Introduction Daniel Shvartsman:Cyber Monday is over, and I guess, it’s time to conclude our mini-series on Amazon. To do so, we invited Priya Anand, the Amazon reporter for The Information to join Behind The Idea. One thing that came up in our conversation was the build out of Amazon’s physical footprint. She called out some of the limits to the experimentation process when talking about Amazon’s 5-star concept.
Priya Anand: To be honest, I walked into the one SoHo and was like – this reminds me of like a RadioShack, plus the front of a Barnes & Noble, which maybe is not what they were going for, I imagine.
DS: At the same time, she acknowledged that there is a real cache to these new stores like Amazon Go.
PA: Every time I go into one of the Amazon Go stores in Seattle and was there a few months back and went to a store, I’ve been to the one in San Francisco, there are always people taking selfies in there, and you never see that in a normal store of course.
DS: What will Amazon look like five years from now? Does the break-up Amazon movement have any momentum? We have one last discussion to see if we can put the pieces altogether. This podcast was recorded on November 9, pre-HQ2/3 and neither Priya nor I have any positions in any stocks mentioned. But we’re here to see what else Amazon will take over in the years to come. So, let’s open the book one last time.
Welcome to Behind The Idea. The podcast that looks at what makes great investment analysis work. We’re starting Part 4 of our mini-series on Amazon, the retail giant. We’re excited to welcome Priya Anand, the Amazon reporter for The Information, a leading tech news website on to the podcast. We’re going to be talking more about Amazon’s competitive positioning, regulatory risk, whatever else seems to fit as Amazon can plan to be about everything. So, Priya, welcome on to Behind The Idea.
PA: Thanks for having me.
DS: So, I wanted to start – we’re recording this just after the mid-term elections and also you had a recent article you published about how Amazon deals with President Trump and sort of their policies around that and obviously President Trump also just spoke up again about Amazon. I’m curious how much has actually changed for Amazon over the last couple of years? How much is the regulatory climate or the story for them changed as they continue to grow?
PA: So, one thing that’s unique about this period of time for them is that no one has really had the kind of problem that they have right now with President Trump who is routinely disparaging them over Twitter in ways that may not always be actually that accurate. So, it’s a unique issue that we are dealing with here, but despite the fact that it’s, you know it’s very easy to dismiss these attacks from Trump. It’s, you know, they could be called misinformed in some cases, the company tells him or its employees to say that he’s misinformed about the deals, the Post Office, and Tax Policy etcetera, but at the same time we are seeing more criticism from right and left of Amazon or at least more attention if not direct criticism. Right.
A few weeks back, we saw Bernie Sanders coming out upset about how Amazon treats its warehouse workers. Amazon lifting its minimum wage up to $15 an hour for its warehouse workers in response and got some praise from Bernie afterward as a result of that, but there are other people in congress too, members of congress like Ro Khanna, who represents part of Silicon Valley who are saying, we need to at least scrutinize Amazon and see how they are effecting the competition and how their pricing shakes out once their competitors are no longer as powerful in the field because of Amazon’s strengths. And so, there are more people putting attention on this issue, the FTC also brought on Lina Khan, who, I’m sure many people are listening to this and you are familiar with her Amazon's Antitrust Paradox piece in the Yale Law Journal. I think it was last year at this point. And she is on board too in there doing these hearings to assess how they should view competition, consumer projection.
So, there’s more chatter at least in Washington about Amazon and whether or not she looked up more closely, does that translate into actual movement to regulate them? D.C. is a pretty slow pace. The EU has been much faster on these things and they are looking at how Amazon is a marketplace and a competitor to the merchants on its platform selling its own stuff and whether it benefits from having that insight into third party sales, but we haven’t seen that kind of swift movement in the U.S. What we have seen though is Trump was calling her review, the Post Office to review their business deals and their practices and whether or not Trump is involved, you know the Post Office has been suffering for years and in some cases not directly related to companies like Amazon and people just don’t send much snail mail anymore. There are lots of other problems the Post Office has. They did and deciding, this is proposal the Post Office has to raise rates, essentially across the board for next year. It’s not affecting only amazon, it affects basically everyone who jumps in the post office and isn’t going to be that significant of a thing for Amazon, who knows, but D.C. is a slow place. It’s a short answer. I guess.
