Yesterday, I received an interesting email from John Tan, a high school junior at the Q.E. Boys School in Greater London.
He accurately explained the beauty of Amazon in scribbled writing that would easily fit on a napkin.
John Tan Email
Hey Mish,
I hope you have had a great Tuesday! I recently came across your blog and it’s great! I have a passion for economics and anything related to business and finance.
I recently started a blogging website myself. It’s run by me and some of my friends at school. It would be great if you could check some out of my blogs and articles. Any feedback and advice from a professional like you would be greatly appreciated!
John Tan
Mish Comments
I get requests every week asking me if I accept paid articles. I don’t.
I get even more requests along the lines of “I will write articles that you like, just tell me what you want.”
I do not hand out assignments and I usually do not even bother responding.
That’s just the beginning. Most of the requests are infomercial requests from people that clearly have never even bothered to read my blog.
The email from John Tan was a refreshing change of pace.
Inquiring minds may wish to tune into his blog or check out his article: The Power of Amazon.
John, I wish you the best. You will go far. I like your enthusiasm and unique style. Just keep at it. Write something at least several times a week. Daily would be even better.
Cheers and best wishes.
Mike “Mish” Shedlock
I am launching a new business shortly and seeking 50 billion dollars in funding.
Executive Summary:
– I will open thousands of coffee shops across America and will sell the premium coffee for $1 per cup
– my goal is to put every coffee shop in America out of business within a year
– then when I have decimated the competition I will raise the price of my premium coffee to 8 bucks a cup
– if anyone dares to open a coffee shop (and undersell me) I will open two coffee shops on either side of them – and sell premium coffee at $1 per cup
Brilliant – no?
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Sorry to tell you.
>8(
McDonalds had been selling coffee for a dollar recently. It sounded like they had planned to do it for a while to bring in customers to buy other stuff.
Now here is an idea. Do the same. But, ladies without the distraction of laptops or dumbphones for free! Or, which ever sex is the smallest group of customers. I would be happy if you gave me 3% share.
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On the internet, there is a Mexican restaurant in Rome, Italy, named La Cucaracha. Or, it is a hoax.
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What McDonalds is selling does not really qualify as coffee … let alone premium
Alas — this is not a problem … I can drop to 10 cents per cup … if I have to I will even pay people to drink my premium coffee… whatever it takes
Because I have unlimited funding … the more I lose the more investors pile in …
Because they are confident in my business model…
They know that I will eventually prevail driving out even the biggest dawgs in this space… Mcdonalds… Starbucks you name it ….. they will kneel before me … and I will take their heads from them …
I hope Jeff Bezos does not read Mishtalk…. he will steal the idea that I stole from him….
And heaven forbid that Elon Musk pick up on this — he is well connected and will get investors AND the government to subsidize his coffee….
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I remember NYC in the world before a major Seattle-based coffee chain introduced America and the world to $3+ coffee. You went to your local greek diner on the corner (when they could still afford the rents to be there) or your local deli, and you paid 50 cents for “kawfee” in a blue paper cup that had something that looked like a greek motif on it. You got it with a couple packs of sugar, a plastic stirrer, and a pile of way-too-many napkins in a small brown paper bag, unless you felt guilty for killing trees and told them to keep the paper. It was pretty much this way across Manhattan well into the mid ’90s.
How about a couple million to relaunch that as a chain?
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Still have that in the outer boroughs, except the price is a buck; maybe a buck and a half. Hey Malthus, the rents here will put you out of business before you knock the competition out, at least in Manhattan. 🙂
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Unlimited funding is unlimited funding… I can pay 500k a month for a space… doesn’t matter
All that matters in the world of free unlimited money is the story…
And the story is good — I am going to own the coffee market in America…
A buck at a time … or 10 cents at a time … whatever it takes
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Seems to be working OK for McDonalds.
But just remember, you’re not the first one to come up with the idea of jacking up the price once you take over. Until you completely vertically integrate the whole supply chain someone else will come along and cut you off at the knees. De Beers being the only success that comes to mind at the moment.
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So, are we saying there is nothing to worry about from China selling us goods at giveaway prices? Great for customers, right?
Until the second shoe drops.
I believe that Chinese are not fools. Yes, their leaders will unflinchingly sacrifice their own people to advance the leadership’s agenda, and I think that is even more easily applied to the rest of the world. The long game.
But sure, what the hell. Enjoy while it lasts, right? Consequences in modern times are always to be borne by the NEXT generation.
Kicking the can towards Utopia.
