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Tag: Amazon

  • Steve Case: Facebook Needs to Pivot and Recognize They’re Not in the Garage Anymore

    Steve Case: Facebook Needs to Pivot and Recognize They’re Not in the Garage Anymore

    AOL co-founder Steve Case says that Facebook needs to pivot and recognize that they are not in the garage anymore. Case sees some of this as a backlash against big tech, which he predicted a few years ago in his book The Third Wave. As companies like Facebook, Google, and Amazon become more important it is critical for them to engage more at the policy level.

    Steve Case, CEO of Revolution and AOL co-founder, talked about Facebook’s response to the explosive New York Times article on CNBC:

    People Are Looking for the Actions to Follow the Intent

    The New York Times report was obviously very troubling. It’s a great company and I know Mark and Sheryl have done a fabulous job of building not only one of the most valuable companies in the world but also one of the most impactful companies the world. It has had a significant impact not just on business but on society, even in terms of politics. They have to understand that they do shoulder a great responsibility and hopefully they will make the moves necessary. They have the right intent, they’ve been clear about the intent. I think a lot of people are looking for the actions now to follow the intent and hopefully, in the coming weeks and months, we’ll see more of that.

    Expected This Backlash Against Big Tech

    Some of this backlash against big tech, backlash against Silicon Valley, I frankly expected that for several years. I wrote a book a couple years ago that’s called The Third Wave and talked about it. As these companies become more and more important and have more and more impact, engaging more on the policy level is going to be critical.

    In the next wave of innovation, the policy issues, the regulatory issues, whether it be on the platform side of the internet or in healthcare or other other sectors of our economy, the entrepreneurs, the innovators need to engage with the policy makers and the regulators. Entrepreneurs don’t like to do that because they just like to have the freedom of action to move quickly, and that’s understandable. But the nature of the kind of issues we’re now dealing with, the opportunities we’re trying to deal with does require more of that engagement. Facebook is seeing that and Google’s seeing that and other companies will see that as well.

    That’s going to do really define the winners in this next 10 or 20 years, the ones that are innovating and moving quickly but doing it in a way that is understanding they’re living in a broader context and are more respectful of the role of policy.

    Facebook Needs to Pivot and Recognize They’re Not in the Garage Anymore

    Facebook’s a great company, Google is a great company, Amazon’s a great company, they’re a lot of great companies out there. They’re going to still be a magnet for talent but it does become more difficult as you get larger. It does become more difficult when your company is attacked.

    A few years ago everybody felt proud to be associated with Facebook and now some at the company, so the reports suggest, are a little more anxious. We’ve seen that in other large companies as well. Some of that this comes with the scale of going from a startup to a speed up to one of the most important companies in the world.

    This is one of the reasons, but not the only reason, that they need to pivot and recognize they’re not in the garage anymore, it’s not a startup anymore. They have significant civic responsibilities and if they implement those appropriately they’ll be able to attract and keep people and attract and keep customers and that’s a key part of what they need to focus on.

  • John Malone says Disney Needs What Apple and Amazon Have… Massive Direct Consumer Relationships

    John Malone says Disney Needs What Apple and Amazon Have… Massive Direct Consumer Relationships

    Liberty Media Chairman and legendary entrepreneur and investor John Malone says that although Disney has a great brand, what they don’t have is a massive number of direct consumer relationships.

    John Malone, Liberty Media Chairman discussed Disney with CNBC’s David Faber:

    Disney Doesn’t Have Massive Direct Consumer Relationships

    Disney has a great brand, there’s no question, and they really know the entertainment business. What they don’t have is a massive number of global credit cards. They don’t have massive direct consumer relationships at this point, and those are not easy to come by. If you look at the other people in the space, Amazon because of their retailing businesses and the creation of Prime has been able to tie into consumer interest pretty globally. It’s very easy for Amazon to sell an incremental service.

    Apple Has 650 to 700 Million Direct Consumer Relationships

    You have Apple wanting to be in this space. Apple is the big gorilla. Apple is wanting to develop a direct consumer entertainment relationship beyond music. Let’s call it into video. We’re estimating that Apple has probably 650 to 700 million direct consumer relationships in which Apple has a credit card, a lot of information about the consumer. They’ve started to put money into original content and they’re certainly having lots of discussions in and around the content industry to figure this out. They want to drive their consumer interface technology, their ecosystem, into the video space in the living room more heavily than Apple TV has so far.

    Jeff Bezos is on a Roll with his Fire Stick, Prime, and Content

    Jeff (Bezos) is on a roll with his Fire Stick and his Prime and his content, so he’s in the living room and Alexa is a is a voice-activated interface that works well, is well thought-through, well-engineered, interfaces with Netflix. I mean well engineered. So the technology side, if Disney has a problem I believe it’s going to be those two things. It’s going to be the technology platform and it’s going to be establishing those one-to-one consumer relationships.

  • Former Walmart CEO says Amazon is “Predatory” Almost by Definition

    Former Walmart CEO says Amazon is “Predatory” Almost by Definition

    Former Walmart CEO Bill Simon says that Amazon has been “predatory” by selling goods below cost subsidized by profits from their cloud and advertising businesses. Simon says that this strategy put major competitors like Circuit City and Toys R Us out of business allowing Walmart to then raise the price of Prime without losing their customers.

    Bill Simon, a former Walmart CEO, discussed Amazon, Walmart, and Alibaba in an interview on Fox Business which can be watched below:

    Amazon Behavior Has Been Predatory by Definition

    I’ve not been an advocate of breaking Amazon up. I’ve been an advocate of really looking at them hard and maybe having them report more details in segment reporting. They just sort of smush everything up into one number and report and I don’t think that gives clarity to the investor. If you really think about it their behavior has been predatory almost by definition. In 2014 they took the price of Prime up right after Circuit City and some others went out of business. They took another price increase to $129 for Prime and Toys R Us is gone.

    The consumer loves them, it’s awesome, I use them all the time, it’s really great to have the stuff delivered. But you see them putting people out of business and raising their price, and then again putting people out of business and raising their price, and that’s just not right.

    Didn’t Walmart Put Competitors Out of Business? Walmart did it for years and years by being a good retailer, not by selling below cost and subsidizing it from income from the cloud and from advertising. Walmart just bought well, moved it well, shipped it well, sold it well, and did it better than anybody else. That’s a different play. It’s sort of like if Exxon decided to get into the restaurant business and used oil revenue to drive restaurant companies out of business.

    How Does Alibaba Compare to Amazon? I love Alibaba. I’ve been in their stock for a while and it is just a terrific business. They’ve got a little bit of a different business model than Amazon. They built it differently because they have much more population density across their key markets than Amazon does other than the main metro’s in the US. I think they have a better opportunity to move the product and eventually, one day make money. I don’t think Amazon has that.

    Walmart Successfully Went After Digital Business

    Walmart stated a couple of years ago that they were really going to go after the digital business and they’ve done that. They have done it really well. They bought Jet, they just invested in Flipkart, they bought Bonobos, and they’ve bought a lot of other things. It sort of puts some juice back in the business.

    On the other hand, three years ago they delivered $29 billion in operating income, last year they delivered $20 billion, and they have already sort of warned that they are going to be below that this year. It’s come at a really steep price but they are doing exactly what they said they are going to do and if you are an investor who likes that strategy you’re buying.

    People Don’t Want Their Groceries Delivered

    Grocery is hard, it’s really hard. It took Walmart 20-25 years to get average at it, nevermind good. When Amazon bought Whole Foods, they not only bought a grocer, they bought a premium fresh grocer. That’s really hard to deliver and to deliver consistently and I think they are finding that out. Part of the problem is that people generally don’t want to have their groceries delivered.

    Most cities, other than New York and San Francisco and older cities, were built in and around the time and grew with the interstate highway system. So people in Dallas commute to and from work and they pass 20 grocery stores. They don’t need it delivered to them. They don’t want it sitting on their doorstep but it would be really nice if they could pick it up on their way home and not have to shop for it. That’s the theory behind Click and Collect and I think that’s a winner.

  • UNCS CEO: It’s an Amazing Time To Be a Consumer… Every Day is Black Friday

    UNCS CEO: It’s an Amazing Time To Be a Consumer… Every Day is Black Friday

    The CEO of United National Consumer Suppliers, Brett Rose, says that it’s an amazing time to be a consumer because every day is Black Friday. Rose predicts that this is going to possibly be the biggest Q4 in our history.