DS: Right. So, I want to come back to that, but I want to sort of look at Amazon itself for a second or two and how they are kind of part of their power, their business power eventually it has to in theory flow towards profit and you had written about how Amazon’s retail business in the U.S. is producing profit, and I’m just curious if you, how you see, is there – one thing we’ve been wondering about is whether Amazon truly can achieve profit like whether they will really get to the point where there is sort of the idea that they will just stop investing and then they make the money, but they also kind of, the way they grow, the kind of have to keep investing, I don’t know, how do you see – do you see that their business bends towards profit over the long haul, is the retail – is what’s happening in retail something that we should expect to happen with the rest of their business lines over time or how do you sort of see that playing out?
PA: Well, I think, you know their last earnings cycle was pretty interesting. So, I had written a few weeks back about how, people forget, people call Amazon a money loser. They are a retail business, it is not necessarily AWS, but it’s still producing in the billions of dollars operating income each year and has been for several years now. In the last earnings cycle, these things are usually sort of dry for them, but that quarter, they really paired down their international retail losses too. So, Amazon is so famous for reinvesting its profits. I think it is sort of a mis rumor that people call it a money-losing company at this point, and reinvesting is part of what ends up making them strong in the long haul.
I don't see them stopping that right. They have so many initiatives that they’re working on that on the newer side. Like Alexa is fairly new, so has not become – outside of the device sales has not become a meaningful driver of sales, very few people use their devices to order shop and voice shop, but they are looking at tons of other applications for Alexa. They have talked about implications on health and in medicine for Alexa, obviously they’ve got these deals with homebuilders to put Alexa and from the ground up sort and have explored ways of doing that beyond just putting devices in certain rooms, where they will be commonly featured. So, people can use Alexa to order more Amazon room service and things like that. The experimentations is certainly not going away and I think despite that they get into the point where they are still on the retail side proving to have significant profits.
DS: You had mentioned pairing down the international losses and one thing I was curious about is, is there a disconnect between what they’ve done in the U.S. and international or do you just from your vantage point is it just a matter that we’re earlier on in the international store and that they’ll get to the U.S. level eventually?
PA: Well, I think there is a lot to impact there. So, China, they did not do well, right. As a result, Amazon does not want to lose out on India too, which is expected to be a huge market once it becomes more mature, and more people go online and more people are comfortable shopping online. So, they are investing really, really aggressively there right now, but I think the difference is that they have the advertising Spigot turned on internationally now. Two, we mentioned, this is probably two earnings calls back, Brian Olsavsky, CFO had mentioned, someone asked international losses are still existed, but they seem to be doing a little bit better, why and Olsavsky pointed out that advertising is helping internationally too.
So, there is – I think you’re right. Like, different part of the life cycle for certain countries. India is in a very early stage. They are making really aggressive investments there because they don't want to lose there. Bezos had said publicly at some point that they want to invest in $5 billion, he said, there. They have obviously competition with Flipkart and Walmart’s invested investment in Flipkart too. So, that’s not a market they want to lose. There are other international markets like the U.K. where they are much more established and in a much later stage of their life-cycle, I guess you could call it there. Perhaps comparable to North America in some ways. But then you have places like India where it’s still early stages and they’re really trying to make sure they do things right now.
DS: Okay. That’s interesting. Because we spoke to Brad Stone as well and he had been going over the India plans recently and it occurred to me when we were talking to him about, India is almost like a make-up effort for Amazon after missing out on China. I'm curious, Walmart has bought into Flipkart, I think they are 75% owner there. Walmart is also – and I have listened to some of your podcast where you’ve talked about all the things that Walmart is doing. What is the sort of general, what are these companies trying to do with their deal making? How are they identifying new targets to how are they deciding whether to buildout things internally or to buy other companies like how are they sort of – where is that dance right now between them? What are the each trying to do as – beyond beat the other side?
