“The scope of this regulatory oversight is changing. People used to focus on just consumer welfare and a price effect. That has now expanded to what harm you are doing to competitors and non-price effects. The scope is expanding, and some of these companies—this is Google, Amazon, Apple, Facebook—they have engaged in kind of favorable treatment of proprietary products.”
Sandip Bhagat, CIO at Whittier Trust talks about why investors shouldn’t allow regulatory threats and investigations to scare them away from tech stocks, as well as his two top picks.
When you talk about regulation, you have to talk at two levels: privacy first and then antitrust. Privacy may not be such an issue, and in a very perverse way, the large players here may actually come out winners because they have the scale to absorb the cost of meeting that regulatory compliance. They’re also multi-national in nature, even today, so the experience in Europe where the GDPR is already in place will stand them in good stead should it come to the U.S.
Switching to the antitrust component of regulatory risk and one of the things that is being discussed is anti-competitive acquisitions, so I think they would come under attack. What happens in the worst case, there is a forced breakup. We put a very low likelihood for that outcome. But fines will come along the way. There will be rulings that say you give equal parity during search processes and displaying of third-party vendors and their products. All of those we think can be absorbed by these companies because of their free high cash flow margins.
On Buying Tech Stocks Under Scrutiny
Here are two really compelling reasons to think about technology stocks now and really for a secular future. One is macro in consideration, the other one is micro and fundamental.
At the macro level, what is the environment? We have seen slower growth than normal after the global financial crisis and, as a result of that, interest rates are lower. Slow growth and low-interest rates help growth stocks. When growth is scarce, growth companies get rewarded with a higher multiple and low-interest rates help growth stocks because they have a higher equity duration and sensitivity to interest rates.
On Microsoft’s Long-Term Value
If there is one take away, it’s a stock to own for the long-term. It’s a great way to compound wealth. It’s indeed a vehicle for inter-generational wealth transfer. The company has rediscovered itself, moved away from a licensing model to a subscription model. Satya (CEO Satya Nadella) has reformed the company. While they’re making inroads in cloud computing, they are actually very unique in that they can play in the hybrid cloud solution space with a foot in on-premise software along with cloud-based application deployment.
On Amazon’s Brand Loyalty
It’s economic mode is based on scale, convenience and brand loyalty, which doesn’t get talked about much. People talk about the technology backbone of Amazon. But that brand loyalty, they’ve been able to convert that into greater user engagement and adoption and then monetized it with more and more transactions to gain a bigger share of the wallet.
Sandip Bhagat, CIO at Whittier Trust On Why This Is a Good Time For Tech Stocks
It’s no secret that Oracle has its sights set on the cloud infrastructure market, which is currently dominated by Microsoft and Amazon. Oracle’s latest attempt to pry open the market is their most ambitious yet.
On September 16, Oracle announced a new, free tier of cloud services, paired with credits developers can use for additional options. Free plans come with two virtual machines with 1/8 OCPU and 1 GB of memory each, along with the choice of Autonomous Transaction Processing or Autonomous Data Warehouse. This gives developers two databases, each with 1 OCPU and 20 GB of storage.
The Oracle Cloud Free Trial Credits, a $300 value, can be used on infrastructure, databases, application development, analytics, content, and experience, management and security or integration.
Until now, Oracle has had little success convincing developers to jump ship from Microsoft or Amazon. These new plans, however, could be a game-changer. The goal is to provide a way for developers to try Oracle’s services risk-free, instead of being forced to choose between committing to an untested solution or going with one of the industry leaders.
The Autonomous Database feature, in particular, is sure to drive growth. The feature has already been a solid hit with existing customers and offers companies with on-premise databases a clear path to the cloud.
Even if Oracle’s free tier of services doesn’t unseat one of the established leaders, it should help the company carve out a healthy segment of the market.
“Retailers and brands took advantage of the buzz, the demand, the awareness, that Amazon has created and really rode that wave for great growth,” says Rob Garf, VP of Industry Strategy and Insights for Salesforce. “Retailers didn’t just ignore Prime Day, but they leaned into it. They really recognized this manufactured holiday, recognized the demand that was being created, and really took advantage of the consumers and their willingness to look for a good deal.”
Rob Garf, VP Industry Strategy and Insights for Salesforce, discusses how retailers “leaned into” Amazon Prime Day, taking advantage of the buzz and overall consumer interest, to initiate their own Prime marketing. Rob was interviewed by Owen Milbury, Senior Manager, Analyst Relations for Salesforce:
Retailers Didn’t Just Ignore Prime Day, They Leaned Into It
What we saw is that this manufactured holiday, Hallmark has to be proud, really rose all ships if you well. The tide has risen where we saw 37 percent year over year growth for global retailers other than Amazon. What’s really interesting is that it just didn’t take place over those two days, but rather the entire month of July. We saw July having a ten percent higher growth rate than any typical month. Retailers and brands took advantage of the buzz, the demand, the awareness, that Amazon has created and really rode that wave for great growth.
Retailers didn’t just ignore Prime Day, but they leaned into it. What we found was that emails were at a heavy double-digit increase week over week. The other really interesting thing is our team stepped back and we actually looked at the Internet Retailer 500. We subscribed to all of their email lists and we went to their homepages over the last week. What we found was 51 percent of the IR 500, more than half, did some sort of promotion either on their home page or through email.
They just didn’t ignore it, they leaned into it. We found that 17 percent of the IR 500 mentioned either Prime Day or Black Friday in July as part of those promotions. They really recognized this manufactured holiday, recognized the demand that was being created, and really took advantage of the consumers and their willingness to look for a good deal.
We Saw Two Breakouts, Apparel, and Footwear
Consumer electronics was certainly big. But we also saw two breakouts, apparel, and footwear. That’s really important because Amazon is leaning into their own private label. So these brands need to think how to differentiate. They didn’t just go to market and give deals. They also promoted limited edition products, special assortments, customizable merchandise, and even looking for subscriptions to be able not only to attract but to retain them over time.
The other one was consumer product goods. What was interesting about that was typically what you find in a grocery store they use the retailer as the intermediary, they’re looking generally to leapfrog these retailers. According to Salesforce research, 99 percent have some sort of active direct to consumer (D2C) type of initiative underway. That was no different this Amazon Prime Day. They were taking advantage of the buzz and really looking for ways to engage the consumer directly.
49 Percent of Orders For Non-Amazon Retailers Were On Mobile
When you think about the time of the year, most of Europe was on holiday, most of the US was taking time off as well, they’re not tethered to their computer. They don’t have the luxury of sitting down and searching that way. That showed in our data. In fact, 49 percent of orders for all non-Amazon retailers were done on a mobile device. This just speaks to the fact we’re on the go, the phone is the remote control of our daily lives.
We’re using it to break through the friction that usually exists between inspiration—I like something and I want to buy it—and then actually purchasing. Just for a point of context, that was a 20 percent increase year over year. It’s become a bellwether for shopping not only during the rest of the year but in particular on Prime Day.
Retailers Saw Prime Day As a Test Run For Holidays
Retailers are seeing this as really the test run for the holidays. They’re looking at their mobile strategy. How are they going to breakdown their friction? They want to make sure that they have mobile wallets so that they can really get through the checkout process. They are incorporating artificial intelligence so not forcing the consumer to swipe five times down the phone to find if you like this you might like this. Instead, putting it right above the fold.
