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On February 28th, 2017, you might’ve thoughtthe internet was down.
4 hours without Netflix, Spotify, Buzzfeed, Reddit, Dropbox, Pinterest, Imgur, League, Tinder, and thousands of others, Even the site that reports outages.
If the world was more productive that day, now we know why.
r/Outside become, just, ya know, outside.
A shark hadn’t bitten an underwater cable, nor was it five/nine, Just an Amazon engineer’s typo.
Probably a stressful afternoon in Seattle, but also an impressive demonstration of the company’s size and power: Amazon Web Services hosts so much of the internetthat for many people, myself included, it basically is the internet.
We know Amazon as an online store, Companiesstore their products in its warehouses, which handle the marketing, and shipping, and returns.
For us, this means total convenience – oneclick away from $125, 27-pound gummy bear pythons, or 5, crisp, 2 dollar bills for $20.
Wait, that’s not how money works… A hundred thousand companies make over a hundredthousand dollars a year this way.
But for Amazon, it’s only a fraction oftheir business.
There’s also Twitch, Whole Foods, Kindle, Alexa sensibly named Echo, Echo Plus, Echo Dot, Echo Dot Kids, Amazon Tap, Echo Connect, Echo Spot, Echo Show, and Echo Look, also a completely different Alexa, Fire Tabletsand TV, Prime Music, Video, Pantry, Ring Doorbell, Zappos, IMDb, Fresh, GoodReads, and over 70consumer brands you’d never know they owned.
Hardly a month goes by where they don’tenter and dominate a new industry, Just trademarking the slogan “We do theprep.
You be the chef.
” was enough to drop BlueApron’s stock 12%.
They’re even investigating pharmaceuticals, education, and finance.
Amazon defines its competitors as “publishers, producers, and distributors of physical, digital, and interactive media of all types and alldistribution channels”, among others.
That’s, like, everyone.
Which raises the question: is Amazon… scatter-brained? Many of these products have nothing in common.
Yesterday they wanted to conquer streamingvideo.
Today, sell organic grapes in grocery stores.
Tomorrow, who knows? And their ideas, increasingly let’s say, creative: 2-day delivery? How about 2-hour delivery, a 3D smartphone, a grocery store without employees, a front door that unlocks for delivery drivers, Aflying warehouse complete with detachable drones.
For all its success as an online store, moreand more, it also seems distracted.
At least, that’s how it looks.
The only way to make sense of their actionsand mistakes, and anticipate their future, is to see the world as they do.
And there are three pillars to Amazon’splan for world domination: To really understand Amazon you have to understand Jeff Bezos Like Steve Jobs or Elon Musk, the philosophyof the man is that of the company.
Apple was founded by people in love with technologyand its design.
No matter how big the company gets, this willalways be reflected in its decisions, priorities, even mistakes.
Amazon began as a bookstore, but that wasnever its heart and soul.
or spine Bezos chose books because no one bookstorecould hold all of them, warehouses visited on the internet could.
But make no mistake: They aren’t a bookcompany, a website, a delivery network, or even a retailer.
Amazon is a scale company.
Bezos understood that when you take somethingand multiply it a hundred, thousand, million times, you can do things all the small businessesin the world never could.
A tree is a tree.
But put 400 billion together and you havethe Amazon rainforest, a force so powerful it controls the world’s climate.
From any other company, this sounds like genericbusiness-speak.
But Amazon really means it.
We say a company is focused if it specializesin beverages, or cars, or bad website design, and puts all its XP into that ability.
Amazon is rare in that its specialty isn’tthe product itself but its scale.
That’s the focus.
When considering a new product, the flowchartis pretty simple: “Would this benefit from being a thousand times quicker, bigger, easier?” If so, you can bet Amazon either sells it, or soon will.
It’s easy to stop there, Sit back and enjoythe profit.
But Amazon asks “Okay, now what can we do?” And this is why it’s unstoppable: the snowballeffect.
First, get as many users as possible.
Give out $50 tablets, free shipping, licenseEcho to every company willing.
More users bring more data, which helps improvethe product.
And the better product attracts even moreusers.
They aren’t just making it easy to liveoff Amazon, they’re making it hard not to.