PA: Walmart in particular is an interesting place because, you know, they clearly saw, I think they made some moves little late in the game to counter Amazon on e-commerce site. Clearly though, they don't want to be in the same position when it comes to reinventing their stores. They have a division that is stuffed with entrepreneurs from various companies that they’ve acquired, Jenny Fleiss from Rent the Runway. They acquired Bonobos and put Andy Dunn in-charge of another division there. They are trying to make sure their physical source aren’t left behind. They have a project called Kepler, run by one of the Jet Co-Founders whose close to Marc Lore and that idea is to reinvent the fiscal story using – and find ways to help us out. We’re expected to have some similarities to the Amazon Go efforts also there, but one thing I actually talked to him about this recently, I talked to Andy Dunn about how they are dealing with acquisition versus building stuff in-house, and one thing that they believe is that they should have their own sort of digitally native brands across, it’s usually every category that Walmart has which is most of them pick to buy at this point. And they’ve acquired a plus size retailer, recently, obviously Andy Dunn's company Bonobos, they have Modcloth. They acquired a company called Moosejaw, a little while back of outdoor and sporting goods. And they are thinking about, how do we, like have their own experience associated with all of these and it again replicates sometime like they started their own mattress brand called Allswell. It’s like Walmart’s version of Casper, basically online only. And so, then it was like, well there are tons of these mattress start-ups that get big pretty fast, and you can catch up in that space, but do we think we can build a community around a plus size brand that has hundreds of thousands of Instagram follower like Eloquii did before they acquired them recently. Probably not as easily as we can make a mattress, which is definitely a commodity item. And thinking about those things. Sorry, that was big.
DS: No, no that was – what I'm interested in is, when you say that Walmart, so essentially in every conceivable category across like – you mostly mentioned apparel there, but I’m wondering if this spreads further, Walmart’s approach is that – Beauty – okay, so they want to have their own brand, it’s not necessarily brand is Walmart, but they want to have, it’s not that they’re trying to sell you everybody’s brand, they want to have their own in like, owned, 100% own brand that they can weed a category with or that they can eventually push forward in a given category that’s the strategy?
PA: That is part of their strategy as told to me by Andy Dunn who is running it. And you can see what category. Like, they are looking at everything. They have this mattress thing, they have now acquired a plus size fashion brand. They have some other fashion brands of their own too now. They are looking at beauty closely, which is a huge space in industry. They think it’s critical to have future to actually own these brands. It’s an interesting strategy how it works out for them, I don't know. Like time will tell and it sounds like a cliché to say that, but that is their bet right now. And if you can build it in-house can you buy them. If you think you can recreate something within a couple of years, some other people have succeeded in then maybe it’s not worth buying it. So, they are doing that analysis across the board. As Andy said, they want to have something in every category, which is sort of an interesting way to go about rebuilding your business and positioning it for the future, I think.
DS: Well, it’s different. I mean, Amazon’s, I’m just trying to think off the top of my head what’s Amazon’s doing, they aren’t doing that. I mean there is a fear that they will, like you said, they will kind of take them third party seller information, they will learn. Amazon knows more than you or me or what either of us wants to buy next, but how is Amazon sort of tackling the same thing or do they just think about the problem differently?
PA: Well, they have tons of their own private label brands too. So, I think a lot of the retail industry is going towards these private label brands and Box, that start-up, that essentially delivers like office snacks and things like that. It’s very popular for people in that space. They have their own [indiscernible] spring brand. Amazon has several dozen, at least several dozen at this point. Private label brands with things like snacks, they have Amazon Basics microwaves and water kettles and stuffs like that. They have ovens – I think battery example, I think it is the most famous in Amazon Basics batteries. And those being so popular now that being sort of not great for other battery brands who used to sell on the platform. So, I think a lot of the retail industry these days is trying to figure out how to do private label better and make their brand just as cool or just as approachable or cheaper and make the packaging look nice enough that people think it’s a good alternative. It’s great for those companies if they can succeed on that and it’s always better for the company using private label, it is cheaper than.
DS: Right.
PA: So, I think it’s become this very trendy thing on retail now.