They are also looking for fulfillment as well. As you are thinking through towards Cyber Week and the overall holiday season, and with it being five or six days shorter between Thanksgiving and Christmas, how are we going to use the store as a fulfillment center? You really bump up against that shipping deadline and need to also be able to fulfill that for several days after. Retailers are really cutting their teeth. They’re really bearing down. They’re looking at Prime Day as a way to get ready and gear up and go full force to back to school, Halloween, and through the holiday season.
https://youtu.be/JHm8PZ2z1xU
How Non-Amazon Retailers “Leaned Into” Prime Day To Increase Sales – Salesforce Execs Explain
“It’s all of broadcasting that’s in danger because of what’s happened with streaming and with other services in that the only people who are willing to watch commercials are people that can’t afford to buy the goods being sold,” says media mogul Barry Diller. “That’s an existential long-term issue. It’s a fascinating time because it truly is a giant arms race. When you have a giant arms race it really is kind of last dollar in.”
Barry Diller, Chairman and Senior Executive of IAC and Expedia, discusses how streaming has upended broadcasting and Hollywood in an interview on CNBC at The Allen & Company Sun Valley Conference:
Don’t Know Who Is Going To Win The Streaming Wars
I don’t know who is going to “win this” (the streaming wars). This is a weird transformation. Ten years ago you essentially have these six movie companies that had hegemony over the entire production-distribution business. Along comes two complete outsiders, Netflix and Amazon, that totally upended what was a kind of a stable business in terms of how it functioned all throughout the world. If you owned a movie company you kind of had a worldwide franchise. Now you have an arms race that never existed before. You have a complete blurring of television and movies which only happened in the last couple of years.
You have these two new entrants which have forced not only consolidation on the old players but forced them to now make investments in their wildest dreams they’ve never had to make before. So you have Disney which has mobilized itself like a true, God-knows, super force wanting to compete in streaming because of these two big players, Amazon and Netflix. You have AT&T reorganizing itself, buying Time Warner. They’re going to compete.
Hollywood Was a Cottage Industry and Now It’s an Arms Race
How many people are going to be at this table five or ten years from now? I think it’s impossible to say. Hollywood is irrelevant. It is irrelevant to the following extent. Before, anything those majors did was kind of an absolute. You couldn’t dislodge them, you couldn’t do anything. So along comes two outside players and everybody is completely dislodged and discombobulated because they can’t get access directly to the audience.
The fact that they’re competing and the fact that you’ve got two big funded players─although they do have a lot of debt─Disney and AT&T, who are going to enter this in a very vigorous way, but that has nothing to do with what we used to call or think of “Hollywood.” This was a cottage industry and now it’s an arms race.
All of Broadcasting Is In Danger From Streaming
I’ve said this to my parral, no one is going to compete with Netflix in gross subscribers. I believe they have won the game. There is nothing that I can see that is going to dislodge them. Amazon is in a completely different business in that it’s selling Prime which gives you all sorts of services, just among them is video and television. Disney has the best chance just because of its very very popular content and the money, the distribution, and the Disney name that it’s putting behind it. Disney has the best chance to get millions of new subscribers. Will they ever get to Netflix (subscriber levels). I don’t think so. I don’t think it matters much.
I never thought and don’t believe that it takes size really (to compete) because if you’re making content there are so many buyers. You don’t need to have any size, you just need to have some talent and some energy and you can do well. Can you build a big empire? Unlikely. I don’t think that the smaller players are necessarily in danger. It’s all of broadcasting that’s in danger because of what’s happened with streaming and with other services in that the only people who are willing to watch commercials are people that can’t afford to buy the goods being sold. That’s an existential long-term issue. It’s a fascinating time because it truly is a giant arms race. When you have a giant arms race it really is kind of last dollar in.
I Think That Regulation Is Mandatory (of Big Tech)
I have absolutely always thought and always believed in sensible regulation (in regards to Google, Facebook, and others). When you get to be of a certain size and when you influence markets there should be regulation that’s tailored to some of the things that are outgrowths of you having a certain kind of market size where you can dictate things that may not be in, let’s call it fair playing field, best interest of all players, etc. I think that regulation is mandatory. I think that it will happen.
I don’t think that these companies should be “broken up” unless it is proven that regulation doesn’t work. I’ve lived in environments where I grew up in broadcasting, broadcasting was a very regulated world. You actually got your license from the government and they could take it away from you. That’s sword over your head made you act. If you didn’t want to act decently, it sure of spurred you along the way. So I’m a believer in good regulation. I’m hopeful.
All of Broadcasting Is In Danger From Streaming, Says Barry Diller
“Fiverr is the everything store for digital services,” says Fiverr CEO Micha Kaufman. “The way people usually find freelancers is they post on Facebook asking if someone knows a good graphics designer. What we’re doing is we’re making it a one-click experience. There’s no bidding, betting, negotiating. There’s browse, search, buy. It’s an Amazon experience to buy a digital service.”
Micha Kaufman, CEO of Fiverr, discusses today’s IPO and how Fiverr has become the Amazon for digital services in an interview on CNBC:
Fiverr Is The Everything Store For Digital Services
Fiverr connects freelancers with businesses of all sizes. Really, the uniqueness of the platform is that the experience of buying a digital service on Fiverr is very similar to shopping on Amazon. You browse, you search, you find something, you click order, and it’s done. Graphic design is one of our most popular services on the platform. Also popular are content marketing, videography, animation, music services, and marketing and advertising. Anything you can imagine.
It’s the everything store for digital services. The system helps you productize your offering. You can define what you’re offering, how much time it’s going to take you to deliver, and the asking price. All the buyers have to do is screen through the offerings, find something they like, click order and pay, and they are done.
It’s An Amazon Experience To Buy a Digital Product
In the categories in which we operate there is a volume of activity of $100 billion in the US alone. It’s still only a single digit percentage online. It’s a very old-school business. The way people usually find freelancers is they post on Facebook asking if someone knows a good graphics designer. What we’re doing is we’re making it a one-click experience. There’s no bidding, betting, negotiating. There’s browse, search, buy. It’s an Amazon experience to buy a digital service. Nobody has done it before. The average time to make an order on Fiverr is 15 minutes. this is unbeatable. It’s unmatched.
We take a take out of every transaction. It’s one of the industry-leading take rates of over 26 percent. If you look at the EBITDA margins, you see that they’re shrinking. The way we actually structured the business is that we continue to grow aggressively while shrinking our negative EBITDA. There is a clear path to profitability. We are operating in over 160 countries. Our growth is coming globally from the adoption of freelancing online.
Our Primary Competitor is Definitely the Offline Market
Our primary competitor is definitely the offline market. I don’t know if it’s 96 or 97 percent of the activity offline, but we don’t need to eat anyone’s lunch to grow. We just need to move offline activity to the online. The offline freelancing market is massive. we’ve estimated that market to be a hundred billion dollars in the US alone. Europe is 1.5 times bigger than the US. There are over 162 million freelancers between the EU and the US. The opportunity is massive and it’s just starting to come online. This is like 1995 for ecommerce. This is so exciting.
Fiverr doesn’t hire its freelancers. It’s just the market that connects freelancers with businesses that have their digital needs. The way the marketplace is structured is such where we don’t have any employee-employer relationships. We are not relying on freelancers. We’re just connecting that supply with a demand that comes forward. We’re the platform on top of which they actually conduct their transaction. We just provide the platform to make that happen. It is very different than Uber and Lyft.
Fiverr Is The Everything Store For Digital Services, Says Fiverr CEO Micha Kaufman
“At Amazon, we still take risks all the time,” says Amazon CEO Jeff Bezos. “We encourage it. We talk about failure. We should be failing. Our failures have to grow with the company. We need big failures if we are going to be moving the needle. We need to have billion dollar scale failures. If we are not, we are not swinging hard enough.”
Jeff Bezos, CEO of Amazon, discusses how to be a successful entrepreneur by being customer obsessed in a conversation at the Amazon re:MARS conference in Las Vegas:
The Most Important Thing Is To Be Customer Obsessed
If you want to be an entrepreneur, the most important thing is to be customer obsessed. Don’t satisfy your customers, figure out how to absolutely delight them. That is the number one thing whoever your customers are. Passion. You have got to have some passion for the arena that you are going to develop and work in. Otherwise, you are going to be competing against people who do have compassion for that. They are going to build better products and services.