    Brett Rose, CEO of United National Consumer Suppliers, discussed Amazon and ecommerce in an interview on Fox Business:

    Amazon Has Huge Competitive Advantage

    All things considered, consumers want free shipping, not quick shipping. However, if all levels are equal with Amazon, Target, and Walmart, the one competitive advantage that Amazon has, that Target and Walmart can’t, is that Amazon has millions of these third-party resellers constantly filling their coffers with products. Target and Walmart are limited to what they have in stock that’s ready to go.

    There is no denying that Walmart has made some massive strides. But to come after Amazon is hefty. Like I said Amazon has a constant supply of products where their not just limited to what they’re curating on their own. They’re limitless in regards to what everybody is sending to them to go right to the consumer.

    Every Day is Black Friday

    Interesting times with tariffs. If you read everything that came out Chinese imports are up 15 percent over the same time last year. They’ve all front-loaded in preparations for the President’s tariffs which are now in full effect. All of these retailers pushed up orders in what might have otherwise taken months. It’s yet to be determined, but consumers still need goods. There’s always going to be a need, the price is just going to fluctuate.

    If numbers are indicative, everything these retailers are curating and everything the street is saying, it’s going to be one of if not the biggest Q4 in our history. Even if you look at Black Friday announcements, Black Friday is out already. Amazon has released their Black Friday items. BlackFriday.com, Macy’s, went live the other day with their sales. Retailers are vamping up to stay competitive. You go online now and you can figure out what retailers are selling for Black Friday.

    It’s an amazing time to be a consumer. Every day is Black Friday. Right now it really is. They’ve already released what the doorbusters are going to be.

    Still a Major Value in Having a Physical Presence

    There’s always going to be the consumer that likes to go to the store, likes to feel it, touch it, get the treasure hunt, but now with real-time shipping, free shipping, real-time inventory, it’s a great time to be a consumer. It’s certainly competitive. While Amazon is making strides they are still going after brick & mortar. Buying Whole Foods and some of the other retailers they are looking at, says there is still a major value in having that physical presence.

  • Deepak Chopra Delivering Reflections on Alexa via LivePerson

    Deepak Chopra Delivering Reflections on Alexa via LivePerson

    Personal transformation guru and popular author Deepak Chopra has partnered with LivePerson to provide insights on demand through Amazon Alexa. “I have this little microphone attached to this little phone and I just speak out to what I’m thinking and what my intention for the day is,” says Chopra, “It’s recorded here and it goes to LivePerson and then it’s on Alexa. It’s all done very efficiently and smoothly and it’s part of my daily routine now.” Each morning, through LivePerson’s conversational tools, Dr. Chopra shares new reflections for the day to center himself and his followers.

    “Our mission is to make life easier by transforming how people communicate with brands,” said Robert Coverdale, Head of LivePerson Studios. “We help the most innovative brands on earth create new business models with the possibilities available in conversational interfaces like text messaging and voice assistants. Now, we have taken the same design and AI tools we used to create and scale those experiences and made them available to individuals with large followings. Our first step is launching with Dr. Chopra, who, like us, understands and values the use of AI to make more human connections.”

    Deepak Chopra recently discussed his LiveNation Alexa partnership on Fox Business:

    Sharing Reflections on Alexa via LivePerson

    For the last 40 years, I’ve been sharing my insights or reflections, meditations with people. It started with friends, then family, then social media, and now Alexa. It wasn’t planned but I start my day with a few reflections and intentions, a joyful energetic body, love and compassion in the heart, clarity of mind, lightness of being. Then I expand on that and somehow Alexa picked it up through LivePerson.

    I think setting an intention or even asking yourself a simple question is enough. You don’t have to actually concentrate and having a specific intention. If you ask yourself, what do I want for me today or for the world or for my kids, you will already have a response there. That brings clarity to your intention and if you start letting go and settle in your being then that intention organizes its own fulfillment through synchronicity. That’s a well-known spiritual tradition.

    The Internet is Our Global Brain

    I think the technology is going to be the next phase of our evolution for higher consciousness if we want it. Technology can be destructive as you know. Technology can also create a more peaceful, just, sustainable, healthy, and joyful world.

    What we see as the Internet, that’s our global brain right now. If I send an abusive tweet, let’s say, to somebody in Africa, I could give them high blood pressure just by doing that. On the other hand, I send them an emoticon with a hug, it could give them a dopamine hit. Technology is bringing together the collective brain. The Internet is the human condition. If you don’t like what is happening in the world then we have to change that interconnectivity.

    A More Peaceful, Just, Sustainable, Healthier, Joyful World

    LivePerson is already looking at recruiting other influencers. We need a critical mass of people who want a more peaceful, just, sustainable, healthier, and joyful world. That can only happen if we collectively have that intention and rewire our collective brain, which is the Internet. It’s our brain.

    I do a morning meditation which is always preceded by four questions. Who am I? What do I want? What’s my purpose? What am I grateful for? Then something comes up.

  • Etsy CEO: Machine Learning is Opening Up a Whole New Opportunity

    Etsy CEO: Machine Learning is Opening Up a Whole New Opportunity

    Etsy CEO Josh Silverman says that “machine learning is opening up a whole new opportunity” for the company to organize 50 million items into a discovery platform that makes buying an enjoyable experience and also is profitable for sellers.

    Josh Silverman, CEO of Etsy, recently talked about their much-improved business and why it is working so well with Jim Cramer on CNBC:

    Our Mission is Keeping Commerce Human

    Our mission is keeping commerce human. It’s really about in a world where automation is changing the nature of work and we’re all buying more and more commoditized things from the same few fulfillment centers. Allowing someone to harness their creative energy and turn that creativity into a business and then connect with someone in the other part of the country or in another part of the world, that’s really special. We think there’s an ever-increasing need for that in this world.

    It’s about value. We’ve been really focused on delivering more value for our makers. Etsy really is a platform that brings buyers to sellers and that’s very valuable. We raised our commission from 3.5 to 5 percent commission which was I think is fair value for our sellers, particularly because we’re reinvesting 80 percent of that into the growth of the platform.

    Free shipping is pretty much table stakes today. Yet only about 20 percent of items have free shipping. About half of all the items on Etsy buyers say have shipping prices that are too high and yet we grew GMS at 20 percent last quarter.

    Machine Learning is Opening Up a Whole New Opportunity

    Machine learning is opening up a whole new opportunity for us to take 50 million items from two million makers and make sense of that for people. We have 37 million active buyers now and many of them come just for discovery, just to see what they can find, and that is exactly the right thing for someone out there. Our job is to create that love connection. Etsy over the past 14 years, with a large team effort, has I think done a great job.

    One thing I want to emphasize is the quality and the craftsmanship with so many of the products on Etsy. That’s something that has been such a delight for me. People like Kringle Workshops that make these incredible products. What we have been doing a better job and need to continue to do a better job of really surfacing the beautiful artisanally crafted products that are available at a really fair price. You’re not having to pay for warehousing, you’re not having to pay for all the other things that mass-produce things have to pay for, you’re buying directly from the person who made it. So it can be both beautiful, handcrafted, and well priced.

    There are 2 million sellers, 87 percent of them are women, over 90 percent are working from home or are businesses of one, who can create a global business from their garage or their living room. Etsy does provide a real sense of community for them and that’s really powerful.

    Amazon May Open New HQ in Queens Near Etsy

    We feel great about our employee value proposition and come what may. Here’s what we have going for us. We think we’ve got the best team, certainly in tech companies on the eastern seaboard. We think ours is the best and we continue to attract great talent. The reason is, first and foremost, our mission is really a meaningful important mission and that matters. Great people want to work in a place with a great mission.

    Second, our technology challenges are interesting. For example, search and using machine learning to make sense of 50 million items that don’t map to a catalog. Third, our culture is really special. We have been a company that’s authentically cared about diversity from the beginning. Over 50 percent of our executive staff are women, we have a balanced board, 50 percent male and female, and 32 percent of our engineers are female, which is twice the industry average. People who care about diversity and inclusion really want to come to work at Etsy. All of that is going for us and we’re happy to compete with whoever we need to.

    Earnings Call Comments by Etsy CEO:

    Active Buyers Grew 17 Percent

    Etsy’s growth accelerated again in the third quarter to nearly 21% on a constant-currency basis. Revenue growth exceeded 41%, fueled by the launch of our new pricing structure, and our adjusted EBITDA margins grew to nearly 23%, while we also increased our investments in the business.

    Active buyers grew 17% to 37 million worldwide. This is the fourth consecutive quarter that GMS has grown faster than active buyers, evidence that we are seeing increased buyer activity on the platform, which is a key proxy for improvement in frequency. We grew the number of active sellers by 8% and GMS per active seller is also increasing.

