Jeff Bezos Is Playing Chess

[badman_ting]

> Occasionally, you’ll have to show those cards and win a hand to prove that you can. But the rest of the time you call and fold, as you await the monster to take the entire pot.

Wait, just which game are we talking about here? I thought it was chess and checkers but now we're on to cards. I'm only sort of kidding -- Bezos certainly does seem like a genius to me, no argument there. But this is just the author going "No, you don't get it, he's so smart!"

(Also, as it happens, the above would tend to be a terrible poker strategy.)

[pachydermic]

No, man. You just don't get it! He's a master of the game. He's thinking 12 cards ahead and is going to uno your bishop with his Washington Post before you can even bingo your king of spades! It's so crazy it might just work!

I don't like the article. Full of sensationalist filler with little real content. What's his point? That stock price reflects the perceived expected value of the company now and in the future? He never really connects Amazon's investment into its infrastructure with Bezos' purchase of a newspaper. He talks about corporate profits as if they are a bad thing (and uses Apple as his sole example) - what about the second largest company in the world? Exxon Mobil hasn't had the same pattern as Apple at all. I'm sure there are plenty of other examples as well. So how does one data point prove his point that withholding profits is a good idea (and I'm not saying it isn't, I'm just confused by his argument)?

Anyways, yes Bezos is trying a strategy of targeting long-term growth. He makes that abundantly clear. Will it work out? Is he really a genius? Honestly, it's too early to really say definitively, isn't it? But that's boring, so no one would write an article saying that.

<\rant>

[rhizome]

But this is just the author going "No, you don't get it, he's so smart!"

I'm a little curious what TC thinks the purpose of insulting their readers in the title of their piece is. The hopelessly mixed metaphor is just icing on the cake, but you do have to break a few eggs to throw the baby out before it's hatched.

[JimWillTri]

Bezos must have still been playing checkers when he bought into Living Social. :)

[chatmasta]

What did you expect from TechCrunch? I'm not even sure you can call the garbage on that site journalism.

[pcj]

"The goal is actually to not make a huge profit too early, and Bezos manages it perfectly. You want to avoid showing your cards too early as you continue to lay the groundwork for an ever-larger business"

That just doesn't sound right. 10 years in market is not too early. And because it is working for Bezos and Amazon, it doesn't mean that this strategy will work for others.

[rpgmaker]

He might be a genius but not all genius can make a profitable business. I doubt that will be the case for Amazon eventually (I may well be one of the suckers heh) but let's remember that they just LOST money on the last quarter and consistently earn little to no profits.

[selter01]

/facepalm. He's not playing poker though, he's playing chess!

[computerJanitor]

If we can hit that bullseye the rest of the dominoes will fall like a house of cards. Checkmate!

[kingraoul3]

Well, it depends on which poker game you're playing and the table texture of your game.

[jccalhoun]

When I saw the headline I said, "Ugh. That sounds like something MG Siegler would write." Then I saw that he had wrote it and I said, "I bet half of it is really about Apple..."

I guess if nothing else you know what you are going to get from Siegler...

[EGreg]

This. But Siegler does have a point sometimes.

[ctdonath]

A consistent problem I've seen with e-books and streaming video is lack of live content, in particular breaking & current news. Apple provides some live sports, and just added SkyNews, but that's all third-party encapsulated content limited to AppleTV. Google scrapes the Web for news, but just gives pointers to content instead of packaging it. Bezos isn't buying a newspaper, he's buying a content-gathering service - it might not be big, but the core infrastructure is in place to get the content and curate it without negotiating with a fiercely protective third party.

We've been observing the demise of news outlets. The demise continues so long as the owners fight to retain total control of their distribution to eyeballs; having given up, WP has finally given total control to someone who does control distribution of content to a whole lotta readers & viewers. Expect the rebranding of WP as Amazon News, and watch it explode onto the news scene giving CNN, Fox, etc a desperate run for their money.

[jeffasinger]

I think if the ultimate goal was to integrate the WaPo with Prime, he may have made the purchase as Amazon, instead of as a personal purchase.

There's something else going on here.