You can’t be a mercenary. You have to be a missionary. Missionaries build better products and services. They always win. The mercenaries are just trying to make money. Paradoxically, the missionaries always end up making more money.
We Need To Have Billion Dollar Scale Failures
You have to pick something that you actually have a genuine passion for. You have to take risks. You have to be willing to take risks. If you aren’t going to take risks, if you come up with a business idea where there are no risks there, those ideas are probably already being done. There being done well by many many people. So have to have something that might not work. You have to accept that your business is going to be in many ways an experiment. It might fail. That’s okay. That’s what risk is.
At Amazon, we still take risks all the time. We encourage it. We talk about failure. We should be failing. Our failures have to grow with the company. We need big failures if we are going to be moving the needle. We need to have billion dollar scale failures. If we are not, we are not swinging hard enough.
Disagree and Commit
If I have a new idea and I want to see it pursued I do have to build support for it. You need very smart people to embrace the idea and move it forward. We have a framework at Amazon, it’s one of our leadership principals, it’s called disagree and commit. That is extremely useful. After you discussed an idea, you do need to make a decision and move forward. The whole team needs to really commit to that. When I really feel strongly about something and the team disagrees with me I have a helpful phrase that I look to use which is, “I want you to gamble with me on this.”
The truth is when you are in a position like that nobody knows what the right answer is. You’re not saying I’m right on this. Go do this. You’re saying I want you to gamble with me on this because I don’t know if it is right either. I disagree and commit all the time. I promise the people when I do it, I’m very clear in saying, “I don’t agree with this. I think it is probably not going to work. But I will never say I told you so and I’m going to be on your team. I will do everything I can to make it work.”
Broadband Access Is Going To Be a Fundamental Human Need
A recent big bet (we’ve taken at Amazon) would be Project Kuiper. This is our LEO satellite constellation. The goal here is broadband everywhere. One of the things this does, it’s just the way the systems work, you have equal broadband all over the surfaces of the earth. Not exactly equal, it tends to be a little bit more concentrated toward the poles, unfortunately. You end up servicing the whole world.
It’s really good because by definition you end up accessing people who are under bandwidth including rural and remote areas. I think you can see going forward that access to broadband is going to be very close to being a fundamental human need as we move forward.
Amazon’s Jeff Bezos: We Need To Have Billion Dollar Scale Failures
“The long-term goal (with Alexa) was to try to invent the Star Trek computer,” says David Limp, Amazon’s SVP of devices and services. “I grew up watching Roddenberry and loved it. We all loved watching it and the science had moved up enough where we thought we had a shot at it. It’s still going to take us years, if not decades more, to get to the shining star that is that Star Trek computer. But we think we can do it.”
David Limp, SVP of Devices & Services at Amazon, discusses the future of devices and Amazon’s role in building trust and protecting privacy in an interview on CNBC at the Amazonre:MARS conference in Las Vegas:
Long-Term Goal With Alexa Is To Invent the Star Trek Computer
The long-term goal (with Alexa) was to try to invent the Star Trek computer. I grew up watching Roddenberry and loved it. It was a lot more innocent than you might make it out to be. Which is, can we invent that computer? We all loved watching it and the science had moved up enough where we thought we had a shot at it. It’s still going to take us years, if not decades more, to get to the shining star that is that Star Trek computer. But we think we can do it.
If you have that in your house or in your car or in your conference room, you’re going to find all sorts of things to do with it. Some, Amazon will invent and it’ll help Amazon. But much more, it’ll help developers. There are 90,000 plus skills and hundreds of thousands of developers building around Alexa right now. If you’d five years ago said there’s going to be a new developer ecosystem that’s not about an operating system and that’s not about applications, but about skills in the cloud, you would have laughed at me. But here it is sitting in front of us, all around us, right here.
Star Trek popularized the idea of the Voice First computer. Amazon Alexa made it reality.
Our Focus Is To Invent On Behalf Of Customers
Our focus is to invent on behalf of customers. If we keep our focus there and build cool things that customers love to use and continue to earn their trust, which we have to do every day, then we think the outputs will speak for themselves. We focus on that. Customer trust is kind of the oil of the Amazon flywheel. We think about it every day. It’s thinking about privacy as you think about the kinds of products that we’re doing. Whether it’s a Ring doorbell or it’s an Echo sitting in your kitchen, it has to be foundational to the product. It’s not something you glom on later as an afterthought.
We think about it at the very upfront when we’re beginning to invent the product. We’re gonna put these in our homes. What do we want to think about privacy? What do we think about trust? We build features into the products and into the services where (those concepts) are first and foremost and paramount. We’re continuing to evolve that as well. It’s not like you’re going to get everything right day one. As we learn from customers we’ll add new features and services that build on that and add more privacy and trust as we go on.
The First Thing Is To Get Customers To Love A Product
The first thing is to get customers to love a product. If you build a product that customers love and use then good things usually come in consumer electronics when you do that. For us, that’s the first thing that you want to do. It happened early on with Kindle. People loved it and then we figured out how to build a book business around it. Similarly, the great thing about Echo and Alexa is that customers love the product.
I don’t think that they’re necessarily buying more yet because of that but they are doing certain things in digital that leads to buying some more things. Specifically, we’ve kind of brought music back into the home again. It had an atrophied in the home. Now music subscription services, Spotify, Amazon music, and Apple music starting last year. They’re growing on Echo and Alexa. People are listening to audiobooks. We have a business there in Audible with the subscription services. Those are the early signs where you start seeing that. In addition, people are buying more smart home products. Whether it’s a smart plug or a light bulb or a robotic vacuum, people are buying those more because it’s easier to control with a voice interface.
Anything That Advances Privacy For Customers, I’m a Fan Of
Anything that advances privacy for customers and gives them a more trusted environment, I’m a big fan of as a consumer. I don’t know enough about that product (announced on Monday by Apple) to weigh in on the specifics of it. As you think about Amazon and our credentials and being able to log on to Amazon, we’ve been doing that for 20 plus years. Your credit card number and your address which we ship your products to, that’s sacrosanct. We have to build trust every day. Any other company or any other person that’s furthering that I think it’s just great for the industry.
Long-Term Goal With Alexa Is To Invent the Star Trek Computer, Says Amazon SVP David Limp
“If you think about where we are on the technology adoption curve and the trillion dollars of spend that are ultimately going to move, there’s no doubt that it’s a cloud-first world,” says Prashanth Chandasekar, Senior Vice President & General Manager at Rackspace. “But the vast majority of the workloads exist in traditional IT. How do we take on that hybrid movement? Amazon is very aggressively investing and we’re investing with them and helping our customers along their journey effectively.”
Prashanth Chandasekar, SVP & GM at Rackspace, discusses how Rackspace has transformed from primarily a hosting company to a technology service company helping enterprises effectively and efficiently move to the cloud on AWS and other platforms in an interview on theCUBE at AWS Summit London 2019:
Rackspace Helping Companies Navigate to the AWS Cloud
Ultimately part of the reason why customers in our install base were reaching out to us and saying, ”Hey Rackspace, you’ve done a phenomenal job helping us in the first evolution of our journey, can you help us now in this new world where it’s actually quite complicated?” Over 1,400 features on average are being launched by Amazon on a yearly basis. Despite what we hear in the headlines where cloud first companies and the startups of today are absolutely leveraging Lambda out of the gate or containers out of the gate.