    Two principal levers contributed to our progress this past quarter. The first is our continued product investment, focused on improving the shopping experience on Etsy. By making it easier to find and buy the great products available for sale on Etsy, we’re doing a better job converting visits into purchases. The second lever was our new pricing structure, which enabled us to ramp up investments in marketing, shipping improvements and customer support.

    Successful Cloud Migration

    We achieved a significant milestone in our cloud migration this quarter, successfully migrating our marketplace, Etsy.com, and our mobile applications to the Google Cloud with minimal disruption to buyers and sellers. This increases our confidence that the migration will be complete by the end of 2019.

    Once fully migrated, we expect to dramatically increase the velocity of experiments and product development to iterate faster and leverage more complex search and machine learning models with the goal of rapidly innovating, improving search and ultimately driving GMS growth.

    In fact, we’re beginning to see some of those benefits today based on the systems we’ve already migrated. I’d like to thank our engineering team for their incredible work to get this – get us to this point.

     

  • FedEx CEO Says Amazon’s Own Delivery System Will Take Business From USPS, Not FedEx

    FedEx CEO Says Amazon’s Own Delivery System Will Take Business From USPS, Not FedEx

    Fred Smith, founder, and CEO of FedEx told Bloomberg this morning that they don’t see any negative impact from Amazon doing more of their deliveries themselves. Smith says that the biggest entity that will lose business as Amazon implements its own delivery force is the US Postal Service:

    “I don’t think it (Amazon’s split HQ announcement) has too much to do with FedEx,” said Smith. “You’ve got to remember that Amazon is delivering things from their fulfillment center to customers. We’re picking up, transporting, and delivering things from every person and business in the world to every other business. The biggest single provider of delivery services to the Amazon fulfillment network is not us, it’s the US Postal Service. They’re the ones that Amazon’s proprietary or indigenous delivery system will take the most volume from.”

    “Amazon’s a good customer” Smith added. “We think they will be a bigger customer in the years to come if they continue to grow and they certainly should, but they are going to do some of their deliveries themselves for many reasons. The biggest single entity that will lose traffic as Amazon puts out its contractor delivery force is the US Postal Service.”

    Amazon is actively marketing their Amazon Delivery Service Partner program, seeking independent contractors to deliver packages from their fulfillment centers to customers. They are literally encouraging people to start their own business:

    We are looking for hands-on leaders who are passionate about hiring and coaching great teams. With low startup costs, built-in demand, and access to Amazon’s technology and logistics experience, this is an opportunity to build and grow a successful package delivery business. Join a community of Amazon Delivery Service Partners in one of the fastest-growing industries in the world.

    Amazon is also hiring drivers directly as part of its new last-mile shipping program according to Business Insider:

    For the first time, the company is planning to hire and manage thousands of full-time drivers to transport packages to customers from Amazon delivery outposts across the US, the company confirmed to Business Insider on Monday.

    Amazon will manage these drivers directly, meaning the company will set their wages, provide them delivery vehicles, and schedule their routes. The drivers are seasonal but will have the option to apply to continue their employment with Amazon following the holiday season.

    “Seasonal employees have long been utilized to supplement capacity during peak shopping periods,” an Amazon spokeswoman said. “This holiday, thousands of full-time, seasonal Delivery Associates will deliver to customers during the busy retail shopping season.”

  • Western Union CEO on Amazon Partnership: Buy Globally and Pay Locally

    Western Union CEO on Amazon Partnership: Buy Globally and Pay Locally

    Western Union has partnered with Amazon to white label their cross-border money transfer platform. “Amazon engaged us to use our platform to service their customers in a better way in order to give access to the millions of customers who don’t have an access today to buy online and pay,” said Hikmet Ersek, the CEO of Western Union. “In the future, they will have the capability to buy globally and pay locally.”

    Hikmet Ersek, President, CEO, Western Union, recently discussed the new partnership with Amazon, competition with Zelle and Vinmo, and the overall health of the business:

    Western Union Digital Business is Growing Very Well

    Our digital business is growing very well year over year. We are now in 50 countries with our digital business sending money to over 200 countries. We pretty much cover the world with digital. Our digital growth is very strong. Our retail money transfer business has been stable. In some countries, we have been a little bit slower like in the Middle East, but we had very strong growth in Europe and US outbound business. Our US domestic business has been a little bit slower than we thought. Generally, I would say that we had a very stable solid quarter and we are very excited about the future.

    You Can’t Send Money From Your Mobile

    US to Domestic there has been some competitive environment. Nothing changed like last quarter. We have certain customers that like to pick up cash immediately. Nobody can beat that. You can’t send (cash) money from your mobile. We pay out in cash immediately. There are also competitors like Zelle and Vinmo who have been capturing some market share there with their zero fee environment. That has definitely been US dominated but is only a small part of our business, seven percent of our revenues. We are more focused on the outbound business, global cross-border business. That has been growing very well.

    Western Union is White Labeling Platform to Amazon

    Amazon has engaged us, over the years we have been building a cross-border platform, which is unique. We are moving transactions in 132 currencies globally and we do about 32 transactions every second. We have a network of 550,000 locations. We are reaching out to about 4 billion accounts globally. This is a unique platform where today we serve our customers with this platform.

    Companies like Amazon engaged us to use our platform to service their customers in a better way in order to give access to the millions of customers who don’t have an access today to buy online and pay. In the future, they will have the capability to buy globally and pay locally.

    The Amazon partnership is for us very exciting because now suddenly we are opening our platform to new customer segments, white labeling to other organizations like Amazon. Today, we are serving our existing customers with our branded transactions. In the future, we will be able to serve huge organizations like Amazon, or Amazon will engage us with other organizations, to engage our platform and to use our platform to serve their customers.

    Paying Amazon Has Been a Real Obstacle for Some

    “There are people in the world who want greater access to Amazon’s huge product selection but paying for those purchases has been a real obstacle for many customers,” said Hikmet Ersek, president and CEO of Western Union. “We’re leveraging our money movement platform to make it easier to shop global and pay local. By facilitating the complex foreign exchange and settlement process, we’re opening up more consumer choices and access to online shopping for tens of millions of potential new Amazon customers.”

    Forrester Research estimates that cross-border shopping will make up 20% of e-commerce by 2022, with sales reaching $630 billion. Choice, quality and cost are the main motivations for consumers to shop online from overseas, but there are challenges and concerns about the lack of payment options for consumers who prefer to pay in person or consumers who are not comfortable using online payment methods.

  • James Patterson Says He is Releasing New Book ‘The Chef’ on Facebook Messenger

    James Patterson Says He is Releasing New Book ‘The Chef’ on Facebook Messenger

    James Patterson is releasing his next book “The Chef” on Facebook Messenger. It will be a hybrid combining the written word with video and photography in an attempt to appeal to the millions of millennials that are on Facebook and tend not to read literature.

    James Patterson, author of “The Chef” discussed this novel marketing strategy of releasing a hybrid book with video in an interview on CNBC:

    It’s About Drawing Attention to Books

    This is about just drawing attention to publishing to books. Books don’t get as much so we’re trying new things. What this is and what’s exciting about it to me is you read the book and then it goes to film and you read the book and it goes to film and you read the book and it goes to film. It’s kind of like a bookie, a book meets a movie, and it’s free on Facebook Messenger.

    Why did I do that? Why would I give away a book for free? It just draws more attention to books which I think publishers need to do more of that. It’s a good story and you’ve never ever seen anything like it. It’s just so different.

    Combining Film, Photography, Books, and Text

    I think that a lot of people go out to Messenger and it’s about a three-hour experience, the whole thing, and that’ll be a success. We’re gonna put it out in book form in February and it will be longer and available at a regular price.

    Literally, you’re reading text and then all of a sudden you see film of what you were reading about. Then it’ll come back and then it might go to photography the next thing and then it might go to newspaper headlines, so it’s just different. This just goes on for about three hours and you can watch it on your phone obviously or on your computer.

    I love that idea of combining film, photography, books, and text. We went to Facebook and they said, yeah we’re in. They thought it was an exciting thing to do and different and they need content obviously. Well, I shouldn’t say what they need, that’s for Mark and Sheryl and I don’t know, but I think they need content, so here we are.

    We Need Publishers That Are Willing to Experiment

    I think it’s a mixed bag. I think independent bookstores are doing better. The whole retail business is in flux, obviously, because so much is done online. So hopefully, Barnes & Noble will rebound and I think they will. We miss Borders.

    Maybe 20 years from now, who knows, maybe it’ll all be done online, but for the moment in this country we really need literature and that can’t be done online right now. We need good publishers that are willing to experiment and do things that are unusual.