DS: Well that doesn't sound very – we sort of, when you think about for example the categories Amazon is killing, we think about retail stores, but this now, it’s not the first time the thought has, like, I think there are other people out there saying this, but like for consumer goods companies all of a sudden this becomes really acute if both Amazon and Walmart and like you said, other retailers are really focused on this private label direction?
PA: I mean there is a whole start-up focused on private label, essentially like household and consumer packaged goods called Brandless. And it’s doing exactly this and it’s – the whole company is based on that. Everything is about $3 or a packet of two will be $3 in some cases and everything is just their own brand called Brandless.
DS: So that sets up a question that Mike had, my co-host who isn’t here today, was that Amazon gets a lot of credit in, we can probably apply this a little bit to Walmart too, but Amazon seems to get credit for vertically integrating, for doing more and more stuff in-house rather than being maniacally focused on one part of the process, what do you think of – maybe that gets us back to the regulation questions, but what do you think about that? Is that justified that Amazon, the example he had was that, if Amazon is obsessed with improving their logistics and their delivery capacity, and so the market you could imagine that Amazon announced that they were just going to deliver their own packages, the market’s reaction will be – that’s great for Amazon, sorry for you UPS. Is that, like is there a limit to what Amazon can kind of do or what Walmart can do as they kind of gross up their businesses?
PA: Well for Amazon, I think, this is a professional question that people ask me, are they going to get too big to do everything right that they are trying to do, and there are some things that haven't worked out, how they’ve wanted them to, but at the end of the day they have come to realize internally. I have done some reporting on delivering efforts and they’ve come to realize internally that among their options Postal Service, UPS or FedEx or delivering themselves it’s going to be cheaper usually. Particularly, when this model of hired independent contractors to flexible work using their own vehicles in a lot of cases has become so popular in the U.S., right. I was always surprised that there seems to be not, companies that are trying to get more drivers like Uber, Lyft, Instacart et cetera everyone out there is fighting for the same people, Amazon school of people who can deliver packages for them is going to always be a little bit smaller, usually physically able compared to if you are driving Uber you have to be able to take packages in the car and then take them out and move them and it is tiring and hard to do that. People are only ordering like bars of soap, there can be bigger stuff that people want and are getting. So, that is difficult, but it is a cheaper option and this pool of people seem to be many, many people who are willing to do this kind of work that this is such a popular form of work in the U.S. right now that’s why you have company like Uber and Lyft and Instacart that are able to grow and spread in just so many different markets and Amazon is capitalizing on that and part of their pitch to their drivers are in their Flex program, which is what they call it, is if you drive for Uber, Lyft and evenings when people are going to restaurants and bars, this is a great supplement, during the day if you want to get a few hours in delivering packages, when Uber is slower oftentimes.
DS: It seems like that Amazon’s reputation is just and that is part of the challenge when you, I guess for – where we started with the regulation aspect, Amazon just seems popular and it seems like people to be willing to – is Amazon the one that allows you to just store packages in your trunk and then people can just come by and get it or is that somebody, or am I making that up, is that somebody else?
PA: Yes, they have a program that lets you do that now. Get packages delivered to your car They also have a program involved with smart lock, couple of smart lock partners and their own team that is working on smart locks and things like that to deliver packages straight inside someone's home. So, I mean, what’s interesting to me is, at a point when everyone is questioning social media companies and other tech companies about their power and how to use customer information, Amazon is getting closer and closer to its customers in a physical sense also and has been largely shielded from all the criticism.
DS: Right. Yes, I mean, that – the fact that we would have left Amazon into our house through a stranger like – on the hand it is like kind of encouraging the amount of trust that we can have in other people, but it also is kind of crazy when you think about it a little bit, and that’s where I just wonder, is there given how popular Amazon is, given how in the lives that customers they are how easy it is to use the website, how easy it is to use their different products, and whatever and they’re sort of fanatic devotion to making life easier for the customer, is there a realistic way to break-up Amazon? I mean, I know we could, there are the big units that you could in theory separate. But is there, do you think that what you talked about earlier, is there real traction, is the company preparing for this as they, you know again the Trump example is, where they are kind of putting together a PR strategy to some degree, but are they legitimately looking at, okay someday we may have to consider this or this around. I mean how much meat do you think there is to this story and to this progression?
