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Conglomerates Didn’t Die, They Look Like Amazon

nytimes.com

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Re: Conglomerates Didn’t Die, They Look Like Amazon

#81

Post by [deleted] »

bryanlarsen wrote: post #75
skookum wrote: post #61

Earlier quoted context omitted.

The experience of hosting and scaling Amazon may have informed some early AWS thinking but AWS was not built specifically to host Amazon and Amazon was never the primary target customer. This is evidenced by nothing more so than by the fact that despite Amazon's prescriptive initiative to move to AWS being well over 5 years in[1], much of retail & digital still runs on Oracle, dedicated HW, and bespoke internal servi…

When you work on a product that has both internal and external customers, there are two possibilities: - the external customers get priority because they're real customers that pay real money. - the internal customers get priority either because they're the "real" business of the company or because they have the right connections Amazon uses a very tiny fraction of AWS, but I'm willing to bet that their bug reports a…

[deleted]

Re: Conglomerates Didn’t Die, They Look Like Amazon

#82

Post by keithlfrost »

appleiigs wrote: post #54
icebraining wrote: post #51

Earlier quoted context omitted.

Amazon has made real money for years, they just have reinvested it. Comparing Amazon to Uber is silly, they're an established business and leader in multiple markets.

Reinvesting income doesn't give you negative income. Having the highest marketshare doesn't mean they make money from it. Bezo is considered the worlds worst boss and there have been many articles about its corporate culture... that will catch up to Amazon.

Amazon certainly has its share of problems and failures, but a lack of strategic financial thinking is not one of them. Take a look at the graph [1] of Amazon revenue and profit over time. Those curves are not generated by people who aren't paying attention. [1] http://www.businessinsider.com/amazon-revenue-vs-profit-2016...

Re: Conglomerates Didn’t Die, They Look Like Amazon

#83

Post by noobermin »

daemin wrote: post #70
gedrap wrote: post #42

Earlier quoted context omitted.

>> industries where it's very difficult for new blood to break into What are examples of such industries?

The canonical example is in Medicine: Doctors, Surgeons, Dentists. All of these professions have strict professional bodies which limit the number of people that can enter them, therefore be it intentionally or not, the wages are kept high.

I think when it comes to healthcare, it will always be the exception, give the inelasticity of the demand for healthcare.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#84

Post by TheSpiceIsLife »

michaelt wrote: post #38
TheSpiceIsLife wrote: post #12

Earlier quoted context omitted.

> that people are perfectly fine with Amazon being a conglomerate What is this supposed to mean? Is there supposed to be something inherently not-fine with a conglomerate? If conglomerates survive because they're better able to deliver goods and services more efficiently then great. As another comment pointed out[1], we are surrounded by conglomerates.[2] Other conglomerates that have delivered things people love inc…

Is there supposed to be something inherently not-fine with a conglomerate? Some people think they have a tendency to be inefficient, as high-performing areas of the business waste money subsidising low-performing areas of the business. And low-performing areas are insulated from free market feedback, like going bankrupt or investors leaving. Of course, some of this stuff is only obvious with hindsight. It was probabl…

I see your point, however:

> And low-performing areas are insulated from free market feedback, like going bankrupt or investors leaving.

This could be a net good for society as not all things societies like can necessarily be delivered by high-performing businesses.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#85

Post by TheSpiceIsLife »

dragonwriter wrote: post #60
michaelt wrote: post #38

Earlier quoted context omitted.

Is there supposed to be something inherently not-fine with a conglomerate? Some people think they have a tendency to be inefficient, as high-performing areas of the business waste money subsidising low-performing areas of the business. And low-performing areas are insulated from free market feedback, like going bankrupt or investors leaving. Of course, some of this stuff is only obvious with hindsight. It was probabl…

It's not about individual cases, but that having the businesses combined prevents investors from allocating capital between them, which is viewed as, in aggregate, less efficient as the allocation is a step removed from the market.

This assumes that investors are efficient at allocating capital, or that individual investors are more efficient than institutional investors.

As an obvious counterpoint: Birkshire Hathaway

A more local example, as an Australian, is Wesfarmers who have persistently maintained strong brands in hugely diverse fields. As a welder by trade I'm willing to bet that the people managing these two conglomerates are more efficient at allocating capital than I, at least.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#86

Post by noobermin »

indigochill wrote: post #10
noobermin wrote: post #6

While prices are low, another aim of governments should be to keep wages high enough to maintain a standard of living. I think the fear around Amazon isn't that it is going to all of a sudden raise the price of goods from Whole Foods, but that they will reverse the employee friendly aspects of the company. When prices are low but wages aren't high enough to guarantee that people can take advantage of those lower pric…

There is another side of that which I've noticed as an American expat. If one country or industry decides to keep wages high, there are at least two effects. 1. The minimum required experience is also increased. You see this in industries where it's very difficult for new blood to break into because the minimum required experience/skill level is above an "entry level" position because the pay expectations of the indu…

I actually don't see the connection between a "minimum standard of living" and a "minimum required experience." Is this the case with company under discussion, Whole Foods? If that requirement is a high school diploma, well that's why we strive for universal high school, but I'm not sure what the connection is here. Please, don't use intuition from high paying intelligentsia type careers to the majority of laborers in the US, much less the world.