    Amazon Has Lightened Up Which is Great

    I think Amazon has lightened up which I think is great. They’re in a position to do a lot of good. Initially, the sort of back and forth between them and publishers I didn’t think was healthy. I do think we need strong publishers and I think we need bookstores out in the world right now. As they say, that may change.

    I’ve changed my tune a little bit. I think they’re doing a better job now, there isn’t that back and forth thing that they were having with publishers. I like that Jeff is giving away a lot of money, I think that’s good.

    Facebook Messenger… Yay.

  • Trade Expert says Amazon Uses a Loophole to Import Almost Everything Duty-Free

    Trade Expert says Amazon Uses a Loophole to Import Almost Everything Duty-Free

    Amazon is using creative tactics that enable it to avoid import taxes on almost everything it sells by making every item sold a single sale that is under $800, according to trade expert and former Trump advisor Curtis Ellis.

    Curtis Ellis, a former Trump trade advisor, explains the details of this tactic below:

    Amazon Importing Almost Everything Duty-Free

    The U.S. government, U.S. Customs, imposes a tax on imports, a tariff or a duty. However, there is an exception. If you go to Scottland and buy a sweater that is less than $800 you can bring it back into the country duty-free. Just put it in your suitcase or have it shipped back and you don’t pay anything. Amazon uses this loophole to import virtually everything worth less than $800 duty-free.

    This Amazon Tactic is Helping China Avoid Tariffs

    They will buy 100,000 sweaters from Scottland, Ireland, or probably China and park them in a warehouse in Tijuana, Mexico. Then when people press purchase now to place their order they break up those 100,000 sweaters into one package, one package, one package and ship them into the country as if they were bought by one person on one day and Amazon had nothing to do with it. They bring it all in duty-free. China does not suffer the impact of tariffs on some imports to America thanks to Amazon.

    Outdated Law Subsidizing Chinese Shipping

    A couple of weeks ago President Trump announced that we are withdrawing from the International Postal Union. This is another example. We entered into this treaty ages ago and it subsidizes packages and shipping so that it is cheaper to send a package from Bejing to New York than it is to ship from Los Angeles to New York. We were giving China this break as if it’s a developing country like Haiti or something. It’s now like the second largest economy in the world and they’re still getting that same break.

    These rules, called The De Minimis Exception, were written before there was an Internet and has never been updated. It’s just another example of how Washington just sleepwalks through everything.

  • Kynetic CEO Michael Rubin: We Owe All of Our Success to Amazon

    Kynetic CEO Michael Rubin: We Owe All of Our Success to Amazon

    Kynetic CEO Michael Rubin says that they owe all of their success to Amazon. “I owe all of our success to Amazon because we are such a big believer in what they were doing, a completely differentiative business model,” Rubin said. “What we’re doing is really all about vertical commerce.”

    Michael Rubin, CEO of Kynetic which also owns Fanatics, Rue Gilt Groupe, and ShopRunner and is one of the largest privately held companies in the United States, recently discussed how his companies have become so successful in an interview with Jim Cramer of Mad Money:

    What I See is How Much Opportunity There is In China

    What I see as an entrepreneur is how much opportunity there is in China. When I went there it’s one of those things you had to see to believe it. We had 45 million people watch our preseason basketball game. Think about that, 45 million people watching a preseason basketball game! That’s like half of a Super Bowl rating. That’s home rabid the basketball fans are in China.

    So for me, I think we have nothing but growth opportunity in China. We’re just launching Fanatics there. It’s a massive opportunity and we think we could build a multi-billion dollar business there. I couldn’t be more bullish on the opportunity.

    I Owe All of Our Success to Amazon

    Fanatics is a really exciting business. I’ll break this down really simply for you. I had a core belief that Amazon and Alibaba we’re going to control ecommerce everywhere in the world. So if you have that belief, you’ve got two options, completely differentiate yourself or go out of business. I’m not a guy who wants to go out of business so you’ve got to completely differentiate yourself.

    People say all the time, “How do you feel about Amazon?” I owe all of our success to Amazon because we are such a big believer in what they were doing, a completely differentiative business model. What we’re doing is really all about vertical commerce. We design, develop, and sell directly to the consumer most of the products that we have, so it’s a completely different business. Think about it like an H&M or a Zara, but in the sports license business and mostly online.

    Kynetic is All About Verticality

    We’re designing the jersey, well actually in the case of the jersey, Nike designs the jersey, but going forward we’re actually gonna manufacture the jersey and sell directly to the consumer. But I’ll tell you, just over the Super Bowl specifically, we sold two and a half million units of Eagles merchandise. Two and a half millions units of Eagles merchandise within a few weeks after the Super Bowl and we design those products, we manufacture those products, we ship them directly to the consumer.

    Because of the verticality, the consumer gets a wider assortment of merchandise, they get anything they want, they get it more quickly, and the leagues and teams make more money. We are also using that data to better communicate with the fans, so it’s a win-win for everyone.

    If you really think about the sports license business and if you think about the sports leagues, what a league wants and what a team wants is to have the best marketing brand in the world. Nike is this incredible brand, but they don’t wake up every day and go to bed every night thinking about how do I maximize every sale in the licensed sports business. So what the leagues did was smart, they said let’s split this from one set of rights to two sets of rights. Let’s work with Nike to be this incredible marketing partner and then really use it to drive the Nike brand and the NFL brand. At the same time let’s work with Fanatics to drive transactions. Now you’ve got two companies instead of one really growing the business as much as possible.

    We Made the Businesses What They Are Today

    For us, the truth be told and people ask this all the time, “Was eBay smart for selling the businesses? First, eBay was very focused, they didn’t want to be in the owned inventory business. Number two, these were teeny companies. When I bought Fanatics back from eBay it was a 250 million dollar company. It’s going to do $2.3 billion dollars this year. It has a completely different strategy. When we bought back Rue la la from eBay it was a $200 million business, then we bought Gilt and now it’s close to a billion-dollar business. ShopRunner didn’t have $100 million in transactions and next year it’s going to do three or four billion dollars in transactions.

    We took these businesses, we’ve developed the strategies, we’ve evolved them, and we’ve made them into what they are today. And Here’s the most exciting thing, we’re just getting going.

    My Loyalty is All About Who Makes Us the Most Money

    Other than the Sixers my loyalty is all about who makes us the most money, so I’m very easy to swap teams. If I own the Panthers I would be rooting to destroy the Eagles. I mean I love Jeffrey, he’s my buddy, but business is business and sports is sports. You’re there for one reason which is to win. I actually always laugh when people come up to me before a game and say, “Hey good luck.” I wish I could tell them good luck, but I’m like for the next three hours I hope you die. I love you before the game and I love you after the game, but there’s no love during the game.

  • Larry Ellison: Amazon uses Oracle, not Amazon to Run Their Business… Because AWS is Not Good Enough

    Larry Ellison: Amazon uses Oracle, not Amazon to Run Their Business… Because AWS is Not Good Enough

    Oracle co-founder Larry Ellison says that Amazon does not even use their own database to run their business. “Amazon runs their entire business on top of Oracle, on top of the Oracle Database,” Ellison said. “They have been unable to migrate to AWS because it is not good enough.”

    Larry Ellison, Oracle co-founder, discussed why Oracle is still the best database in the world and why it’s significantly better than Amazon and SAP databases in an interview this morning:

    Amazon Does Not Use AWS to Run Their Business

    Sometimes I liken the computer industry to the fashion industry. Certain brands get popular, certain brands get unpopular. IBM when I first came into the industry was the ultimate brand. It was not a company against whom you would compete, it was the environment which you would compete. Amazon now is the number one brand in infrastructure cloud computing.

    Let me tell you an interesting fact. Amazon does not use AWS to run their business. Amazon runs their entire business on top of Oracle, on top of the Oracle Database. They have been unable to migrate to AWS because it is not good enough. I keep saying this because they just spent another 50 million dollars last year buying still more Oracle Database. I keep saying this because well maybe our database is better than Amazon’s databases. Why else would Amazon keep buying our database?

    Last year they bravely said that they are sick of these comments of mine and they are going to move off of Oracle. They said they are going to move off of Oracle by 2020. Well guess what, they took their first step, they just moved a bunch of their warehouses off of Oracle and guess what happened. I will send you a copy of Amazon’s internal memo. It went down. It failed. They had a huge outage. They said that if they would have stayed with the Oracle Database this wouldn’t have happened.

    All of the World’s Most Valuable Data Runs on Oracle, Not Amazon

    The Oracle Database manages most of the world’s data, today and ten years ago. Nothing has changed. All of the world’s important valuable data is in an Oracle Database. They’re not in Amazon’s database. Amazon won’t use its own database to run its business.

