Video Of The Week: Mary Meeker's Internet Trends Report

This is a few weeks old, but I finally got around to watching it.

Mary always does a nice job of summarizing the latest trends.

#VC & Technology

Comments (Archived):

  1. creative group

    FRED:When reading Mary Meeker annual tech trends we really expect more when she is now on the inside looking out.”An X is already a X to those who already know.”If the majority of what is said isnt known by the tech savvy or trader that boat has sailed.Advertisement for various companies.Captain Obvious….

  2. jason wright

    rear view mirror

  3. William Mougayar

    Nothing on blockchain or AI

    1. awaldstein


    2. Vasudev Ram

      Yes, more surprising that nothing on AI when there seems to be a fad for it among (well-funded) startups these days.

  4. William Mougayar

    Image search as a big trend? Hmm

    1. Arnold Waldstein

      Yup this jumped out

    2. Twain Twain

      Oh, we better believe it. Google has put DeepMind team to work on YouTube videos:* http://www.businessinsider….@SixgillBlog:disqus

    3. Vasudev Ram

      Yes, useful, but not likely a big trend (by gut).

  5. pointsnfigures

    Trendlines broken yesterday with Amazon buying Whole Foods.

    1. PhilipSugar

      Yup they will:1. Lower prices through supply chain2. Replace every Point of Sale3. Provide Prime members benefits4. Make it so if you order by noon you can pickup by 4 for free at a locker in the store. Then they will upsell you as well on that visit.(This is not a novel thought by me, they do this at University of Delaware at 7-11s they have their own trucks now and they deliver to the office in the morning and make the locker run late afternoon)5. Other things I haven’t thought of to control the world

      1. Arnold Waldstein

        And a lot moreSwitch back to Whole Foods from the large growth in other chains picking up organic shoppers. They are in for a world of painEven more challenging for the artisanal producer. Whole Foods was their friend and launch pad then they continually got 360d and move to boutiques and chains which are going to feel price pressures and follow suitAgree with you on restInstacart and their ilk are toast at best at least wherever whole food reigns supreme.

        1. PhilipSugar

          What does 360d mean? I assumed turned in a circle?Point 1 is why they will switch back. Kroger was able to compete on price. Not anymore.If I’m negative, I’ll say they changed the culture at Zappos and their warehouse conditions are dreadful. Employees at Whole Foods because of benefits and conditions really are nicer to customers, and their shoppers like that we will see what happens.A strength and a weakness of WF is that they have six regions and store managers have a lot of authority to buy unique stuff. I’d love to say that continues but I doubt it.Bezos says your margin is my opportunity. But when you wring out costs, well other things suffer.

          1. awaldstein

            one at a time.-360 is/was the in house brand.Bring in artisanal, prove the market make it their self. Ex–they replaced the entire cold pressed juice market with their own. Bought massive cold pressers, and every night cleaned out the perishable section and pressed it. Brilliant for them, death to the brands.-Organic shoppers wanting artisanal brands have switched to others as more and more they left WF. The Albertson’s of the world are in for a world of pain, in fact the private equity firm that owns them was trying to buy Whole Foods.-You are not negative at all. I am way inside the Whole Foods world as I was both a vendor and had customers at an exec level for a number of years.-Regional and store level choices have been on the way out. If there are national brands in more categories, choice will get less and yes, I agree unfortunate.We agree.Fascinating to watch them and Walmart battle. I think they will crush Walmart actually. Buying from them or jet is a bit of a nightmare.

          2. PhilipSugar

            Walmart sells 14 times more groceries than Whole Foods, more than Kroger, Safeway, and Costco combined (numbers 2 through 4)…That doesn’t count the rest of their stuff which is nearly the same:…Even though we run current Whole Foods Loyalty Pilot in Philly and Dallas which goes away, I have no Whole Foods near me. But I can see the number of SKUs and had to understand why. They still buy a lot regionally and locally.I shop at the Newark Natural Co–op: http://www.newarknaturalfoo…One of their main ways to get artisanal vendors is to have a Farmers Market in their lot. They have a big one today.As far as Walmart. Living in the “hinterlands”, going there, and having sat on a board with Wesley Wright who opened every store from 1977 to 1999 they don’t care about Whole Foods customers and the two don’t mix.They got into groceries in 1999 I laughed.First, there aren’t any Whole Foods because the area couldn’t support them.Second, people want to buy everything from car batteries to cheap t-shirts, electronics, oil, and groceries.Third, there are ton of people that shop there that don’t have credit cards.You know what one of their biggest sellers is? Pop Tarts.That should tell you something. Their view of cold pressed juice? Look at that green stuff! (insert bodily function joke here)

          3. awaldstein

            good points all.been a dozen years since i went into and sold into walmart. there are none in nyc.complex and actually thrilled to see this disruption and change happening.

          4. PhilipSugar

            People forget that if you take the population of NYC, LA, SF, BOS you are at 4.4% of the U.S. Population. If you add in all of the top ten cities you end at 8%. If you say how many households make $100k which if you make less I don’t see how you are able to shop at WholeFoods 20%The reason why I bring these up (easily googled) is when you start talking mass market there are a ton of people out there that do not look like people on this board.That doesn’t mean you can’t carve out a great business serving the first paragraph people. Tons of companies do.But when you want to go mass market, then you really need to take this into consideration.I just find this is a big blind spot for people. For instance people say ride sharing will replace people buying cars. You know how many Uber’s or Lyft’s within pickup 10 miles distance of me right now I just looked? None, zero, zip.

