Short transcript excerpt from a YouTube video in which Joel Spolsky and another speaker discuss Amazon’s business strategy. The speaker argues Amazon’s approach is to "find the moving parts in the business and break them apart," turning components (e.g., disk space, warehouses, fulfillment) into separate, competitive businesses. The excerpt notes Amazon has "37 businesses" and highlights the surprising origin of a major cloud platform from a bookseller.
Questions this video answers
37
What do you think about Amazon, Jeff.
Bezos, best company in the world.
You really do think that?
Yeah. Are you kidding?
And why?
They have a strategy that. I don't think anybody even knows what the strategy is yet.
Okay. Do you think Jeff does?
Yeah, yeah, sure. I can tell you what it is right now. The Amazon strategy is to constantly try to find the moving parts in the business and break them apart. Let's say that you have an online commerce store that sells books, but that requires, for example, some disk space to operate that. Then you either buy the disk space out on the open market, or if there's some reason you can't buy it on the open market, you sell the disk space to yourself and also to everybody else, and you buy it at whatever the best price you can buy it at is. You've now broken off the disk space from the books. You made two separate businesses, one that tries to provide disk space at the lowest possible price and to win that business, and the other one that does the books. And think of all the other things that go into books. Now you need some warehouses. Those warehouses, you make them available to anybody or you buy them, whatever's cheaper. Anybody else would have said vertical integration. They would have this big monolithic system. Jeff Bezos just sits there, breaks off little bits and pieces of it.
It's like fulfillment. Anybody can have our fulfillment.
Anybody can have our. They've done this repeatedly since the very, very beginning. And they now have 37 businesses. And everybody looks at them and says, these are unrelated businesses. Why do you have web hosting and servers and Elastic Storage and Mechanical Turk and 9 million other things that seem to be completely unrelated? Why are you killing it in all these single businesses? But it's just like, this is the new business model. Start with a bookstore, and I'll just break off every little single piece that I can find, and I'll make them all compete as if they were independent individual businesses.
Could you ever have guessed that the most important cloud platform would come from the bookseller?
You never would have guessed this. And once you realize the way Amazon does things, this becomes evident. This is his mitosis. It's sort of the system for inventing new companies. What is Yahoo System for inventing new companies? I don't know. I'll buy something really popular, right? That's all I can figure out, right? What is Microsoft? I don't even know. Google was like, let's make 20% time, and people will do random stuff.