    So if our database is so great what have we done wrong? We didn’t get our database to the cloud quickly enough. If you wanted a cloud database, you had to go to Amazon for a database. Then you were able to go to Microsoft for a database. It took a while for us to build a secure cloud. It’s really hard to build a secure cloud. We think we are there now.

    We have by far and away the best database in the world. Nothing is close. We show a series of benchmarks where we are ten times faster than Amazon. More importantly, we are ten times cheaper to run the same exact thing on Amazon on our database. So if you want all that security and want all that reliability, you have to be able to spend less. That’s what we’ve shown in a series of benchmarks. Even Amazon can’t move.

    People say that Oracle has no chance in database and Amazon’s going to dominate everything, well you would think that one of the early customers that Amazon would move, how about Amazon. No, Amazon picked Oracle.

    We Have a 10-20 Year Lead on Amazon

    We think we have a 10-20 year lead on Amazon on databases. Let me prove it. Another thing, Amazon uses Oracle not Amazon. Amazon’s transaction processing database that they have is called Aurora. Aurora is an open source database. They just it picked up and made it closed source on Amazon. They didn’t write any of that. They picked up Aurora, put it on Amazon and made it available on their cloud. Well, so who owns Aurora? Who develops Aurora? That would be Oracle. It’s called MySQL. That’s our small open source database which they claim is their big transaction processing database that’s going to replace Oracle. It’s just preposterous that Amazon didn’t even develop the Amazon database. It’s just a chunk of open source that we are responsible for called MySQL. MySQL does not compare to the Oracle Database. There is a reason Amazon uses Oracle.

    SAP Also Uses Oracle Everywhere

    You know who else uses Oracle? Another company that hates us, SAP uses Oracle everywhere. SAP ten years ago said I hate Oracle, I’m getting off of Oracle, I can’t stand these guys, especially this guy that goes on TV and makes fun of us. They say we have this great new database called Hanna. It’s awesome. Well, they have all of these cloud services such as SuccessFactors. Does it run on Hanna? But oh no, it runs on Oracle. Actually, 98 percent of everything SAP does runs on Oracle. A decade later, they still use Oracle, can’t get to Hanna.

    The Oracle Database beat IBM in the database business and beat Microsoft in the database business. We’ve been in this business for 20 years constantly making our database better. Now it’s the world’s first autonomous system.

    The Oracle Database is Much Better Than Anyone Else Has

    The EU actually did a study, of the top hundred SAP customers in Europe how many of them run the Oracle Database? Only 99 percent. One actually ran IBM DB2. All of their cloud services, whether it’s SuccessFactors, Ariba, all of these things which they’ve been trying to get off of Oracle and onto Hanna for a decade still all run Oracle. The reason is that Oracle is just a much better database than anyone else has.

    Microsoft CEO Satya Nadella was asked if I can have any other piece of software in the world what would it be? Everyone thought he was going to say Google Search. He said the Oracle Database because it’s the information age and all of the world’s most valuable information is stored in an Oracle Database.

  • SiriusXM CEO Jim Meyer: Audio is Thriving Like Never Before

    SiriusXM CEO Jim Meyer: Audio is Thriving Like Never Before

    It’s been an eventful quarter for SiriusXM, attaining their highest ever quarter of revenue at $1.47 billion and their highest ever adjusted EBITDA at $589 million.

    In the earning call SiriusXM CEO Jim Meyer talked about adding 300,000 net new self-pay subs in the third quarter, Amazon partnership, Pandora Acquisition, Connected Vehicle initiatives paying off, and how it’s going with Automatic Labs, which they acquired last year.

    SiriusXM CEO Jim Meyer opening statement during 2018 Q3 Earnings Call:

    Thrilled With Third Quarter Results

    I can’t think of a more exciting time for all of us at SiriusXM and I’m thrilled with the results we were able to deliver in the third quarter.

    With this momentum, I’m once again pleased to increase our guidance for 2018 subscribers, revenue and EBITDA growth. We are driving more subscribers through a bigger enabled fleet and maintaining our strong content lineup as you would expect us, both of which position the company for tremendous future success.

    But we’re going even further with our proposed acquisition of Pandora Media, our investments in 360L, our next-generation in-vehicle platform and our vastly expanded push to drive engagement outside of the car with better streaming apps, including our new marketing agreement with Amazon.

    Added 300,000 Net New Self-Pay Subscribers

    SiriusXM added about 300,000 net new self-pay subs in the third quarter, similar to the level we attained in last year’s third quarter. We overcame the headwind inherent to a bigger base by achieving one of our lowest ever churn rates for any third quarter and our self-pay base now stands at 28.5 million subscribers with total paid subscribers reaching 33.7 million.

    I’m thrilled we attained our highest ever quarter of revenue at $1.47 billion, our highest ever adjusted EBITDA at $589 million and our highest ever EBITDA margin, reaching 40% for the first time. We attained this margin by coupling strong revenue growth with equally impressive expense management.

    Auto sales continued at a high level in the third quarter, with a SAAR of about 16.9 million and I’m hearing in my conversations with the OEMs, they expect solid numbers to finish out this year. Our OEM relationships remain strong. Since the start of the third quarter alone, we extended agreements with Audi, Jaguar, Land Rover, Mazda, Mercedes-Benz, and Volvo. As you might expect, with these OEMs and others, we are planning the future of our service in their vehicles well into the 2020s.

    We are receiving higher penetration commitments at some OEMs, more firm 360L deployment schedules and in some cases, improved financial terms. Car buyers love SiriusXM and OEMs have recognized this by agreeing to prominently place us in the dash for many years to come.

    Next year, we will make meaningful progress on additional 360L rollouts as we cycle into the 2020 model year. We prefer to let our OEM friends make their own announcements and I expect they will be doing that as we approach these higher deployments in the back half of 2020.

    Making Tangible Progress with Connected Vehicle Services

    A few years ago when SiriusXM began to invest in the connected vehicle services business, I told you it would be a marathon, not a sprint. And now, you can see us making tangible progress in ramping our CV services unit, which provides safety, security and convenience features to consumers at 12 different automotive brands. We are now achieving strong double-digit revenue growth here and seeing positive cash flow contributions from this business.

    Several OEMs, including Fiat Chrysler, Nissan, and Toyota, are ramping penetration of our CV services in their vehicles and we can’t be more thrilled at how this long-term investment is now paying off. This is yet another way that we also remain important to OEMs as they assess their entertainment and connectivity ecosystems.

    At Automatic Labs, which we acquired last year, we have an aftermarket solution to enable smart services in almost any car on the road. And here, we are also following a very deliberate strategy. Automatic recently launched a new Dealer Program to significantly grow our distribution and it’s already live at several pilot dealerships. This program enables dealers to offer car buyers three years of free crash alert and connected main services as well as free premium services like roadside assistance for six months.

    We expect dealers will recognize the opportunity to improve their long-term relationships with their customers and hopefully encourage repeat buyers. I’ve always been a student in the importance of a good distribution model. For years, the OEM market has served SiriusXM extremely well, first in the new channel, then in the used and significant growth opportunities still exist for us with the OEMs. But with the ubiquity of smartphones and the growing population of connected devices like smart speakers, enormous new opportunities to consume audio are being created.

    Audio is Thriving Like Never Before

    Audio is thriving like never before. This has created opportunities for many new businesses to flourish and for existing businesses like ours to evolve and grow in new directions. And let me reiterate, this is not a zero-sum game. The entire pie of audio consumption is actually growing. Clearly, we remain focused on extending our winning position in the vehicle, but we are also following through on our efforts to drive engagement and subscribers out of the car as well.

    When SiriusXM’s existing subscribers use our service elsewhere, it’s bound to increase the value proposition and make our relationship stickier. And by deploying our unmatched content lineup across improved apps and ever more connected devices, we now have an opportunity to grow with customers who may want a subscription that isn’t tied to a vehicle.

    There’s More to Come Between SiriusXM and Amazon

    In June 2017, we first launched the SiriusXM Alexa skill set to enable our service on Amazon’s Echo devices. It’s clear to me that audio on these smart speakers just clicks. It works beautifully. We immediately found traction with hundreds of thousands of our subscribers rushing to use the service on Amazon’s devices via the easy-to-use Alexa’s voice interface.

    As we began to contemplate a further push out of the car, part of our Bring Us Home campaign, we knew that collaborating with a skilled distributor like Amazon could drive a significant lift to our service outside of the car. And Amazon knows that diverse audio program is probably the biggest value driver today in the smart speaker universe.