There are a whole host of companies that are going through this massive digital disruption trying to compete with these startups. They need a lot of help to reskill their workforce to change the way they think about processes within their organizations between their business development and technology and operations teams. Then ultimately, how do they actually build out a much more agile way of responding to customers? That work requires a company like Rackspace to come and help them navigate through that really large set of features.
There’s No Doubt It’s a Cloud First World
That’s what’s so dynamic about the space. Nobody would have predicted this ten years ago. Even today we’re seeing a ton of momentum with concepts that were very nascent just a few years ago. Kubernetes is a concept where almost every one of our AWS customers at Rackspace, what we call fanatical AWS, are absolutely looking for help on Kubernetes. When we think about Docker a few years ago and Dock Enterprise and we think about Kubernetes and there was that battle, today the battle has been won. Kubernetes is pretty much the de-facto orchestration engine. Nobody would have predicted that a couple of years ago.
Hybrid and multi-cloud are becoming a lot more prevalent. I think even Amazon is very much acknowledging that the big opportunity is in hybrid cloud. If you think about where we are on the technology adoption curve and the trillion dollars of spend that are ultimately going to move, there’s no doubt that it’s a cloud-first world or a destination is the cloud. But the vast majority of the workloads exist in traditional IT. How do we take on that hybrid movement? Outposts is a great acknowledgment of that. Amazon is very aggressively investing and we’re investing with them and helping our customers along their journey effectively.
There’s No Doubt It’s a Cloud First World, Says Rackspace SVP Prashanth Chandasekar
“You will see the continuous expansion over the next year into many different categories,” says Rent the Runway CEO Jennifer Hyman. The company just raised additional funds at a $1 billion valuation. “Anything that you do not use every single day, we want to make it fiscally irresponsible for someone to not have a subscription to Rent the Runway. We’re trying to build the Amazon Prime of rental.”
Jennifer Hyman, CEO of Rent the Runway, discusses in an interview on CNBC how her company benefits from the growing sharing economy and how ultimately she envisions Rent the Runway becoming the Amazon Prime of rental:
We Benefit From the Advancement in the Sharing Economy
It’s been 10 years since we’ve been working hard to pioneer this new form of dynamic ownership. Ten years ago we were not a darling of the industry and really had to partner with designers to show them that this was an entirely new customer base for them and a new revenue stream. This is just how young people are thinking about ownership across the board. I actually think we benefit from the advancements in the sharing economy. If you think about how this concept of dynamic ownership where we have unlimited choice and the ability to use whatever product we want whenever we want it, our digital worlds have already moved there.
That’s how we consume entertainment. That’s how we consume music. The idea that you would have that closet in the cloud for the physical world and that form of dynamic ownership, the Millennial Generation Z consumer is so ready to adopt this behavior. That’s what we’ve seen since we launched our subscription, just this dramatic growth and acceleration, not only in how many users we have but in how frequently they use the product. They’re using it 120 days of the year with the unlimited subscription, which is now 70 percent of our revenue.
Dynamic Ownership Applies to the Closet, the Home, and Beyond
Think about how frequently millennials are moving and how your home has become this new bastion of self-expression. Your home used to be a private space and now because of social media, it’s as public as you taking photos of yourself every single day. So the ability to continuously dynamically change your home and have new items arriving we really think that this idea of dynamic ownership applies to the closet, the home, and beyond.
Think about all the things that you don’t have to use every single day and bringing that into the physical world and think about the sustainability of this as well. The millennial and younger customer really cares about the fact that there’s a huge amount of waste. Over 80 percent of the closet is not used regularly. So to create a new contract with the customer where she could have the variety that she wants but she doesn’t have to accumulate all of this stuff that she doesn’t use. You couple that with the fact that this younger generation is living in cities where you don’t even have the space to house all of the extra stuff that you might have put in your garage.
We’re Trying to Build the Amazon Prime of Rental
It (revenue) really depends on the item. That metric changes every year based on our cost to serve, which goes down every year. It also matters what cost we procure the inventory at. We started a model last year which is a platform where brands are giving this inventory on consignment and we actually are revenue sharing with them on that inventory. It’s our own version of fulfilled by Amazon and it’s now a new revenue monetization stream for the 600 brands that we work with.
You will see the continuous expansion over the next year into many different categories. Anything that you do not use every single day, we want to make it fiscally irresponsible for someone to not have a subscription to Rent the Runway. We’re trying to build the Amazon Prime of rental. Rent the Runway is primarily a logistics company. What we really do is we restore physical goods to perfect condition before we send them out to the next customer. We now know all of these different data points about any given fabric, how to restore it to perfect condition and how to maximize the turns while it still looks brand-new.
“It’s still really early days,” says Amazon Web Services CEO Andy Jassy speaking about the cloud. “Sometimes we remind ourselves that even though it’s a $30 billion revenue run rate business growing 45 percent year-over-year, it’s the early stages of enterprise and public sector adoption in the US. Outside the US they’re 12 to 36 months behind depending on the country and industry.”
Jassy says that although price is the conversation starter, speed and agility are the primary reasons that enterprises are moving to the cloud. He says that most startups have built their businesses from scratch on top of AWS. Some of the big examples, he notes, are Lyft, Airbnb, Pinterest, Slack, Tomo, and Robinhood.
Andy Jassy, CEO of Amazon Web Services (AWS), discusses how the cloud is still really in the early days in an interview with Jim Cramer on CNBC:
Cloud is Still Really Early Days
Sometimes we remind ourselves that even though it’s a $30 billion revenue run rate business growing 45 percent year-over-year, it’s the early stages of enterprise and public sector adoption in the US. Outside the US they’re 12 to 36 months behind depending on the country and industry. It’s still really early days. The conversation starter when people move to the cloud is always cost. Instead of laying out all that capital for data centers and servers and instead only spend what you consume that’s usually very advantageous.
Capital expense turns to variable expense and variable expense is much lower than what most companies can do on their own because we have such a large scale that we pass on to customers in the form of lower prices. We’ve lowered our prices on 70 different occasions in the last ten years. You get real elasticity. You provision what you need and if it turns out you need more, you provision more. If you don’t need anymore because you’re at the peak you just give it back and stop paying for it.
Primary Reason Enterprises Move to Cloud is Speed and Agility
Price always is the conversation starter but the number one reason that enterprises are moving is speed and agility. Usually, if you want to try an experiment in your company it takes 10 to 12 weeks to get a server and then you have got to build all the infrastructure software around it. In the cloud, you can provision thousands of servers and minutes. Then because we have 165 services that you can use in whatever combination you want you can get from an idea to implementation in several orders of magnitude faster. You can innovate much quicker.
As an example, what Lyft is doing in the space is pretty amazing and the piece that they’re growing at is really amazing. To be able to scale the way they have, first as a start-up and then a fast growing business, and then what they would tell you is that they’re able to invent and change the customer experience so quickly, several orders of magnitude faster than they could if they were doing on premise that it’s really helped build their business.
The Cloud Encourages Innovation
The vast majority of applications in the next five to ten years will be infused with some sort of machine learning. We are in kind of a golden age of computing. Almost every company that we speak with is interested most importantly in being able to take their own data. Most companies have gobs of data. Even startups today have gobs of data. But it’s so hard to know what’s in there and it’s so hard to know what the gems are and it’s so hard to know what’s going to be the predictive pieces that change the customer experience. Our machine learning capabilities are going to solve that for a lot of customers.
If you are building technology applications and trying to build consumer experiences, you want to do as much as you can for as little money as possible. Then when you have ideas you want to be able to move fast. One of the things that happen at companies that build on the cloud is it used to be so hard to get anything done that none of your employees spent any time outside of work thinking about new ideas, because why bother. It was so demoralizing that you never get to try it.