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You’ve got to have the right advertising: the diamond is forever. This sold, until the fashion for short term marriages arrived. Who wants to buy a diamond forever when the average relationship last a decade, at most.
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This time would be different — I will unlimited funding in place … and I can borrow at 0.
I can easily see any competition off… as long as the unlimited funding maintains confidence in my ability to execute this brilliant plan
Works for Amazon… can’t see why it wouldn’t work for me
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…And who said inflation wasn’t a good idea.
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Excellent
But you left out one thing. You need to purchase a major newspaper to sing your company’s praises … and use as bully pulpit when necessary.
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Around 1900, John D. Rockefeller and JP Morgan deduced that owning about 25 of America’s news papers would give them control of public sentiment.
They “bought” control.
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I will hire Obama to be my front man…. he will help me tap into government subsidies far greater than those that go to Tesla.
This is a winner.
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quit a possible scenario in today’s zirp environment. Your endeavors can be funded by cheap debt and employee stock options. The cash burn will be substantial and a profitable quarter might materialize in about a decade . Maybe the nascent company will be bought out at a premium by a larger company looking for growth or purchased by a private equity firm in a levered deal. Anyways your paper net worth via stocks will be impressive. Money for nothing and your chicks for free .
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Once I am done with coffee shops … I will turn to burger joints…. then next up … petrol stations …
Petrol for 10 cents a gallon!
And why not car dealerships? I will sell top of the line BMW’s for $1000…
When I am the richest man in the world I will of course tip my hat to my mentor … Jeff Bezos…
Thank you Jeff for inspiring me!
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This is the most poorly designed plan ever. You’ve got to go to the stock market, and have Wall Street finance your venture. You should never make money until you are a monopoly. Loose money for two decades at a minimum, then enjoy the fruits of your hard labor.
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Better still, free delivery. A cup in every hand. God knows if we don’t have time to make a cup, we surely don’t have time to go out and buy it.
This is war.
The contest centers about “judgements” as to how far your opposition is willing to go. Radical Islam’s threat is not their numbers or even their killing ability, it is their willingness to sacrifice themselves AND their loved ones to succeed.
Everyone is at war with Amazon. They are losing money to compete against a business that doesn’t need to ever (apparently) make money. They hope and believe that this paradigm will not last, and all they need do is outlast them.
Doesn’t look like a good bet to me. The economy has changed and they ONLY thing that matters to anyone is whether they believe a given business model can dominate its market.
We watch as M&A rules, each corporation not investing in its own technology or innovation, but in buying up its competition, ELIMINATING their competition.
None of this looks good in the long term, but, do we care?
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John D. Rockefeller perfected that idea in 1872.
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“Yesterday, I received an interesting email from John Tan, a high school junior at the Q.E. Boys School in Greater London.”
Wait a second!
You mean there is a school outside London where boys are taught quantitative easing?
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probably not the quantitative easing coming from boys that you are thinking, but about as useful as that coming from central banks! 🙂
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The school for QE is in the City of London.
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That was a good catch. 🙂
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Mish,
Great encouragement from you to John Tan. Like you, I wish him success.
DavidC
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Don’t know if he is referring to the credit card, the shipping service, Amazon Prime, of the website. But I am sure that if he checks Amazon he will find out which. sort of like pulling the arm on a slot machine, you hope for two cherries at least. Not much different from voting in the UK elections.
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Speaking from personal experience, Amazon’s biggest attraction is convenience. One click shopping. Of course its pretty much all bad from there given their prices are definitely not the best, their Prime service is a lie half the time because what you order is not immediately available, and they inevitably always ship through USPS which means you may never see it.
Convenience is what interests me. Humans seem willing to sacrifice almost anything for it, and then find themselves bored to tears and spending money they don’t have to fill their time.
I believe life has never been easier for Americans as a whole. I’ve lived long enough to know first hand how many people lived, out door toilets, no running water, and brutish labor to name a few, and it seems to me that people are more malcontent now that in written history.
How much more convenient will our lives need to become before we simply decide life is not worth living and end it all?
Amazon has tapped into this big time, and will happily sell us the rope to hang ourselves, two day free delivery….just don’t become too depressed if it is a week late.
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That’s like the old joke about the little boy trying to imitate John Wayne. He turns to the little girl and says,”I want what I want when i want it.” The little girl replies, “You’ll get what I got when I get it.” Yes, we all want to imitate John Wayne.