    Last week, we announced a new promotion that allows existing Echo owners to easily obtain a free trial of SiriusXM. We are also bundling a free third-generation Echo Dot with six months or greater service commitments to our streaming-only or All Access plans. We are thrilled to be working with a dynamic company like Amazon. And importantly, we’re not just present on their platform, but actively cooperating with them to cross-promote and market to their base.

    I’ve always said I just want people to listen to our service wherever they want, however they want and it has to be easy. There’s more to come between SiriusXM and Amazon as we think of additional ways to extend this relationship. So, stay tuned.

    Creating the Best Audio Programming Available

    All of these efforts in technology and distribution would be for naught without our creative team, all of whom who work tirelessly for our subscribers, casting a wide net to capture and create the best audio programming available. We continue to launch specially created music channels from major artists that have proven to be a hit with our listeners such as Dave Matthews Band Radio. We presented fiery live performances just for subscribers like The Killers in the Hamptons, curated a special channel all summer long from The Beach Boys and then topped it off by reuniting them for the first time in years for a Town Hall in Hollywood.

    We’ve added provocative talent in talk and sports with a daily show from CNN’s Chris Cuomo, where callers can reach him directly, a new show from Hall of Famer Reggie Jackson, the return of Brett Favre’s very popular show on our NFL channel and we’ve added a new program highlighting women in sports.

    And while we know that sports fans love us, we work harder than ever to get them closer to the teams they follow. For that, we have just launched two exclusive sports channels, SiriusXM Big Ten Radio, and SiriusXM Big 12 Radio, that will deliver fans and alumni across the country in-depth access to Big Ten and Big 12 focus sports, talk and news plus extensive live game coverage.

    These channels join SiriusXM’s unparalleled lineup of college sports programming, which now features the all-college sports channel, ESPNU Radio, plus 24/7 channels focused on each of the Power Five athletic conferences, ACC, Big Ten, Big 12, Pac-12 and SEC. Quite honestly, with the result – with the recent addition of these conference channels, we dominate college sports coverage.

    A Business That is Humming Along and Throws Off Cash

    SiriusXM clearly has a great collection of content to match its excellence business model. The company’s high monetization and high variable margins let us make more and more cash flow as we grow bigger. This is a business that is humming along and it throws off cash in a highly predictable way that investors love and we continue to give that cash back to stockholders, $334 million of share repurchases in the third quarter plus nearly $50 million of dividends because after all, it’s your money.

    Let me be crystal clear about this. Nothing is changing in our capacity or our commitment to continue making significant capital returns to our stockholders for years to come, but we’re also investing in future platforms, hiring talented data scientists and software developers and constantly seeking out new content our subscribers will love. All this we do and we’ll keep doing.

    Goal is to Link Non-Converting Customers Back to Pandora

    This quarter, I’m pleased we were able to make a much bigger step towards setting the future path of our company with our proposed acquisition of Pandora Media. Over the years, Pandora has built a huge user base of approximately 70 million Americans and scaled $1-billion-plus advertising business.

    Over the past year, Roger Lynch and his team have taken important steps, so that Pandora’s business will thrive in the future. By sitting on the board for the past year, we’ve learned a tremendous amount about Pandora’s business and we have concluded we can do many things better together versus apart. Number one is the ability to cross-promote across the two platforms that could come from sharing of listening data and contact data.

    In addition, at SiriusXM, we are running about 23 million trials in new and used cars this year. And the truth is the flip side of our conversion statistics will tell you that most people don’t want to pay for radio at the end of the day. I feel there is a strong opportunity if we can link non-converters back to a Pandora or maybe a Pandora with a bit more content in a way that makes our combined business bigger, better and more profitable. There are many ways we believe that one plus one will exceed two very quickly and we plan to give you additional color on that over the next few months.

    Last Thursday, we filed for Hart-Scott approval of the Pandora acquisition. This morning, the go-shop period of our deal with Pandora expired uneventfully. We’re planning to get together and sharpen our pencils on our integration plan very soon. We and Pandora expect to file our S-4, which includes the proxy statement and prospectus with the SEC in the next few days as Pandora moves towards a stockholder vote later this year. We continue to expect to close in the first quarter.

    Last week, while I was out in Oakland for a Pandora board meeting, I had the privilege of speaking with a large group of Pandora’s talented employees. It was fantastic to talk about our shared future, what we can do with all of our financial resources, vast troves of data, unmatched content, enormous user bases and some of the most talented people in radio and technology. I am confident that together, these two companies will be even stronger.

    In the meantime, it’s full speed ahead at SiriusXM with a laser focus on reaching or exceeding our new higher 2018 guidance, exactly as you would hope and expect.

  • Apple Search Advertising: Their Next Multi-Billion Dollar Business?

    Apple Search Advertising: Their Next Multi-Billion Dollar Business?

    Senior Analyst at Berstein, Toni Sacconaghi, released a note today predicting that Apple’s advertising business will be worth billions by 2020. Similar to Amazon, Apple is incrementally focusing on expanding adverting opportunities, especially within the App Store.

    Toni Sacconaghi, Analyst at Bernstein, recently predicted that Apple would increasingly focus on and expand its advertising business:

    Obviously, advertising is a very attractive business because it has 80 percent gross margins. If you think about Amazon, the conversation around Amazon has increasingly moved towards advertising which is now a four to five billion dollar business, very high margins. That’s all just happened in the last two years and now we’re starting to see Apple do very analogous things to what Amazon does.

    Apple’s Ad Business is at $1 Billion Today With Big Potential

    Apple’s principal advertising foray today is in the App Store when you search for an app, ads pop up based on what you search for. This is very analogous to what Amazon is doing with Amazon sponsored product ads where an ad will pop up when you search for an item. We think this business today is maybe a $500 million to $1 billion dollars, but it’s only in 13 countries.

    Apple Ads Are Not in China Yet

    They’ve just actually rolled it out to six more,  that’s including six recently rolled out to. It’s not in China yet. We’re not seeing very high ad load, so you only get one ad when you do a search, whereas on Google or Amazon you might get four or five. The potential for this business to really inflect is significant and again it’s a very high margin business.

    Apple Has Big Potential for Increased Ad Load

    If you go to Amazon or Google you literally have to scroll down an entire page before you get non-advertised based hits and Apple today is only one, so it’s certainly possible that you could do more ads. Moreover, what Apple doesn’t do is once you’ve once you’ve done your search and you go to the next page there’s no advertising and that also occurs at Amazon and Google.

    There certainly may not be the potential for the same ad load going forward but Apple’s is so low relative to what we’re seeing elsewhere that we think there’s a potential for increased ad load.

    Apple’s Privacy Stance is a Limitation in Its Efforts to Advertise

    I think Apple’s privacy stance has really been a limitation in its efforts to advertise. Obviously, targeted advertising is worth much much more than general advertising, so Apple will continue to try and do both while preserving privacy. The ads are really based on very limited data. They’re based on whether you’re on an iPhone or an iPad, they’re based on your geographic location, age, and gender, and that’s it.

  • NYU Stern Professor Scott Galloway: Amazon is a Monopoly that Should be Broken Up

    NYU Stern Professor Scott Galloway: Amazon is a Monopoly that Should be Broken Up

    NYU Stern Professor Scott Galloway says that Amazon is a monopoly that should be broken up. “When one company can take down the price of any other consumer company, almost by a third, just with press releases, I would argue that the markets are no longer competitive. The key to this great system we call capitalism is that no one player has too much power,” stated Stern.

    Scott Gallowy, NYU Stern Professor, recommended that Amazon should be broken up in an interview on Fox Business:

    Jeff Bezos Lost the Value of Nordstrom Yesterday

    I believe that Amazon from an investors perspective is probably a buy. Essentially, you had a company whose valuation may have gotten a little bit over its skis. Rising interest rates, the threat of a slowdown, and also the specter of regulation took this stock down. I think Jeff Bezos actually lost the value of Nordstrom just personally yesterday, his net worth declined $9 billion. I would argue from a strictly economic, business, and shareholder standpoint, Amazon has never been stronger. Whenever they bump up against any big tech companies they’re winning.

    Amazon is Effectively a Monopoly

    My issue is that when you have one company that controls 50 percent of all ecommerce, that small companies never get out of the crib and large companies are prematurely euthanized, who tend to be better taxpayers and employers. While it’s great for shareholders to have shares in a company that is effectively a monopoly, in a growing economy I would argue that we have a proud history of moving in on companies in terms of antitrust regulation and we’re at that point in the economy with Amazon.

    Won’t the Markets Take Care of This?