PA: I mean, perhaps there is suddenly because as – there is a lot of people – there is no doubt I think that people realize Amazon as a very, very powerful company, but at the same time when you look at the – and you just start with things like that that would maybe eventually lead to question whether things change at this point and a lot of the arguments are Amazon responds to all those arguments. Usually somewhat effective we have so many competitors in every industry we’re in, all those different industries from retail to music to whatever you want to name. Now, voice computing, like pick anything and you could probably name a handful of competitors at least. And so, I think, we’re in the – we’re still in the early stages of it, and it’s hard to really tell them a point when we won't be at least in the next couple of years or so, be in the early stages of people having these conversations around how to look at its results in different markets right. A lot of the antitrust arguments start to really get wiggly when you look at the other side that they break up, which is they have competitors and many deals. Sorry, that wasn't a direct answer to your question, I just think it’s sort of a complicated one that I tried to be careful with.
DS: Yes. It’s a tough – yeah, I just think Amazon is so smart with how they, like they, I don't want to exaggerate, but they do seem to be playing sort of a couple of steps ahead. I guess my question for you that sort of points together these two threads, if you are Jeff Bezos, who keeps you up at night more? Is it somebody like Bernie Sanders, who is more dedicated I think than – it seems like the most visible dedicated politician to break something like more left-wing regulation or is it somebody like Marc Lore at Walmart who is leading up the e-commerce efforts or somebody, else like what keeps you, if you are Jeff Bezos what you are worried about, if you are, I mean, richest man in the world, I guess you're not worried about much?
PA: No offence to Marc Lore and Walmart, but I think given Amazon’s leadership position in e-commerce compared to Walmart's early stages of trying to be better right now, and the fact that he probably knows Marc at least decently well from when Amazon acquired Quidsi, he and Marc spent some time there, you know I’m not sure if he is kept up at night by him. And also, I think Marc Lore clearly aggressive guys moves fast has made a lot of changes at Walmart since he started about two years ago to put that on a path to being a powerful player in e-commerce.
The jury is still sort of on whether or not he can make that happen, right? It’s a long-term effort and it is still early days for that as people at Amazon would say, they love the phrase early days, but it is still early days for that and Marc sold his last company to Amazon. So, he hasn't there is no stand-alone example of what he has built in the past right. I think it still remains to be seen how things work out for his company. Jet was losing a ton of money burning a ton of money sort of was like, It was sort of a hail mary that they got acquired by Walmart in the first place, and so I think the jury is still out on how much Walmart succeeds in this strength. And that’s – they are trying real hard and have a lot of initiatives.
Anyways, one was interested about reading about how the digital power dynamics sort of shake out there, hate to use the word digital, but people who are trying to make Walmart a bigger player in e-commerce and areas and the like and go to our site and read an org chart that we compiled of people who are making those decisions and in that we described these initiatives. So, I don't know if Walmart is what keeps Jeff awake at night if anything. And you know Trump’s tweets he’s been pretty quiet in response. Company policy is to just sort of pivot as quickly as possible, but don't badmouth Trump either, shy away from that. So, if there is something that keeps him up at night, I would love to know what that is.
DS: He seems to be like a pretty comfortable guy at this point in his career.
PA: Yes. And he loves making pancakes. So, if he is waking up relaxed enough to make some joy of cooking pancakes, that’s his favorite recipe adherently, I read, then it’s a pretty good state of mind to be and I guess when you're running a company of 600,000 people.
DS: Yes. That’s something we should all aspire to I guess to be able to just put it aside and make some pancakes.
PA: I guess it’s easier to not be that stressed though when you are the richest person in the world.
DS: Yeah. So, I wanted to ask a couple of, just sort of a couple of questions, your thoughts on where Amazon might be headed. We put together a couple of questions, just imagine we’re in 2023, five years from now, the most immediate thing you would mention the Walmart side of this, but what do you think Amazon’s physical stores look like five years from now, where are they headed? We’ve got Whole Foods now. We’ve got a couple of other experiments, but where do you think the Amazon is going physical store ways?