[freehunter]

Almost as easily as I can imagine Kindle Newspapers being improved by this, I can imagine Prime Instant Streaming having a live news channel. I'd be down for it.

[ojbyrne]

I thought that was a pretty poor article - no real argument and essentially a mixed metaphor between the title (chess) and the body of the article (cards/poker). The bit about "negative cash cycles" seems hopelessly outdated - comparing Amazon to bricks and mortar companies seems appropriate to 2002, not 2013.

[riggins]

I wouldn't agree that a negative cash cycle is outdated. However I would disagree with the author's inference that a low profit business with negative working capital is as good a high profit business.

As evidence, I'd point to a great negative working capital businesses. Dell. No one's arguing that Dell is a super business thanks to the cash it generates because of its negative working capital cycle.

Bezos is obviously brilliant. It's possible that he made the decision to stick to low margin businesses because he knows that won't attract competition. That would be counter-intuitive and pretty brilliant if you're certain you can out-execute your competitors in the low margin space.

[venomsnake]

Or we can KISS (keep it simple stupid):

1. Next time a law surfaces Amazon tax they will have much bigger mallet with which to hit the gong. WaPo has amazing team and journalists.

2. Right now content is king - Amazon lacks much original content. Newspapers are dying, but the market for quality journalism will always be there. And he learned a lesson from Apple books.

3. He could just be Citizen Kane - just for the fun of it and the challenge to bring it to the digital world.

[foobarqux]

> Next time a law surfaces Amazon tax they will have much bigger mallet with which to hit the gong. WaPo has amazing team and journalists.

No need to wait until next time, Amazon labor conditions have been making headlines recently and even Obama is making gestures to do something.

Since Amazon is such a low margin business raising wages could be crippling so there is an immediate and critical need for Amazon to start doing public relations and lobbying.

An important media analysis would be to compare WaPo coverage of Amazon, especially the labor conditions issue, before and after the acquisition. It would also be interesting to know how much Amazon has increased lobbying funding and political contributions recently.

http://articles.washingtonpost.com/2013-07-24/politics/40860...

[neonhomer]

I'm not sure i buy into the whole idea that they are spending so much money on infrastructure and then they will "turn on a switch" to be profitable. Google is building, but they are still profitable. Here's an interesting dissection of amazon's earnings (complete opposite perspective from the article): http://market-ticker.org/akcs-www?singlepost=3190940.

[raheemm]

He said the same thing in all the paragraphs as in the headline - Bezos is playing a smart game that the rest of us don't get. So what exactly is that game?

[ds9]

I can't speak for the writer, and one can only speculate, but here goes:

Two suggestions seen (here on HN?) recently: (a) Washington Post is influential "inside the beltway" (b) its book reviews can influence buying on Amazon.

These putative purposes may be in tension with the idea that print newspapers are going away, but may be viable if Wapo will stay in another form (at least the website).

Also maybe adding some sort of news service into Amazon-related products, a subscription or such.

(The article is convincing about Amazon playing a smart or fortunate business strategy, but doesn't live up to the headline.)

[o1iver]

Did you read the article? The theory seems clear to me...

[mikkom]

> . The “problem”? Apple was too successful, too quickly. Because the iPhone was such a good business

"too quickly"? Apple? Are we talking the same Apple that was founded in 1976?

[speeder]

I think the "quick" does not refer to time since foundation, but the fact the success was a spike instead.

[hosh]

More like, while everyone thinks he is playing Chess, Bezos is playing Go.

Edit: Amazon and WaPo looks like this huge moyo play.

[ngoel36]

Bezos has been playing chess far longer than we even knew a game was going on. He just castled.

[saraid216]

Psh. Castling is a trick play, like the forward pass. Back in the old days, we moved one piece at a time.

[malandrew]

Jeff Bezos could turn it into a micropayment based newspaper. He could easily have Amazon Prime be a gateway to WaPo articles.

Alternatively, he could send out a Kindle to every WaPo subscriber and kill the print version tomorrow.

[Arallu]

Alonzo Harris: This shit's chess, it ain't checkers