    Walmart was hauled before Congress when they were at 11 percent of retail and Amazon was only at 6 percent. However, I think a more apt analogy would be railroads or Ma Bell or even Standard Oil, where we decided that effectively the markets were no longer competitive. You now have a company where if it just puts out a press release saying that it will address health care costs, and we don’t even know if that means they are giving employees gym memberships or that meant that they are starting an HMO, on opening bell the healthcare industry sheds $31 billion in value.

    Good for Shareholder, Good for the Company, Good For the Planet

    When one company can take down the price of any other consumer company, almost by a third, just with press releases, I would argue that the markets are no longer competitive. The key to this great system we call capitalism is that no one player has too much power. In addition, I think if you broke up Amazon shareholders might benefit. If you spun AWS, soon after the spin the two companies in aggregate might be worth more than the two companies combined. So good for the shareholders, good for the company, good for the planet.

  • Chinese People’s Liberation Army Implanted Malicious Microchips on Computer Servers Bound for U.S. Companies

    Chinese People’s Liberation Army Implanted Malicious Microchips on Computer Servers Bound for U.S. Companies

    An explosive Bloomberg Businessweek report details how China was able to pull off the most significant supply chain attack ever against American companies. Reportedly, China used third-party vendors to America companies, including Amazon and Apple, to insert a tiny microchip, no bigger than a grain of rice, onto motherboards for Supermicro. Amazon Web Services (AWS), reviewed these servers and found “troubling issues.”

    “Nested on the servers’ motherboards, the testers found a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design. Amazon reported the discovery to U.S. authorities, sending a shudder through the intelligence community. Elemental’s servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships. And Elemental was just one of hundreds of Supermicro customers.

    During the ensuing top-secret probe, which remains open more than three years later, investigators determined that the chips allowed the attackers to create a stealth doorway into any network that included the altered machines. Multiple people familiar with the matter say investigators found that the chips had been inserted at factories run by manufacturing subcontractors in China.”

    Bloomberg Businessweek reporter Jordan Robertson who co-wrote this blockbuster story talked about it on Bloomberg TV:

    The basic gist of this story is that in 2014 and 2015 a unit of China’s People’s Liberation Army implanted malicious microchips on computer servers bound for U.S. companies. Those computer servers wound up in very targeted, very large companies including Apple and Amazon.

    What these malicious chips did was compromise the software on these hardware devices at the kind of level that you can’t detect, in many ways the ultimate silent attack. This was a very major discovery for these companies and for U.S. intelligent services.

    This story has taken us well over a year to report and write and a lot of that is learning what is a hardware attack? It’s such science fiction in many ways to us as reporters and to the public at large. A hardware attack is simply the most effective type of computer hacking that any organization can engineer. The reason is if the hardware of the computer is compromised it will irrevocably compromise the software that sits on top of it.

    There is no commercial security system that can detect that kind of manipulation. It’s a super serious attack that is almost impossible to detect without physical examination of the hardware which almost no one does.

  • Foursquare CEO: Facebook and Google Are Not Your Friends and Are After Domination

    Foursquare CEO: Facebook and Google Are Not Your Friends and Are After Domination

    Foursquare CEO Jeff Glueck said in an interview that “Facebook and Google are not your friends, they’re unreliable partners and are after domination.” He added in a blog post, “That’s why we’re building a company that stands apart from Google and Facebook as the most trusted, independent platform for understanding location.”

    Glueck also announced the first close of a new round of $33 million of equity funding led by strategic investors Simon Ventures and Naver Corp. and by Union Square Ventures. He says that the first close of $25 million occurred on Friday and that he anticipates a secondary close of at least $8 million by year’s end.

    Jeff Glueck, CEO of Foursquare, spoke about the new funding and how they were going to use it in their quest to “become the location layer of the internet” on CNBC:

    Foursquare is Really the Location Layer of the Internet

    Foursquare is really the location layer of the Internet. This round led by Simon Ventures is really gonna give us the fuel to continue investing. If you think about the location features on your phone, most of the time they’re powered by Foursquare technology. If you get a Snapchat geofilter, if you type a place into Uber,  if you get matched on Tinder to people who like the same places, those are all examples of Foursquare technology at work.

    Foursquare Helping Companies Take on the Amazon’s of the World

    With this round of financing we’re going to take that into the retail world, into the dining world, and into the general media publishing world to bring location technology to bear. Foursquare helps media companies and brands and apps create location features. The examples of our customers are like Apple and Microsoft the like but 90 percent of commerce still happens in the real world.

    For all the attention on Amazon and what Jeff Bezos said, Amazon is just 4 percent of consumer spending. Over 90 percent takes place in the in the real world including grocery, auto, and retail. We want to help those companies prepare to take on the Amazon’s of the world and that’s what we’re doing.

    We help marketers reach people based on where they go in the real world, measure whether it leads people into the stores. We help apps be contextually aware so that when you walk into the store if there’s an offer you’re aware.

    We Started as a Consumer App so 100% of What We Do is Opt-In

    We started as a consumer app, so we think about privacy and enhancing consumer experiences with everything we do, so 100 percent of what we do is consumer opt-in. For instance, a lot of the apps that use us they say would you like to opt into background location to be to be alerted when you’re near a service or a special offer, about 60 or 70 percent of people choose to participate and about 30 to 40 percent don’t.

    Everything we do is anonymized or aggregated. For instance, the data goes into a panel of over 25 million phones that we see always on and that creates a kind of Nielsen panel of the real world foot traffic. We were able to, for instance, predict the Chipotle sales famously we’re going to be down 30 percent before they announced their earnings. At an aggregate level, no one’s worried about privacy.

    Everything We Do is Designed to Create Value for Users

    Everything we do is designed to create value for the users. We’re not helping some flashlight app ask you for your always-on location. What good is that to you? We’re helping pair people in dating based on their favorite places. We’re helping to deliver contextually aware weather alerts for AccuWeather. Hey, you’re at the stadium and rain is about to happen.

    All the cases where we make the experiences better the users opt-in because it makes the experience better. In a world where you don’t want to open a lot of apps, you want the app to tap you on the shoulder at the right time to remind you that you have a chance to get 50% off, or there’s a weather alert, or you’re near a friend. All these things are really valuable. Apple already reminds people that you’re opted into location sharing. It’s actually the part of the ad tech ecosystem that is doing shoddy things that we don’t think are best practice in privacy that I think will be heard over time. Why should a location be on for your flashlight app?

    We are the independent Switzerland. If you think about Facebook and Google, there are only three companies in the world that can understand when a phone moves out of your pocket moves out of 100 million businesses in over 170 countries, that’s Google, Facebook, and Foursquare. We are the independent option.

    Facebook and Google Are Not Your Friends and are After Domination

    Our customers, which include folks like Apple and Microsoft and Tencent and Twitter and Snapchat and on and on. They look to us as an independent company. Facebook and Google are not your friends, they’re unreliable partners and are after domination. We are the Switzerland and I do think the location space needs a public independent company at some point that has the wherewithal to invest in pushing location technology.

  • Ring CEO: I Have No Animosity For the Sharks

    Ring CEO: I Have No Animosity For the Sharks

    Ring CEO Jamie Siminoff has a rags to riches story that most entrepreneurs can only dream of. He was famously turned down on Shark Tank only to later sell his company to Amazon for $1 billion just this past February. Siminoff says he is now appearing on an upcoming Shark Tank episode on the other side as one of the Sharks. Even though he was turned down he says “I really have no animosity for any of the Sharks.”

    Jamie Siminoff, CEO of Ring, discusses his return to Shark Tank as an investor, the Ring integration with Amazon, and the true reason for the success of the Ring product line on Bloomberg:

    New Technological Innovations Coming to Ring Soon

    We are doing a number of things around battery life. One is around solar where we are adding a lot of solar accessories to our products. We are also going to be coming out with some other technology innovations that we will be announcing over the next couple of months.

    A lot of that technology comes from the integration that we have been able to do with Amazon, now being able to leverage a much bigger pool of technology and experts that we just couldn’t as a small independent company.

    Amazon has done a wonderful job of securing and protecting the privacy around their customers. We’ve focused on that for our neighbors. We are one of the best solutions for security in the neighborhood and I think we will just let customers continue to choose that.

    We Are the Market Leader Because Ring is Effective

    From the competition side, we’ve had literally hundreds of people come into the market. Why we’ve been able to keep such a large market share I believe is because we really are there to deliver effective affordable solutions to our customers.

    We are not just about selling a product, it’s about selling something with effectiveness and we’ve really been able to prove that. A study we did with the New York police showed we were able to reduce burglaries by 50 percent. It’s really about that effectiveness of our solution not just about the particular hardware product.