PA: I think we’ll see a lot more of them. They opened up these 4-stars and 5-star stores in New York and elsewhere. I think elsewhere too, they’ve talked about where they put only products that are really highly rated on Amazon. To be honest I walked into the one in Soho and was like, this reminds me of like a RadioShack, plus the front door of a Barnes & Noble, which maybe is not what they were going for, I imagine, but they are trying to step out, and they bought Whole Foods right. So, clearly, they are serious about this and the pace at which they are opening up Amazon Go stores is pretty fast, considering they just opened up the first one to the public in January in Seattle and now they’ve got 30 in Seattle, they have one in San Francisco that’s just around the corner from our office. The Information’s office. They are opening up more in Chicago also. So, they are pretty fast with this. So, I think by 2023, we’ll see that they’re pretty steeped in physical retail, and I think we’ll probably end up seeing more models of stores than they have now. Because they very quickly went from Go to opening up this sort of shop of randomness with 4-stars store or 5-star store. So, I think we will see a lot more. I mean there was a report a few months back, I think in Bloomberg that they were planning to open up as many as 3,000 stores in the next couple of years. I thought that was a little, you know when you look at that pace like multiple stores a day opening up, I don't know if it’s going to be that rapid, but I think we will definitely see more than what they have now and potentially some new models for them too.
DS: What has stood-out as a unnoticeable or important change to the way we shop that they are trying to make, is it just the Amazon Go and the cashier list or are there other things that they are doing that are like they might change the game as it where anything you are seeing?
PA: I think the cashier list thing certainly has changed the game, particularly if they figure out a way to expand that to bigger stores. I mean, every time I go into one of the Amazon Go stores in Seattle and Sierra few months back and went to a store, I have been to the one in San Francisco. There are always people taking selfies in there. And you never see that in a normal store of course. I mean, I guess in certain Instagram focused companies right maybe you see that, but in convenience stores or grocery stores that people are not normally taking selfies. So, I think that has changed the game. I think it has set a different bar, you see a lot of retailers, other retailers trying to figure out how to[mirror that. There are bunch of start-ups working on cashier list stock to shareholders to checkout. I think people may shy away from the cashier list and say, check out free or something to avoid the branding and cashier is not having jobs anymore, but I think that’s been a game changer and if they expand that to larger format stores, and things beyond the convenience store then that could just continue that.
DS: Okay. Another 2023 question, what do you think – of the projects that Amazon is currently working on, but that aren’t a big deal for them on the bottom line or even just revenue, what would be your pick as something that becomes a major driver five years from now?
PA: Well, they’re trying to build up Amazon music right now, which everyone things about Spotify or maybe Apple music, right now, but they even went out and did an air, if you go back, how they want music to be a big deal, and it doesn’t become surprising when you realize that that’s essentially primary thing that people use Alexa for. I wrote a story months back. I had some internal data. You would assume that more people maybe shop using their Alexa devices and they said on earnings call that is an incremental driver of revenue, but incremental can be, it is a really big term. I always think it is funny when people say some things an incremental driver of revenue. It could be $1, it could be $0.05 like that is an increment, it really is a way to answer without saying anything of value. It turns out less than 2% of people who have Alexa devices who have echo’s, actually have used them twice on top of Amazon. So, figuring out other used cases is pretty important for them and the most popular used cases for Alexa are still like what’s the weather and can you play the song for me. And so, I think they are really going to be focusing and they have said this to, they are really going to be focusing on making music bigger.
Restaurants and food delivery, Amazon restaurants is currently small business relative to Uber Eats and Grubhub and things like that, but they are looking at markets that are a little more popular in markets that are not the New York’s and San Francisco’s but maybe a tier lower in terms of city size. I saw some data a few months back and was surprised to see them gaining share in other places, and I hesitate to name the cities because it might change by now and I could be missed remembering. So, the names of the cities, but I think that is one that will – the Amazon cares about food categories, right, you eat three times a day, sometimes you make food at home, groceries, online groceries, and sometimes you eat out, and I think they want to have a solution for all of those because when you get in that food space there is a lot of opportunities, since people have to eat, right? So, I think right now people, in some cases people don't even know Amazon restaurants exists. I think at some point that might change and that could become bigger. If we’re thinking about just the areas that are small right now that could one day become more popular.