That’s the power of data in the hands ofsomeone operating at this scale.
It’s why there’s now a movement to limitthis, why companies like Digi.
me, who I’ve previouslymistaken for a data collection company, actually let users manage and safeguard their information.
And the results are things like Prime: Itmay lose money on the heaviest shoppers, but with a hundred million of them, they’rewinning a lot more than they’re losing.
So why purchase competitors like Whole Foods? Exactly because it’s not what they’regood at: Books never expire, well, some do.
But groceries, not so much.
You have to go back repeatedly, putting Amazonin your routine.
And with so much shipping, Spending $11 billion fulfilling 300 millionpackages in 2015, they can do something almost no-one else can: Compete with UPS and FedEx.
They already lease 32 Boeing 767 cargo jets, and plan a massive cargo hub in Kentucky, But that’s just the beginning.
After announcing a new $79 Kindle, Bezos wrote “There are two types of companies: thosethat work hard to charge customers more, and those that work hard to charge customers less.
Both approaches can work.
We are firmly in the second camp.
” And he’s really not kidding… The parts alone cost $78.
59, plus $5.
That’s a loss of $5.
25 for every Kindlesold, not including things like marketing, licensing, and support.
And sure, there are ads, but only as an option, Companies like Facebook and YouTube are fundamentallyadvertising companies.
No matter how well-intentioned YouTube employeesare, unless something drastic changes, the company will always prioritize advertisersover creators.
That’s the business model.
And then there are customer companies – whereYou and I decide what gets demonetized.
Apple is comfortable charging more for †hevery best experience, And for Amazon, helping the customer meansmaking us pay as little as possible.
Both are loved in a way that’s impossiblefor an advertising company.
You might say – “They only care about thecustomer to make more money” And maybe you’re right, there’s no wayto know, but the effects are the same, When Apple refused to unlock the San BernardinoiPhone, When Amazon takes a loss for the sake of ourwallets, and offers some of the best customer supportI’ve ever had, It may only be a calculated business decision, But it’s great for us.
Of course, when the customer comes first, everyone else comes second.
Employees can be easily be forgotten in thisnever-ending quest to satisfy us.
Here’s how Bezos describes it: “One thing I love about customers is thatthey’re divinely discontent.
Their expectations are never static.
It’s human nature.
We didn’t ascend from our hunter-gathererdays by being satisfied.
” This is the hedonic treadmill – no matterhow much our lives improve, our expectations simply adjust.
Almost any other company would resent this- constantly having to improve their products, even the rate at which they improve.
But Amazon embraces it – they’re just asdiscontent as we are.
Except, if there are billions to be made byconcentrating on scale and customers, why can’t anybody else do the same? How can a tiny online bookstore do somethingexponentially better than Walmart, the world’s largest company by revenue? It’s easy to think of the CEO as the supreme leader of a company but “Even Bono Has A Boss”.
In this case, shareholders.
The longer a company loses money, the greaterits risk, and the more anxious get investors.
But for Amazon – lack of profit isn’t justtolerated, it’s celebrated – They could stop and make a dollar, they’drather wait and make five, Using profit from things like AWS to fund projects like Kindleand Echo.
Because Bezos is so open about this, shareholderssign off, and they can think far into the future.
Those cargo planes? Not so cheap.
But that doesn’t stop Amazon.
Supermarkets operate at a 1% profit margin- but Amazon can buy Whole Foods, and actually lower prices.
It also gives them freedom to experiment.
The Fire Phone was never ready for, ahem Primetime, but that’s a small price to pay for this strategy.
MoviePass, Snapchat, Uber, Spotify, Blue Apron, all starving companies following in Amazon’s footsteps, crossing their fingers money willcome later.
Ex-Google CEO Eric Schmidt says Amazon isalready Google’s biggest competitor.
AWS competes with Google Cloud, Echo withGoogle Home, Prime and Express, YouTube and Twitch Even search.
A company this diversified will face plentyof challenges, A lot will change in 10 years, but we’llalways want low prices, fast delivery, and easy shopping.
As Amazon conquers one industry after another, they may only have one real competitor: thegovernment, who may say “Do not pass go, and do not collect $200”.
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