazon succeeded because they figured out how to do online retail really well. Remember "one click ordering"? (The key to that is not the one-click ordering. It's that the user can easily cancel for a short period after ordering. That makes one-click ordering safe for the user. Most retailers still don't get this.) Then they developed new distribution technology. Amazon has 30,000 Kiva robots and their order pick time is down to 15 minutes at some distribution centers. They're now in the same business Webvan had 15 years ago, but their costs are low enough that it works.)

>They're now in the same business Webvan had 15 years ago, but their costs are low enough that it works.

People frequently mistake Amazon's business. They're not a store or a delivery service, Amazon is a logistics company.

What they do at the frontend is important, but their value as a business is everything in between... warehouses, picking systems, delivery logistics, AWS... doing as much of that stack themselves as possible and doing it very efficiently is their core.

Just try to buy AAA batteries to convince yourself that being a store isn't Amazon's core competence. (the review system, the recommendation engine, the product organization, it's all mediocre at best)

The future of massively computation intensive personal level logistics is the amazon drone delivers your daily packet of stuff which contains four AAA batteries because amazon has figured out your remote control battery which is currently working, should be dead by this evening. Also it'll have two rolls of TP and one of your favorite breath mints and one squeeze packet of ketchup because it knows you're having french fries with dinner tonight.

Personal logistics is going to look a lot more like the star trek replicator (although enormously higher latency... for now) than like a web page store.

The blind faith that "... on the internet" will make you a millionaire, will be replaced by a blind faith in the infallibility of personal logistics. Why if Amazon is sending my wife baby clothes, no need to even bother taking a pregnancy test because how could Amazon ever be wrong, etc.

I disagree on the "daily packet of stuff" bit from the standpoint that I don't think Amazon is really great at the "we'll pick which specific product/brand you should get" part yet.

Part of that is the rise of 3rd party sellers and fake reviews has really impacted my (and many others I've spoken with) trust in Amazon. To continue the battery example, I could totally see some knockoff brand arriving that blows my remote up down the line because they were cheap, poorly made no-name batteries (possibly expired) that happened to have great margins for Amazon.

I just don't have that trust there. But maybe that's been my experiences and personal preference to research things to death.

> Amazon is a logistics company

We hear this said of Amazon, and that's also Uber's ambition.

But isn't Walmart also a logistics company?

Isn't every big company that makes or moves around physical items?

Yes. Some are more successful than others.

Not as much.

Amazon sells it's fulfillment services directly. AWS should be obvious, but they also sell fulfillment services. Not just whitelabel spam products from /r/Entrepreneur either.

Amazon can do the entire logistics chain from accepting products shipped from your manufacturer to processing the payment in your own web store. [1]

[1] https://services.amazon.com/fulfillment-by-amazon/benefits.h...

Trying to understand: WalMart is logistics, but their logistics customer is WalMart, and the only way in is to sell in a WalMart store.

Amazon effectively thinks outside the Big Box, and will let anyone sell anything within the Amazon marketplace. I'm not sure if third-party websites w/ Amazon back-end and fulfillment are a thing, but that's a possibility.

In which case, Amazon effectively sells a marketplace, ordering, and delivery logistics system to its merchandise suppliers.

Maybe. I'm not entirely sure I'm a fan of the "Company X isn't in Market Y, they're actually in Market Z" meme, but it's got utility.

The problems I'm seeing with Amazon now are on two fronts. One is that the actual product review/selection process stinks -- too little control over quality and relevance of what's presented. If I go to a third party, one specialising only in the products of interest to me, I can get a far more appropriate selection of items, and I value that.

The other is morality. Bezos is an asshole and screws people over -- techies, noncompetes, warehouse workers, competitors, and more. I've got a problem with that. I may be in the minority, but that is something which ultimately matters. Perhaps it's the only thing which ultimately matters.

Buying AAA batteries is a great experience. You can even order by voice via Alexa. What experience are you actually looking for? Who does it best?

This result is perfect after a few key presses of the a key: https://www.amazon.com/gp/aw/s/ref=is_s_ss_i_0_3?k=aaa+batte...

I'll reframe what I said a little.

I want to buy the least expensive (per unit) CR123A batteries from a brand/seller that meets my own standard of trust.

Search for CR123A batteries ... 14,000 results, 27 departments, about 100 sub-departments. On the first page 2 of the 17 results include per-unit pricing. There's no way to sort by unit price. Package size varies from 1 to 12, there's no way to sort or select by package size. Cost ranges from $1.44/unit to $5.02/unit

---

CR123A batteries are expensive enough to care how much they cost. They can also burn your house down if the proper protection circuits aren't in place (cheap Chinese manufacturers don't always include it)

They are also very frequently overpriced. A healthy market where you could do easy price comparisons would be good for the consumer but it doesn't exist.

To find the least expensive, I'd have to manually sift through 14000 entries and divide the price by the number of batteries manually. It's a big frustration, and I've legitimately tried and given up on buying them on amazon because of the bad experience.

I believe the issue is that saying there are "bits" companies, and there are "atom" companies is a misnomer. I believe there are "product" companies, and there are "platform" companies. Product companies have to earn "each dollar" they make, platform companies get a share of each dollar thats earned on them. Amazon makes money from all amazon merchants. Google makes money from every ad sold. They're private "governments". That's why they get high multiple valuations. They just scale better.... they probably became the dominate platform because they're the ones who figured out HOW to scale, and they only scaled after they actually needed to.

> Birchbox. Soylent. Maybe Uber. You can think of others.

Go ahead, I'm listening. And what is this Birchbox which is a great success again?

> Amazon succeeded because they figured out how to do online retail really well.

Actually, Amazon succeeded because they had everything you could want in their stock, especially the rare things (books?) that literally nobody else had (and you would pay for such a thing a special premium on top of its normal price, but the alternative was to not have the thing, so it was a win-win).

Seriously. Having almost any book that has been printed in the past 100 years available from somewhere beats the stuffing out of scouring yard sales, used-book stores, library divestments, etc, etc

uber being not profitable doesn't really tell us anything. They are not profitable by design.. if they cut their growth budget today, I am sure they are insanely profitable, they just prefer to spend all the money in growth.. Even in SF they try to launch new products all the time, Pool, UberEats, delivery API.. it costs money to grow these businesses. Hopefully they did the math so when the time comes, they can turn the switch and basically print money (and they probably spend a ton of money on driverless car R&D)

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