With the cloud, you can provision instances and servers in minutes so people spend their free time thinking about new customer experiences. They know that if they come up with something over the weekend they can come in Monday and try it for a dollar. It changes how many people in your company think about innovation and where you get new ideas from throughout the company.
Most Startups Have Built Their Businesses on Top of AWS
Most startups have built their businesses from scratch on top of AWS. Some of the big examples are companies like Lyft, Airbnb, Pinterest, Slack, Tomo, and Robinhood. There is a very large number of them. But there are a lot of businesses that either haven’t gotten big yet or are just trying to build a business. One of the interesting things that happened I remember in 2007-2008 when we had the recession. There were all these very gloomy emails sent from a lot of venture capitalists saying don’t expect to get funded, but the number of startups kept growing.
As opposed to having to go raise money to pay for data centers and servers people can try several instantiations of their idea on top of AWS and if it isn’t getting traction you paid something like 80 cents a month or a $1.50 a month, whatever your usage is. We have loads of companies that are trying to build businesses on top of us that really only pay anything meaningful when they have traction.
Amazon More Focused on Long Term Than Most Companies
It’s always hard for me to measure the impact we have on the overall world. The way we think about it at Amazon is that in every single one of our businesses we have never met customers who don’t want prices to go down. If the center of your gravity is customers, which it is in every single one of Amazon’s businesses, you’re always working relentlessly to find ways to take cost out of your structure so you can give it back to customers in the form of lower prices. It’s actually really easy to lower prices. It’s much harder to be able to afford to lower prices.
We’re much more focused on the long term than most companies. We are trying to build a business and a set of customer relationships that outlasts all of us. As such, we think if we help our customers get more done and are successful on their own, even if it means lower margin percentages, over time we’ll drive more absolute margin dollars. They’ll be more successful and we will ultimately be more relevant.
It Takes Work to Actually Move Away From Oracle
I think Larry (Ellison of Oracle) has a certain view of the world that isn’t always steeped in what the facts are. If you look at Amazon, we started the company at a very early stage and we had Oracle. It takes work to actually move away from Oracle. Lots of customers are learning this as so many people are trying to move away from the commercial-grade legacy database providers like Oracle or SQL server to newer engines like Aurora.
We now are 88 percent of the way through moving all of our Oracle databases and will be at 100 percent by mid this year. We turned off our Oracle data warehouse in November of last year and moved it to Redshift. We learned some very interesting patterns that customers are very excited about copying. We don’t really meet a lot of customers who aren’t looking to move away from those databases to Aurora.
Smart managers are the backbone of any business – but when leadership is running on empty, things can start falling through the cracks. When tasks begin piling up and managers’ attention is pulled in every direction, AI tools can step in to help.
Leadership roles in departments from payroll to administration services face up to 96% chance for computerization in the near future. But automation overhaul isn’t exactly a new concept; retail workers, service industry staff and everything in between has fallen risk to AI-replacement. Why should managerial work be any different? Machines can gather information, analyze the data, learn from past events, and most importantly, recommend solutions in the same way a human manager could, albeit much faster. But reliance on such programs doesn’t necessarily mean we are without responsibility; too much pressure on automation can lead to disastrous outcomes.
For Amazon, this took form in their “state of the art” hiring AI that was built to help fast-track the hiring process. With already over 600,000 employees on payroll, hiring is a big job for Amazon and this AI algorithm was expected to change the game. Until it didn’t. In order to teach the algorithm, it was fed ten years worth of resumes to identify successful hiring patterns. The previously male-dominated industry was evident in these successful hires and as development continued, the algorithm began to pick up on the pattern of gender discrimination. By 2018, the program was scrapped as the AI began penalizing resumes including the word “women” and filtering out listings of all-female colleges.
Hiring is perhaps one of the most personal and one of the most difficult of all business operations, especially for small business. Today, over half of small businesses use some form of tech to help move along recruiting, but smart leaders know there’s no substitute for a meaningful, in-person interview. The takeaway for automated management and its imitations is along a similar vein to AI in any other position – it simply lacks the human touch. So when office managers and project managers are spending their creative energies on mundane and repeatable tasks, they cannot away lead their team effectively. Here’s the AI that changes everything.
AI gives us a great opportunity to truly “work smarter, not harder.” Products specifically designed to reshape office management, like Managed By Q, turn regular tasks into a localized and cohesive platform. In this program, managing scheduling from maintenance to interviews is a snap, employees may submit requests with minimal workflow interruptions, and booking, communication, and billing are handled on a single place. Project management standards get a new look as well with AI tools that help break up even the most complicated projects into simple, easily achievable tasks. iCEO is one such platform that not only helps keep traditional employees on task and in communication but also communicated with freelancers and gig workers to manage progress that keeps everyone on the same page.
More than four in five businesses believe they could benefit from bringing in better tech, but that’s only half the battle. In spite of this, one in five businesses thinks it’s just too much of a hassle to buy and implement new tech. Here’s where to start. This infographic details the powerful new tools of the trade for managers, how they are helping us lead our teams better, refocusing daily operations, and finally giving us the time to concentrate on what matters. Will AI replace your manager? Let us know in the comments.
The demise of many retail chains is due to the rise of the internet and the inability of some retailers to keep up, says long-time retail executive Gerald Storch. “The proximate cause of the demise of chains like Charlotte Russe, Gymboree, Payless, Toys R Us, and Sears is the rise of the internet and their inability to keep up that environment,” said Storch. “It’s the decline in physical traffic to bricks and mortar stores and the mall.”
Retail Comp Store Sales Up 6 Percent During Holiday
Retail sales have been very strong this holiday. Of course, there are winners and losers. The winners are the people who are doing it right, who are mastering the internet and who are driving value to the customer. You see 4.2 percent out of Walmart, almost 6 percent out of Target, over 7 percent out of Costco, and about 18 percent in the US out of Amazon.
I put out an index called the Storch Advisors Index and the volume weighted comp store sales gain of major chains in the US was 6 percent for the holiday season. Of course, there were some poor performers but that’s because they are not keeping up with the consumer. Whether it’s JC Penny, Sears, Macy’s, Kohls, some of those are becoming yesterdays.
Gov. Report Showing Retail Sales Down is Absurd
I know the folks at the government work hard to collect that data but I think there’s something missing there. The world has changed. First of all the internet has happened and I think that makes a big difference. There is no way, if you look at those numbers it says the internet was down in December. Only a report from Washington could say that. That’s ridiculous. It says the internet underperformed department stores for December. Absolutely absurd.
Why can that be true? Actually, the raw data said that sales were up about 9 percent in December. But then they applied a negative 10 percent seasonality discount because it was December. I’m not sure that discount factor was correct. Among other things, both Cyber Monday and Black Friday fell in November this year and they were huge as we saw by all accounts. There is something a little wonky about that report. I choose to put it on the side and say it’s not typical about what’s really going on in retail right now.
Retail Demise Due to Rise of the Internet and Inability to Keep Up
The proximate cause of the demise of chains like Charlotte Russe, Gymboree, Payless, Toys R Us, and Sears is the rise of the internet and their inability to keep up that environment. It’s the decline in physical traffic to bricks and mortar stores and the mall. The origin though comes down to the fact that all of those companies have one thing in common, hedge funds and private equity put huge leverage on those businesses.
So at a time when the world changed and the internet happened, they had to invest huge sums in the internet and they had to make their stores more beautiful than ever. You can only do that with money. All these firms were leveraged right before, bang, this retail apocalypse happened. They had no money to make any difference. It didn’t matter if you had the best management in the world. The management at Charlotte Russe is pretty damn good. But they couldn’t do anything about it because they didn’t have the money to spend. Walmart did have the money to spend. They’ve been spending it and that you are starting to see in the results.
