Tag: retail

Don’t Be Disintermediated<span class="badge-status" style="background:red">Premium</span> 

Don’t Be DisintermediatedPremium 

Disintermediation Defined Disintermediation is when one party inserts itself between an interested party and its customers (see below table of “disintermediators” and “disintermediatees”).  Ironically, parties that suffer disintermediation often invite it upon themselves. Google Disintermediates Yelp and OpenTable For the past several years Yelp restaurant reviews appeared on Google business listings (this appears to have…

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It’s People! It’s People!

It’s People! It’s People!

Human Capital is Key

“It’s people! Soylent Green is people!” shouted Charlton Heston’s Robert Thorn in 1973’s Soylent Green. Fast forward 45 years and people remain central to the process. Although the process we refer to isn’t recycled human foodstuff but rather the global economy where Intellectual Capital provides economic sustenance and Human Capital is the key ingredient (Intellectual Capital = Human Capital + Structural Capital + Relationship Capital).

Grist for the Mill

It’s only a matter of time before Technology giants begin to reach into public schools in an effort to identify and recruit top-tier talent in an Intellectual Capital-driven global economy.

Technology’s Four Horsemen – Alphabet, Apple, Amazon and Facebook – hired 247,714 net new employees in 2017, up 89% from the previous year’s figure of 131,196. Amazon alone accounted for 91% of 2017’s total and 84% of 2016’s total (this makes sense given the nature of Amazon’s retail-centric, distribution-heavy business model).

Technology companies require an enormous amount of human capital and brainpower. This is especially true of large technology companies that work to define new market opportunities and use cases. Waiting for the U.S. K-12 public education and university systems to produce inadequately trained professionals is both a suboptimal outcome and supply chain bottleneck. Therefore, we expect for companies such as the Four Horsemen to become increasingly aggressive and systematic in their approach to training and recruiting young people.

Technology's Four Horsemen.png
Employee Counts: GOOG, AAPL, AMZN and FB for Years Ended 2015, 2016 and 2017 (click to expand)

We have experienced early green shoots of this phenomenon with Peter Thiel’s Thiel Fellowship a foundation that awards $100,000 grants to high potential young people. Those accepted (104 fellows and alumni, 2,800 application last year), to the two-year program learn how to write code and build companies. Young people skip or step out of college to become Thiel Fellows where in addition to grant proceeds, Fellows receive support from the foundation’s network of entrepreneurs, investors and operators.

Another example comes from my personal experience in China 2006-2011 where a number of the large China-based IT Services companies set up company-owned “universities” to train recent college graduates in an effort to better prepare them for the type of work that they would perform on behalf of clients. My view is that these companies will reach further back into the student supply chain and begin to recruit and train students during their junior high and high school years.

Reduce Time-to-Productivity

A misconception that many have is that an engineer fresh out of college can hit the ground running at optimal efficiency and drive massive value for companies. That’s hardly the case. Universities do a poor job of preparing students for life in the real world. It makes enormous sense for companies to actively invest in the U.S educational system both at the K-12 and university levels. Short-term operating profit margin dilution will pay dividends over the long-term in the form of new differentiated products and services. To ensure a worthwhile outcome it is paramount that companies take a systematic approach to execution. If nothing else Alphabet, Amazon, Apple and Facebook excel in measuring outcomes and re-calibrating where necessary.

No Teachers Required

Given what we have posited it would make sense for the Four Horsemen and others to get involved in public education early in students’ academic careers. Further, it would be logical for companies to seek to influence the academic experience as much as is necessary to maximize the probability of optimal outcomes for both students and companies. Therefore, it is not unreasonable to expect that the Four Horsemen and a few select others will eventually shape student curriculum — particularly in Math and Science. This may range from content creation to teaching methodologies to the act of teaching itself. Teachers’ Unions ought to be concerned. From a technology standpoint it would not be difficult to replace public school teachers nor college professors with machine learning platforms wrapped in friendly AI skins. AmazonGo is already doing this with retail checkout lines. It’s less a question of “how?” and more a question of public will.

What if Alphabet Were to Acquire Walmart in an Effort to Better Compete with Amazon?<span class="badge-status" style="background:red">Premium</span> 

What if Alphabet Were to Acquire Walmart in an Effort to Better Compete with Amazon?Premium 

It’s fun to speculate. What if Google parent company Alphabet were to acquire Walmart in an effort to better compete with Amazon? One of the advantages that Amazon has in an AI-driven world is a fully integrated retail experience. Amazon customers may speak buy orders into their Alexa-powered smart device – “re-order paper towels” -…

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Amazon’s Retail Experience Provides the Company with an Edge vs. Google in the AI War.

Amazon’s Retail Experience Provides the Company with an Edge vs. Google in the AI War.

Amazon’s straight-through-processing (“STP”) retail experience provides the company with an edge vs. Google in the AI war:

Visual output from our Amazon Alexa query – “Buy Amazon Echo”:

AMZN Echo search

Consumers may execute the purchase transaction with one or two instructions. This is true for millions of products sold via Amazon’s retail platform. Amazon provides consumers with a holistic retail experience seamlessly combining intelligent, AI-driven product search with order processing and payment processing capability. We believe this integrated retail experience provides Amazon with an edge over Google in product search as well as with AI-powered personal assistants.

Here’s the comparable retail experience using Google’s AI:

GOOG Echo search

The consumer is required to execute multiple additional instructions in order to execute the transaction using Google’s AI as a result of Google not having an integrated retail platform.