I do grant I'm not sure the government with the law that exists can do anything about Whole Foods, or should it, and thus, I am making a bigger point about that the government is supposed to function for the public good. I think the glimmer in Whole Foods is more an indictment of the system in the US than anything.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#87

Post by dragonwriter »

TheSpiceIsLife wrote: post #85
dragonwriter wrote: post #60

Earlier quoted context omitted.

It's not about individual cases, but that having the businesses combined prevents investors from allocating capital between them, which is viewed as, in aggregate, less efficient as the allocation is a step removed from the market.

This assumes that investors are efficient at allocating capital, or that individual investors are more efficient than institutional investors. As an obvious counterpoint: Birkshire Hathaway A more local example, as an Australian, is Wesfarmers who have persistently maintained strong brands in hugely diverse fields. As a welder by trade I'm willing to bet that the people managing these two conglomerates are more effic…

> This assumes that investors are efficient at allocating capital

Yes, in aggregate, it does. Phrased another way, it assumes that the market is more efficient when different investments are unbundled and can be selected independently than when they are bundled.

Note that I am not necessarily endorsing this charge against conglomerates, just clarifying what I see to be its basis.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#88

Post by dredmorbius »

tpeo wrote: post #27
dredmorbius wrote: post #24

Earlier quoted context omitted.

A counterpoint suggests the concept's been losing ground: https://books.google.com/ngrams/graph?content=conglomerate&y... The concept is an old one, dating to the late 19th century. In the 1960s and 1970s, the new phenomenon was the "multinational corporation". https://books.google.com/ngrams/graph?content=multinational%...

"Conglomerate" is a latinate word for "put together", which is to say that it doesn't immediately refer to the idea of a parent company with controlling interests in several subsidiaries over different markets so you're bound to pick up different uses of the same word. For instance, "conglomerate" is also a technical term in geology. Just check out the hits from the 19th century. Also, I'm wary of using n-grams to in…

If you look up Sorkin's earlier articles, he'd also posted recently on some failed / dismantled conglomerates -- the use here quite probably refers to that, which his regular readers might get.

There's a lot of invective in this HN thread that is directly addressed (Berkshire-Hathaway, etc.) within the article itself. This suggests things.

I'm well aware that ngrams aren't absolute proof and that language itself changes (quite particularly in business and finance). But it is a datapoint to be considered. Answering it from ignorance isn't a particularly strong counter.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#89

Post by dredmorbius »

Mathnerd314 wrote: post #13

(from the Yale note) > switching costs are high > Amazon’s platform lock-in > users said they would be taking their business from Amazon and returning to Diapers.com—which, other users pointed out, was no longer possible I have a hard time taking this seriously. "Lock-in" is just a sunk cost, it's more about the psychology of switching than an actual problem. If they went through all the pain of figuring out AWS's XM…

I'm increasingly wary of the "sunk cost fallacy" argument. For reasons which are difficult to articulate clearly, but the upshot is that I don't think SCF gives full weight to the issues involved, at least in some instances.

One aspect of this is risk. Whatever your present course is, you've greately reduced your uncertainty regarding it. A new course of action may involve a great deal of unrealised and unrecognised risks. That is, your costs are understated, and your benefits are overstated. Particularly with complex situations.

Re: Conglomerates Didn’t Die, They Look Like Amazon

#90

Post by mandeepj »

asdf8565 wrote: post #77
nitemice wrote: post #20

Earlier quoted context omitted.

This is a really amazing and clever idea on Amazon's part: Taking a system or technology that you've already built and are maintaining, and make it accessible to others as a platform. Then continue using that platform as if you were a/the best customer. They did it with AWS, they've done it with their retail business, and now they're probably going to do it with AmazonFresh/WholeFoods. It makes a lot of sense, and it…

IMO, the biggest/best companies are the one's that take run of the mill daily business expenses and turn them into money makers. Google needed email to run it's business. They built a customer facing service around it. Computing answers is their thing. With their machine learning cloud services, anyone can compute answers for their complex problems. Companies that stagnate tend to iterate, with little to show for it,…

> Google needed email to run it's business

Please explain

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