Walmart and Amazon Battle it Out
You have Walmart buying a lot these ecommerce companies to get stronger in ecommerce. Then you have Amazon buying the bricks and mortar. Why did they do that? One reason. To keep up with Walmart in grocery. Grocery is the ultimate perishable, food. It has a lot of waste. Grocery is already around the corner from everyone’s homes. You have to ship them from the stores. Walmart has the stores to do it and they are proving it now. Groceries is one of their best performers in the latest quarter.
Amazon was looking at how do we beat Walmart in grocery? Grocery is a huge market and one of the last ones that Amazon hasn’t conquered. They thought, well, we could try to ship it from wholesalers and centralized locations. They started that way and it does not work. So they bought Whole Foods so they could be around the corner from people’s homes. That’s why they are expanding Whole Foods. They may be the only grocer in the country that is adding locations, all so they can ship to your home.
Aurora CEO Chris Urmson says that there is this amazing opportunity to go and take the next step in democratizing transportation. Aurora, an independent autonomous vehicle technology startup, has secured over $530 million in funding led by Sequoia, Amazon, and T. Rowe Price. The inclusion of Amazon in this round raises the prospect that Aurora will help power Amazon’s well-known ambitions to provide autonomous delivery.
“This is a company that is a technology giant and they’re a massive logistics company,” says Aurora co-founder and CEO Chris Urmson. “We’re just excited to have them as a partner and we’ll see if we can make them a customer at some point.”
Chris Urmson, Co-founder & CEO of autonomous vehicle technology startup Aurora, discussed the most recent investment in the company and the future of driverless technology in an interview with Bloomberg Technology:
It’s Amazing to Have a Great Partner in Amazon
It’s amazing to have a great partner in Amazon. This is a company that is a technology giant and they’re a massive logistics company. We’re just excited to have them as a partner and we’ll see if we can make them a customer at some point. I can’t really speak to Amazon but let me tell you how we think about it. At Aurora we’re building a driver and that driver can move people and ultimately it will move goods as well. We look at Amazon and see this incredible logistics company and we look at an opportunity to help them with that over time.
We’re really excited about the investment in Aurora. That’s an incredible vote of confidence for us as a young company. The folks we have around the table with Sequoia and Amazon and T. Rowe Price is great. We’re going to spend it on hiring great people and bringing it in. This is a big problem and we need lots of people and that’ll be a big part of it.
We’re Building a Driver
We’re building a driver and the idea is you should be able to get in your car and sit back read a book or have a nap and get from A to B. We’ve been at it for about two years now and we’ve got this great group of people who’ve joined us, so we’re about 200 people now. It’s just exciting to see the progress we’re making on the software. We’re still developing it so we don’t have a product yet that we ship to customers, but our test team is out on the roads. We’ve got vehicles on the roads in California and Pennsylvania as well.
I think our approach is probably similar to the way that Google is approaching it. They’re building a driver and they’re integrating that. They’re buying vehicles from people and then doing what they’re going to do with it. Our model was to do the thing that we can be the best in the world at, and we think that is building that driving capability. Then we go and work with companies like Volkswagen and Hyundai and ultimately with other companies in the transportation sector. What we’re really excited about though is that we’re actually an independent player. So people that are working with us have confidence that we’re going to be supporting them and their interests.
Aurora is Democratizing Transportation
What we’re seeing is this technology that has an incredible opportunity to save lives and make the roads more efficient and make it less expensive and more accessible to get around. Like anything that’s going to be transformational, it takes a while. It’s a new technology and it’s bridging between two industries, between the technology industry and the automotive industry. Anytime you have that level of complexity it takes a while to figure it out.
We look at it and we see this incredible green field. There’s this amazing opportunity to go and take the next step in democratizing transportation. We’re going to be there with our partners and we think there’s lots of room for others to play too.
Heart of the Technology is Anticipation
I think the heart of the technology is really anticipating how others are going to drive on the road. Our vehicles today do a good job of seeing other people, whether it’s a pedestrian or cyclist or another car, and then it’s anticipating what they are about to do next. Are they about to step in the road? Is that vehicle about to make a lane change in front of us? If you can do that well then you become what we talk about as a defensive driver and you avoid these kinds of catch-22 situations.
There are subtle cues. As a car’s driving along, even if it doesn’t turn on the turn signal, if it starts to drift in the lane it might be about to make a lane change. If you’re approaching an intersection it might be that some car wants to make a move over. Part of the magic of this technology is getting to the point where we’re picking up those subtle cues in the software and then reacting to them safely.
Car makers are recognizing that this is an important technology. They see this as part of their future. For many of them, they’re going to move from being car makers to companies that provide mobility. The key ingredient to that is having a driver in their system and that’s what Aurora brings to them.
Aurora is Democratizing Transportation, Says Aurora CEO Chris Urmson
Ecommerce is a lot more than just Amazon, says UPS CEO David Abney at the Davos 2019 conference. Abney says that their focus is really on helping small and midsize businesses compete with the bigger players by enabling them to offer two-day shipping.
UPS recently introduced a product called Ware2Go which matches businesses with warehouse space in the US and around the world which makes faster delivery possible.
David Abney, CEO of UPS, discussed how UPS is focused on helping small and midsize business compete with big companies in an interview on Fox Business at Davos 2019:
Ecommerce is a Lot More Than Just Amazon
Amazon is a good customer of ours. We work closely together. But people kind of associate Amazon with ecommerce, but ecommerce is a lot more than just Amazon. You have the other big retailers. It’s really those hundreds of thousands of those small and midsize etailers that has allowed us to be the ecommerce vendor of choice. We will continue to do that through our portfolio and through our technology.
This hub is really designed to expedite and to enable these small and midsize businesses to where with today’s technology they can really compete with markets all over the world. If you look back a little while they couldn’t do that. This hub is just part of the strategy. But it’s our focus on small and midsize businesses. It is providing alternatives to these customers to where they can compete with the large ones.
UPS Focused on Helping Small Businesses Compete
More and more of the competition is having to do with being able to deliver to their customers within two days. That’s much easier for larger customers who have distribution centers all over the US and throughout the world. It was almost impossible for small and midsize.
We just introduced a product that’s called Ware2Go. We are a broker between people who have warehouse space all across the country and the world enabling these smaller companies that need to store inventory to compete. It has gotten off to a great start.
Ecommerce is Going to Continue to Increase
I believe ecommerce is going to continue to increase. It’s so convenient for many people using their mobile device to just order what they are interested in getting. That is why we are putting such an emphasis on it.
When we talk about ecommerce let me give you a couple of stats. Of European small and midsize businesses, only five percent export. You would think it should be much higher than that.
However, from the US only one percent of small and midsize businesses export. That’s why trade agreements are so important. They would benefit small and midsize businesses. It’s also why any technology that we can provide them would be helpful to increase their exports. I believe there is a big runway for these smaller retailers.
Retail Up 5.6% – It Doesn’t Sound Like a Slowdown to Me
I think we have to be very careful. I think sometimes people can start to build bad news on top of bad news. I will just give you an example of the peak season that we just finished through December. Retail is being estimated across the market to have increased 5.6 percent. That doesn’t really sound like a slowdown to me. All online retail increased 17 or 18 percent.
So again, healthy numbers. We think the US economy has held up reasonably strong. Internationally there are headwinds of course on trade-related issues. But still when you hear news that there is a slowdown theirs talk of one or two-tenths of a percent. It’s really not the kind of news that some people are taking it much further.
The future of fintech is cloud, AI, blockchain, IoT, 6G and quantum computing, says Anton Ruddenklau, Global Co‐leader of FinTech at KPMG. Those are the technologies that are fueling the digital transformation and will be central to financial services in the UK and the world going forward.