    I Have No Animosity for Any of the Sharks

    I think as an investor now that I’ve been able to go to the other side of the Tank I’m sure I will miss the next big Ring because investments are very tough to pick. Who’s the best, who’s not? I really have no animosity for any of the Sharks. That platform is really what helped build Ring into what it is today so I’m thankful that we just had the opportunity to be on it.

    I do wish that we had gotten money at the time because I was broke and it would have been very nice to have had that money, but we still made it. What I tell any entrepreneur that doesn’t get the money either from Shark Tank or another investor is we were turned down over 100 times and you just got to keep going.

  • Amazon SVP on $15 Minimum: We Decided That This Was a Place We Could Lead Now

    Amazon SVP on $15 Minimum: We Decided That This Was a Place We Could Lead Now

    Amazon announced today that effective November 1st they are raising the minimum wage in the U.S. to $15 per hour. They are also raising the minimum in the U.K similarily.  Amazon senior vice president of operations, David Clark, says that the reason for doing this is that “we decided that this was a place we could lead now.”

    In a tweet Clark said, “Shared the new Amazon $15 minimum wage with the team here at LGB3 early this morning! Best All Hands Ever!!!” Bernie Sanders tweeted back, “What Mr. Bezos has done today is not only enormously important for Amazon’s hundreds of thousands of employees, it could well be a shot heard around the world. I urge corporate leaders around the country to follow Mr. Bezos’ lead.”

    Amazon CEO Jeff Bezos replied to Sanders tweet saying, “Thank you @SenSanders. We’re excited about this, and also hope others will join in.”

    David Clark, SVP, Amazon discussed why Amazon chose to raise their minimum wage with Bloomberg Markets and Finance earlier today:

    This is a Place We Could Lead Now

    This is really about the future. We’ve had a great year hiring and a great year of retention in fact. As we look forward we really said what do we want to be as an employer and what do we want our focus on pay to be? We decided that this was a place we could lead now. That’s why we went and moved now to the $15 in the U.S. starting November 1st. We are also moving to £9.50 across the U.K. and £10.50 in London effective November 1st as well.

    This is really us (and not a reaction to Bernie Sanders). We didn’t look at what people had to say or to our critics, we really stepped back and said what do we want our focus to be and how do we want our view on pay to be going forward? We thought long and hard about it and we landed on a place that says this is an area we can take a leadership position in and that’s why we went ahead and did it.

    Today is a Very Exciting Day for Our Employees

    Our average pay is over $15 an hour when you include all of the stock and incentive pay. What we are talking about today is a new minimum pay, minimum cash pay, which will be effective across the U.S. and across the U.K. We will talk more about what it means to the overall company bottom line in our earnings call later in the month.

    We are very excited about what this means for the company, what this can mean for customers over the long term. Today is a very exciting day for our employees as they receive this news coming up to the holiday season.

    Our focus on both price and selection are unchanged by this and we expect to continue with great prices, great service, and great selection for customers in the months to come.

    We Think the $7.25 Minimum Wage is Too Low

    What we believe is that $7.25 as a minimum wage in the U.S. is too low. We will leave it to Congress and the experts as to what that number should be. For us that number is $15, we think that’s a good place to be and we encourage other large employers to join us there. We think the $7.25 federal minimum is too low and we encourage other big employers (like Walmart and Target) to start the journey and join us at the $15 level. That would be great.

    We look at our wages and overall compensation structure in every part of the world every year. We will come back and look at it again in 2019 to determine if there is anything else needed at the time and we will do it every year going forward as have in the past.

  • Zippin CEO: In 5-10 Years Every Store Will Be Checkout Free

    Zippin CEO: In 5-10 Years Every Store Will Be Checkout Free

    What if going to a store was easier than shopping online where you could just walk in and pick up your purchases and walk out with payment happening all in the background?

    You have heard about Amazon’s cashierless stores, Amazon Go, and their plans to open thousands of those stores in the coming years. Now there are startups that intend to bring this concept to all stores by providing a software platform and a technology solution to retailers.

    Zippin Co-founder and CEO Krishna Motukuri talked about the technology behind his new checkout-free solution in a recent CNBC profile:

    At Zippin, our mission is to banish checkout lines for good. You can simply walk in, check-in when you enter, pick up whatever you want, and simply walk out. If there was somebody that actually was able to follow a customer around the store and see what they were picking and just took a note of that information and then when they walked out simply just gave them a bill, it would be very convenient for the customer.

    We use overhead cameras that look straight down and get a bird’s-eye view of the entire store. That allows us to uniquely identify customers and we use that information to also understand which items they’re picking from the shelf and which ones they’re putting back. This information is paired with sensors that are on the shelf that worked with the cameras to accurately identify which products cart picked.

    As we’ve seen in the online world where ecommerce customers can actually see which product you’ve clicked on how long you actually considered it or whether you put it in the cart or taking it out, there will be retailers that will be responsible in the way they use that information.

    In addition to supermarkets and grocery stores, we’re also getting a lot of interest from hotels, airports, stadiums, and commercial buildings. For the first time, this technology allows you to operate a store more cost efficiently. We expect more of these smaller stores to appear in residential complexes and office buildings where there was nothing other than just a vending machine and some salty snacks before.

    Our next step is to actually take the technology to an existing retailer and implement it in their stores. I would say five to ten years you should expect every store will be checkout free.

  • EU Investigating if Amazon is Using Data to Unfairly Compete With Third-Party Sellers

    EU Investigating if Amazon is Using Data to Unfairly Compete With Third-Party Sellers

    The European Union is on the prowl again in a likely attempt to win cash and concessions from Amazon. This is another investigation in a long string of investigations into American companies designed to extract big cash payments.

    European Commissioner for Competition, Margrethe Vestager, indicates that the issue is the possible use of third-party seller data by Amazon to determine which products it might decide to produce and sell itself, thus competing and presumably putting out of business the other sellers of that product. Vestager admits that there have been no formal complaints from resellers but they “have people” coming to them and asking questions about this issue.

    European Commissioner for Competition, Margrethe Vestager discussed their investigation on CNBC’s Closing Bell:

    EU Suspects Amazon Is Using Data to Compete With Third-Party Sellers

    It’s too early to have a concern but we like to understand how this is working because Amazon has this dual role, they host a lot of little guys and enabling them to do e-commerce which is a great thing, at the same time they’re a big guy in the same market. How do they treat the data that they get from the little guy? Does that give them an advantage that cannot be matched or how to understand this?

    We have concerns from the marketplace and we have seen this also in a sector-wide inquiry so so we’re very interested to learn also in deep detail how this works.

    There Are No Formal Complaints Filed From Third-Party Sellers

    One thing is to enable the little guy to do business. It’s another thing that once you have enabled it and you see how it works in the marketplace basically you take it and because you’re a big guy you do large scale so you can sort of occupy that marketplace yourself. We have people coming to us with concerns but no formal complaints have been filed from third-party sellers.

    The EU Already Settled an eBook Case with Amazon

    We have already had one Amazon case on eBooks, on German and English spoken eBooks. We saw that Amazon was saying if you as one of our suppliers do something innovative, if you lower your prices or something like that, you always have to give us the same benefit and that, of course, made it very difficult for the eBooks market to innovate.

    If you always have to give Amazon whatever you have then of course that puts a lid to innovation. That we solved in a settlement actually covering ebooks in almost all segments.

    Not Opposed to Amazon but We Have Questions

    It’s important that the price point is right because for many people on a low budget, of course, low prices is of the essence and enabling choice is a great thing. We also want to see that innovation is thriving because being a customer in an innovative marketplace is, of course, better than being a customer in a non-innovative marketplace.

    This is what we’re trying to understand how does this work and of course, it may turn out that we have no further questions to be asked but that remains to be seen.

    EU Commision Meeting With US FTC

    We’ve had a very good meeting today with Federal Trade Commission Chairman Joseph Simons and others from the FTC, and we didn’t discuss in any detail these questions. What we discussed is our cooperation which is actually very good because we exchange views, but we don’t try to walk in each other’s shoes.

    Status of the Google EU Investigation

    Of course, we expect a change of behavior because the decision is a cease-and-desist decision, you have to stop this and you cannot put anything in its place that has an equivalent effect. This is about enabling choice for the ones who produces our phone so that that maybe you can have a phone that carries other apps when you have the out-of-the-box experience.

    That is important for us to see this change in the marketplace to show that those who actually have the skills maybe to do another operating system from the Android open source code that they may be able to do that. The fine will have to be paid and then of course it is for Google to decide if they will appeal the case or not.