Of course we forget the price we pay with Amazon and Walmart. In the eighties and nineties Walmart help to keep consumer inflation down but at the cost of killing off local retail store owners and eventually the malls and strip stores. Amazon has done the same although no in that same manner. Where Walmart could kill local retailers and kill small to medium suppliers (when Walmart was over half your business they had a bad habit of driving your prices to them down to the point of being under cost and you out of business) amazon has at least provided a few retailers another outlet for sales. The cost is having to split revenues with Amazon which may leave them with marginal returns.
So our shopping habits change from time to time. Regardless, I still won’t shop at Whole Foods and I don’t see where that combination of Amazon-Whole Foods will have that much impact on the grocery business. The best that can be hoped for with that business model is that they keep the fools who believe that they are preforming a socially responsible choice by paying for high priced goods that may not be what they believe them to be. The other small group of shoppers are those who are willing to pay the price of convenience of having their food shopping done for them and delivered. Individuals with that much disposable income deserve what they get. And, of course, it will create a few more minimum wage like jobs. I see “contractors” driving their vehicles delivering for Amazon. Of course they do this with war but they call them mercenaries.
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If Amazon Prime doesn’t deliver within two days, complain to their customer service. If you press hard enough, you will be given a full refund and allowed to keep the merchandise. Amazon always starts the negotiation by offering a free month of Prime and then a gift card but refuse and force Bezos to fulfill his Prime promise.
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Well, wouldn’t THAT be convenient!
I live for opportunities to wade through customer service voicemail prompts only to get someone who I need to argue with for 45 minutes only to get pushed up the line to a “supervisor” who I must repeat the entire scenario again.
No thanks.The premise of modern consumerism is that promises seldom must be kept because it’s just too damned much trouble.
I paid $20 for next day mail to an adjoining suburb, only to have it arrive four days later. I went to the post office to complain (principles!) and got a refund. It would have been faster and easier to simply drive it there. They DEPEND upon us giving up…as it is the only intelligent choice. Principled complaints change nothing.
Pay your money and take your chances.
50 years ago my uncle worked in a large GM body shop in Omaha. He told me his shop produced horrific work, but the owners take on it was that a small percentage actually refused the work, so redo’s were not cost prohibitive. He made more money and keep expectations low with customers, and being a large GM shop, was able to project the notion that it was all you could expect.
AMAZON, normalizing low expectations.
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I’m not much of a fan of Amazon. Often find their prices a lot higher than elsewhere. But I’ll admit once you set up an account, an order can be placed very quickly. Which can be a draw.
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Just a historic note. Right after the 2008 financial meltdown Amazon fell to $9 a share.
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Too bad they don’t run the HC system through them. Join Amazon Prime you can see the doctor TODAY, otherwise it;s next week.
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Yes, and your doctor will be officed in the post office. Amazon and government are on the same fast track. They dominate without the “inconvenience” of competition. Government nor Amazon ever needs to meet a budget or show a profit. Modern economics.
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To much of a good thing can give you an indigestion! The spice of life is diversity.
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I find a stable diet far less ravaging on my digestion than constantly experimenting…but I’m old.
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What I call the Amazon Effect is killing small businesses. Amazon may only be 16% of ecommerce activity, but their influence on the mindset of the general consumer is much greater. We are now conditioned to get goods super fast at no extra cost and at low, low prices, and be able to return goods at the seller’s expense. The downside of this is that there is downwards price pressure on manufacturers, including those selling through other channels, resulting in less profit available to hire new workers and pay decent wages.
And Amazon creating more jobs than they destroy? Yes sure, I would love to exchange a retail position in a nice book store for a job in a faceless warehouse where my every movement was tracked. Wait until those Whole Foods cashiers are replaced by automated checkouts.
Amazon does not make money in retailing themselves, they haven’t since inception. They occasionally show a small profit or breakeven on retail because the losses on selling most items at or below cost is compensated for by the 15% they charge outside sellers to use their platform plus advertising fees (money for old rope).
In my view, Amazon is not a force for the good, it is the new Walmart, but the internet’s reach has allowed it to be far more destructive more quickly that Walmart could ever dream of.
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Amazon and Walmart are Godsends.
Mish
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Reblogged this on World4Justice : NOW! Lobby Forum..
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I’m not kidding: I do not understand the fits-on-a-napkin explanation of Amazon. What is the explanation, in English?
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I really thought that in the USA the fact of selling goods or services under the real cost was against the law since the great depression. I learned that in France at school 30 years ago. Has the business law changed ?
This topic should be more commonly discussed because that is the modern slavery developing everywhere that we see al (or undergo already).
It glorifies the pyramidal effect of the richest gets richer.
My only way to fight against is to get the good produced or service performed myself.
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