DS: Right. It’s just interesting when both of those markets are really competitive, and it’s just like cameras on, it just seems like they are not shy of saying like, okay, you might have Spotify or you might have Apply music or food deliveries is not the highest margin business in the world, but for Amazon, I guess to be that sounds like the strategy is just, if I can get myself into your life in any way possible where we have some sort of, like it is adjacent to what we do already, I’m going to try to do that because then you’re more into, we talk about with like the phones, with Apple trying to get you into their ecosystem and all of these seem like continued ecosystem place, is that a way to think about how they keep choosing new markets?
PA: Oh, for sure. And that’s also what Prime is, right. It’s an ecosystem essentially. There are a lots of and ancillary Prime benefits that people may not realize exist, but it’s all of that and how do we add more of that offering. Like there is photo storage, people may not realize that Prime includes some photo storage through Amazon. Photo storage on a personal level and things like that definitely are designed to make you part of the Amazon echo system and make Amazon your first choice.
DS: So, maybe that is one last question I had for 2023 is just, what’s the new – this is obviously going to be more speculative, where is the new area you could see Amazon expanding into that they don't currently have, it’s not even a small thing, it’s something that they haven't really entered yet at all?
PA: Oh my gosh. What industry have they not entered. The fun thing about covering Amazon is that it’s like covering dozens of companies at a time in every industry and you could right into the healthcare one day given all their efforts there and another day in transportation another day and e-commerce another day and fashion another day. I should have given this one more thought ahead of time, but I am not sure what they have in intricate.
DS: I don't think…
PA: Go ahead.
DS: I was going to say, I don't think they are into journalism yet. So, I think we're okay.
PA: Well, Bezos personally owns the Post, so are we going to separate the man from the company? Trump doesn’t in his tweets rightly or wrongly. They’ve even considered entering home insurance. I wrote a story a few months back about how internally they’ve talked about as part of their home automation offering, does it make sense for them to enter the home insurance space, if they have Alexa devices in every room, can the camera point toward a window after it breaks and see what the cause is, can they reduce premiums by really having a strong monitoring system. They talked about that internally. So, I think anything is on the table, right?
DS: Yes. I think when you are, even speaking about them for five different episodes now including our own talk and it just seems like, I think I wrote in one of our articles that it’s good they ended up with the name Amazon instead of relentless or whatever else they were thinking about in conception because Amazon is just such a good image for them in terms of how they keep, they are just so vast and just kind of keep flowing into new things. One last question sort of around this, when do you see – how should we know as sort of outside observers when something for Amazon isn’t just something they are fooling around with, but become something that they are really, what’s sort of the tell that something has become a real priority that Amazon is really investing in because it’s going to be their next AWS or their next third party seller or Prime or whatever else. So, how do you perceive when Amazon really throws its weight behind a new initiative.
PA: I think it’s pretty easy to see when they're doubling down on stuff like. Alexa devices and echo, at some point a couple of years ago, it was like, oh! my god these things are literally everywhere, all the time, and prominently on their site and when you walk into Whole Foods, after they bought Whole Foods, it was like you walked into a Whole Foods and there are just like Echo devices - Farmfresh echoes! And so I think they make it pretty obvious what they are really doubling down on something. Once it’s there and it exists, like it is clear. People will know about it. It will be all over their site. It will be pushed to you in emails, they will be out talking about it. It will be the talk of the earnings call, et cetera. That’s one thing, I think they don't – once they realize they really care about something, I think it becomes no, you might not realize for a little while that it’s happening, but once it’s there it is clear. They turn on the spigot and it just flows.
DS: Okay. This is, I mean, thank you for coming on. This is just so interesting just all the different areas that they are kind of turning on the spigot or that they are experimenting with and just the different ways that they interact in our day-to-day lives and so – and for investors obviously it is just a really interesting story on pack, because it’s been such a big winner even though there is – in theory has to be a natural limit to which Amazon hit, but really appreciate you joining us and thank you.
PA: Thank you for having me. I appreciate it. It was great talking to you.
DS: Yes. Absolutely.