Anton Ruddenklau, Global Co‐leader of FinTech at KPMG discusses the future of fintech in an interview by Charlie Barrett, who is the FinTech Lead at AWS:
By 2027 Large UK Banks Will Go Cloud Native
The first tipping point is 2027. That is the date that IDC predicted when large UK corporate banks go cloud-native. They base it on spend analysis they get from CIOs across the industry. They say that 75 percent of the industry would have gone cloud native, the other 25 percent would have gone bust. There is an interesting thing.
Just as a sidebar, we’ve seen one CEO who has already been fired in the last couple of weeks because they didn’t actually adhere to their cloud strategy, and that’s Sage. So it’s starting. People are getting serious about cloud.
If you move back from those dates, what do the CIOs say? By 2020 they will spend more money on cloud services and data than they will on legacy technology. That’s a big tipping point for us and the cloud providers in the industry full stop. By 2022 the analysis shows that people will spend more money and resources on digital propositions and products supported by data and cloud than they will on legacy. We are moving to really a digital economy on financial services.
Blockchain, IoT, 6G, and Quantum Computing
The other one is blockchain which we think which is roughly between 2022 and 2024. That will be predicated on a number of things. Our tipping point analysis shows that ten percent of consumers and SMEs will have adopted distributed ledger cryptocurrency and that whole gamut of tokenization.
Then the internet of things (IoT). The new 6G is coming down from the mobile operators which is specifically for sensor technology and location based services. That’s sort of early 2020s. That will really fuel up the connection of machine to machine and all the things we want to see as consumers coming through.
Quantum computing is also a big one that is a big question mark for people. It’s super nascent right now. If we believe what people are saying to us, by 2024 or 2025 the quantum will arrive and that will just change the bandwidth for everything including the distributed ledger which really needs a lot of power to really make it work at scale.
Machine Learning Baked Into Cloud Services
More nearterm, I think for us is machine learning being baked into cloud services and cloud data warehouses? We see the likes of Amazon really moving hard on that and bringing machine learning to the masses. You don’t need to be a data scientist to do it. I think that is a fundamental change that’s coming. The small and medium sized fintech firms can adopt that a lot quicker.
However, they don’t have the distribution in scale. The opportunity for us is to get the large banks to understand that. It comes back to new types of skills and moving IT from the back office to the front office.
Lime monitors data from their scooters and bikes in real-time in order to ensure that all bikes are charged and available to riders. In fact, in 2018 Lime monitored 26 million scooter and bike trips worldwide according to their year-end report. The average ride was just over one mile totaling 28 million miles for the year.
Not only does Lime monitor data from their scooters they also remotely slow them down depending on where they are in a city, all in real-time.
Xiuming Chen, Engineering Manager of Infrastructure at Lime, discussed how Lime uses AWS and Amazon Kinesis to ingest all of this real-time data:
Lime Sends Commands to Scooters in Real-Time
Lime is a company about urban transportation and we provide a green and affordable transportation option for the users. Our scooter is connected to our servers to ensure a higher quality of service. We need to send commands to scooters in almost real-time. Maintaining hundreds of thousands of concurrent connections is a huge engineering challenge and that number is only growing.
Lime Slows Scooters Down Depending on Geolocation
We collect all kinds of information between these vehicles. For example, GPS, location, velocity battery level, and motor information. Safety is a top priority for Lime. As an example, we have a feature that requires us to slow down vehicles when they enter certain areas of the city. To achieve that we have had to increase the frequency of data collection drastically. We have a team of data scientists and machine learning engineers. The team analyzes this data to help us understand how people use our service.
On-Demand “Juicers” Use App to Collect Scooters
Normally we see spikes from 11 a.m. to 4 p.m., depending on where you are, but sometimes we also notice a very interesting spike at 9:00 p.m. So we have a network of on-demand workers that charge our scooters. We call them Juicers. Every night at 9:00 p.m. we start to allow Juicers to collect scooters. All of them open the app at the same time which causes the traffic to flatten our servers and causes a traffic spike. In the past, the traffic came directly into a relational database and our service become slower and unusable.
Amazon Kinesis Ingests Real-Times Scooter Data
We started to use Amazon Kinesis to ingest real-time data coming from our vehicles. The speed of the growth of this industry is incredible. Scalability is one critical issue we have to deal with and we can let Kinesis do the heavy lifting behind the scene. We can spend the time to work on some more important features that users really need.
“For us, our partnership with Amazon was all about new customer acquisition,” says Lands’ End CEO Jerome Griffith. “If you look at searches online, more people go to Amazon to search for clothing than anyplace. If you are not there you are not relevant.”
Jerome Griffith, CEO of Lands’ End, discussed the recent turnaround of Lands’ End and the reasons for it on Fox Business:
We Are Doing Well Because We Went Back to Basics
We’ve had six quarters of sales increases and five straight quarters of EBITDA increases. The company is on a good track right now. We are doing well because we went back to basics at Lands’ End and made Lands’ End what Lands’ End was meant to be.
We Veered Away From Who the Customer Was
The company has a very loyal consumer base. In fact, the conversion rates online are some of the best in the industry. That means the customers like what we give them. What happened over the years is we sort of veered away from who the customer was. We seemed to be saying we want a different customer. Now we don’t. We know who our customer is and we want them.
If You Are Not on Amazon You Are Not Relevant
For us, our partnership with Amazon was all about new customer acquisition. If you look at searches online, more people go to Amazon to search for clothing than anyplace. If you are not there you are not relevant.
If Tariffs Come We Will Weather the Storm
Right now we are extremely well diversified, we don’t have one country that we are over-penetrated. So even if tariffs come into effect I think we will probably weather the storm. This company is really focusing on our business fundamentals, top line growth, bottom line growth. Outside of that I can’t affect what the market does on a day in and day out basis. I tell the guys here worry about what you can affect, not what you can’t.
According to the Wall Street Journal Amazon is testing larger format stores with its Amazon Go cashierless technology as a prelude to a Whole Foods rollout. The WSJ appeared to have spoken with several insiders. “It is unclear whether Amazon intends to use the technology for Whole Foods, although that is the most likely application if executives can make it work, according to the people.” There are predictions by some experts and entrepreneurs that virtually every physical retail store will be checkout free within 5-10 years.
Walter Robb, former Whole Foods co-CEO, discussed the possibility of Amazon adding its cashierless technology to Whole Foods in an interview on CNBC:
Amazon May Go Cashierless at Whole Foods
I just think is part of a larger revolution that’s happening in retail and in food in general. The customers are having more and more options. Amazon Go, which is now up to 13 stores already has this deployed in a smaller store format. The application of this to a larger selection of products, most Whole Foods stores have about 35,000 units, is very exciting and very interesting.
I think we’re just seeing this massive wave of disruption and innovation in retail in general. What this does is, if you call the grocery business about $2 trillion in the US plus or minus, what you’re seeing is all these new ways in which the customer can get their food. This is part of that choice. I think one of the things that people miss about the Amazon Whole Foods merger is the fact that physical retail really matters. What this does is say, okay we’re going to try to make the physical experience a little more streamlined for people so it contrasts with the online experience. I think you just see this bevy of choices the customers never had and we couldn’t even imagine five years ago.
Whole Foods and Amazon Culture Clash Smoothing Out
It’s still early but I think Amazon and Whole Foods certainly have different cultures and different styles, but I think that Amazon has very smart and capable people and I think the cultures are beginning to find their way, both their work processes. If you think about what we at Whole Foods gained from Amazon, we got tremendous first best-in-class technology and data capabilities, the digitization of Whole Foods, was significantly accelerated.
I think for Amazon they got a great brand in fresh foods which they’d struggle up to that point. They got the knowledge of the customer in the physical stores versus just the digital world and they got proximity to about 85% of the US population. It was a real win-win-win combination. People forget that food is probably the largest sector in the economy. This is a very significant deal that happened and I think a proxy for the fact of how business and commerce in general are evolving so quickly.
AWS CEO Andy Jassy announced Amazon Textract at the AWS re:Invent 2018 conference. Textract allows AWS customers to automatically extract formatted data from documents without losing the structure of the data. Best of all, there are no machine learning skills required to use Textract. It’s something that many data-intensive enterprises have been requesting for many years.
Amazon Launches Textract to Easily Extract Usable Data
Our customers are frustrated that they can’t get more of all those text and data that are in documents into the cloud, so they can actually do machine learning on top of it. So we worked with our customers, we thought about what might solve these problems and I’m excited to announce the launch of Amazon Textract. This is an OCR plus plus service to easily extract text and data from virtually any document and there is no machine learning experience required.
This is important, you don’t need to have any machine learning experience to be able to use Textract. Here’s how it generally works. Below is a pretty typical document, it’s got a couple of columns and it’s got a table in the middle of the left column.
When you use OCR it just basically captures all that information in a row and so what you end up with is the gobbledygook you see in the box below which is completely useless. That’s typically what happens.
Let’s go through what Textract does. Textract is intelligent. Textract is able to tell that there are two columns here so actually when you get the data and the language it reads like it’s supposed to be read. Textract is able to identify that there’s a table there and is able to lay out for you what that table should look like so you can actually read and use that data in whatever you’re trying to do on the analytics and machine learning side. That’s a very different equation.
Textract Works Great with Forms
What happens with most of these forms is that the OCR can’t really read the forms or actually make them coherent at all. Sometimes these templates will kind of effectively memorize in this box is this piece of data. Textract is going to work across legal forms and financial forms and tax forms and healthcare forms, and we will keep adding more and more of these.
But also these forms will change every few years and when they do something that you thought was a Social Security number in this box turns out now not to be a date of birth. What we have built Textract to do is to recognize what certain data items or objects are so it’s able to tell this set of characters is a Social Security number, this set of characters is a date of birth, this set of characters is an address.
Not only can we apply it to many more forms but also if those forms change Textract doesn’t miss a beat. That is a pretty significant change in your capability in being able to extract and digitally use data that are in documents.
Despite Jeff Bezos’ recent admission that Amazon will eventually fail, the company plans to stave off its demise by investing in as many markets as possible. Aside from being the world’s largest eCommerce enterprise, Amazon also has its tentacles in sectors like on-demand cloud computing, pharmaceuticals, and even more recently, banking. Now it wants to venture into sports broadcasting. The retail giant has reportedly filed a bid to acquire the 22 sports television networks that Disney is offloading. The move is seen as Amazon’s attempt to further develop its live video offerings.
CNBC reported several companies have placed bids for those sports networks, which were once under 21st Century Fox. Aside from Amazon, Apollo Global Management, the Sinclair Broadcast Group, KKR, Tegna, and The Blackstone Group also made offers.
Amazon has reportedly bid to buy 22 regional Fox Sports Networks from Disney. Why would they do so? Here’s a deep dive look at what the future of sports broadcasting & sports media business could resemble and what Amazon may be thinking: https://t.co/ntn25uetrh
Surprisingly, New Fox was not among the first-round bidders. The company was founded after Disney shelled out $71.3 billion to acquire 21st Century Fox’s assets this year. The sports networks were initially among the assets Disney paid for. These assets included the YES Network, which shows games of the New York Yankees, as well as other channels that broadcast regional games from different professional leagues like the National Basketball Association, the National Hockey League, and Major League Baseball.
According to reports, the House of Mouse allegedly wanted to partner these networks with their just launched ESPN+. However, the Justice Department ruling required the company to sell the networks before the Fox deal could be completed to avoid antitrust issues.
New Fox was a strong contender to buy back the channels. Lachlan Murdoch, Fox’s CEO, had previously confirmed that he was keen on getting back the networks, which made the company’s absence in the bidding glaringly conspicuous. However, Fox might submit a bid in the next round, which is scheduled before the end of the year.
Media companies will be keeping a close eye on Amazon though. The prospect of anadditional 22 networks in Amazon’s Prime Video service will boost its live-streaming power and could potentially change the television landscape.
Amazon has been steadily pushing into live sports broadcasting, signaling yet another way the tech industry could shake up the traditional media landscape https://t.co/Mqu2XSmN32pic.twitter.com/MJwJc4vkrz
More importantly, sports programming still has a strong viewership and brings in massive revenue. In fact, it generates the most revenue for the $70 billion television ad industry. The popularity of live sports also means that having major sports leagues like the MLB and NBA on the roster will enhance the value of the Amazon Prime Video service and could compel more people to subscribe.
Jeff Bezos’ company hasn’t exactly been hiding its interest in incorporating live sports in its streaming offer. Amazon has already closed deals to broadcast Thursday Night Football and 20 of the United Kingdom’s Premier League soccer matches in 2019.
If Amazon does go into sports broadcasting, tech companies like Apple, Facebook, and Google might also make a move on sporting rights just to remain competitive.
Acquiring Disney’s sports channels also provides a number of opportunities for Amazon. The eCommerce giant can phase out these cable networks and offer the live games either exclusively to Prime subscribers or as an add-on to the Amazon Channel. It also gives Amazon a larger advertising playground. Moreover, they will have a wider market to showcase all their products and services.
Amazon has not made any official comments regarding its foray into sports broadcasting. But it’s guaranteed that the traditional media companies and Amazon Prime subscribers will be watching closely to see if the company will emerge victorious.
Amazon will fail. That is the surprising admission that Jeff Bezos made to his employees last week during an all-hands meeting. However, Amazon’s CEO isn’t ready to see that happening anytime soon.
In a recording that CNBC was privy too, 54-year-old business mogul Bezos said that “Amazon is not too big to fail.” He even made a prediction that hiscompany will inevitably fail after an employee asked about his thoughts on the Sears bankruptcy.
“Amazon will go bankrupt,” Bezos said. “If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”
It’s a little hard to imagine Amazon going under, especially when you consider that it’s valued at almost $3 trillion. However, retail history is against the company. One investor posited that all retailers wouldeventually go bankrupt. And while certain companies become popular, they would eventually fail to adapt, causing the business to decline and fold. Retailers that have been able to adjust and change with the times are considered exceptions.
Amazon has so far shown its adaptability. It has given consumers what they wanted by effectively utilizing logistics and technology. But as it exceeds its revenue threshold, it will have a harder time finding alternative profit sources. At this point, there aren’t enough people or subscribers left to double their Prime membership. It has to find other avenues that it can bring online instead, like grocery or banking.
Jeff Bezos to employees: ‘One day, Amazon will fail’ but our job is to delay it as long as possible https://t.co/kWicq59UBA
Don’t expect Bezos to throw in the towel anytime soon, though. The investor said that Amazon’s goal now is to put off that failure for as long as possible by focusing on the consumers. According to Bezos, if the company starts to “focus on ourselves, instead of focusing on our customers, that will be the beginning of the end.”
But customer focus is the least of Amazon’s worries, as the company is renowned for their obsession with keeping their clients happy. However, possible antitrust violations and government regulations are fast becoming a concern for Amazon.
Bezos understands this but acknowledges that with Amazon’s size, it’s reasonable to expect that it will be closely scrutinized.
Despite the scrutiny, Amazon’s expansion still continues. The company recently announced the two new locations it has chosen for secondary headquarters. The new “H2s,” as people have dubbed it, will be built in Queens, NY, and in Arlington, VA, with Amazon expected to hire about 50,000 employees.
When you use OCR it just basically captures all that information in a row and so what you end up with is the gobbledygook you see in the box below which is completely useless. 
Textract Works Great with Forms 