          5. awaldstein

            Really well said and true.I live almost entirely in the first category and have build companies that have crossed over (like RLD in the early days) but for the most part that is where I work and live.

          6. PhilipSugar

            Thanks, I just bring it up because I am so far in both categories. I did 270k miles on American last year. I stay at hotels that are much nicer than I ever would need.But among others I drive a 2001 Chevy Sliverado with over 200k miles, here it is this morning with 3,500 pounds (yard and a half) of dirt in it I need to unload.Both don’t understand the other https://uploads.disquscdn.c

          7. LE

            For sure given your education level that is pretty unique. My general rule is not doing something that I can pay someone else to do unless I somehow enjoy doing it. Then it goes under ‘entertainment’. It’s obvious that you have what I call ‘secondary meaning’ to driving a 16 year old truck. I like and enjoy the new car smell myself.

          8. PhilipSugar

            It is not all that I drive, but you like exercise at the gym. I like it in the yard. But when I go to Best Materials in Middletown for fill and super top soil, I am viewed as just and average joe.

          9. LE

            Actually the only time I went to the gym was when my treadmill broke and I was waiting for the new one to arrive. Then I also bought a rowing machine and a recumbent just for variety. I didn’t even know that there was a great place literally next to my office in the medical center. It’s the nicest place didn’t even know. But haven’t been there since the new equipment arrived.To me going to the gym is not an efficient use of time even though it’s close to home and office. The portal to portal time is better spent in my basement.

          10. awaldstein

            Such a great comment.We are defined by these anomalies.

          11. JLM

            .That looks like two scoops of dirt from a half cubic yard front end loader. I recognize the fall pattern.Dirt weighs 120 lbs +/- per cubic foot, or 3240 lbs per cubic yard.Dirt is heavy.That dirt looks loamy trending toward sandy. If it were more organic, it would weigh less.If you had a yard and a half, it would weigh about 4860 lbs — two and a half tons.You do not want to be lugging that much dirt with a Silverado unless it is rated for two tons.In the ATX, you would need to put a tarp on the bed of your truck, load he dirt on top of the tarp, and then fold it over the load to keep it from spraying out as you drive. Secure it with elastic fasteners. It also makes it easy to clean up.Sorry.JLMwww.themusingsofthebigredca…

          12. PhilipSugar

            It is lifted six inches with heavy duty springs and driveshaft. The sandy dirt is fill the other dirt is a mix of topsoil and horse manure very organic. It is a yard scoop, but not full. I had gotten a bit of a short load of the topsoil for my raised garden and we made it up.She is called the mule.Here in Cecil County not having at least one kind of dirt, some hay, and other residues in your truck bed will get your man card revoked no different than no different than not returning a borrowed truck with more fuel than you got in it.She is considered a pretty boy truck. Almost nice enough for my wife to drive (She drives a 2016 Yukon Denali XL)Here is a man’s truck as they tell me down the street as he does renovations https://uploads.disquscdn.chttps://uploads.disquscdn.c

          13. JLM

            .Down here, you can still get by with an Easy Rider rifle rack and a deer rifle, a shotgun, and a whip. [Carrying a pistol with another under your seat.]If you’re on your game, you can have a lariat, but someone might ask you to build a loop and throw it. So, unless you really can, you’re advised to be careful.I am ashamed to admit. I sold my pickup in anticipation of moving to Savannah and Wrightgsville Beach.It feels funny not having a pickup. Like misplacing your testicles or something.JLMwww.themusingsofthebigredca…

          14. awaldstein

            The last time i owned a truck it was this one. This was I believe in Cherryville, BC.Covered for the winter.https://uploads.disquscdn.c

          15. PhilipSugar

            I LOVE it. I am pretty sure that is an IH with no synrcomesh.

          16. awaldstein

            You may be right.In the summer and Fall I put rails on the sides and brought in 20 chords of standing deadwood Tamarack which is what it took to get through the winter. So much work to fell, haul, cut, split and stack as you can imagine.And to move my bee hives around from place to place.My buddy and I worked at finding old abandoned log cabins in the bush and used the truck to move, assemble and sell to folks in the valley.In the winter, I put the cab on so we could move stuff around out of the snow.I am not quite bold enough to show what I looked like at those times but hair and beard were long!Life is long and good and diverse if we are lucky.

          17. awaldstein

            We don’t have dirt here so we go to the gym.Though Lianna is pushing me hard to get something in the country so maybe I’ll again have a truck and bee hives and a root cellar.

          18. PhilipSugar

            Look at my picture below. Think I need to go to the gym after help hand loading that?And I want to be clear I am using the man word as tongue in cheek, because my petite wife can outwork me, we are insulting ourselves.

          19. LE

            Exactly. And especially many people in NYC. Who think the world revolves around what they do and how they think. And even more importantly think that it’s the right way to think.For instance people say ride sharing will replace people buying cars. That’s one of those 50% predictions that will not be correct. I guess it’s hard for people living in the city to have a feel for why people like having their own cars at their disposal. Same with self driving cars. I mean truly self driving. Not situationally self driving.

          20. Salt Shaker

            This is gonna be fascinating to watch unfold. The avg. HHI of an Amazon Prime customer is $70K, roughly 24% higher than Walmart’s customers. Walmart is ubiquitous, while WF–like Amazon Prime–caters to an affluent consumer residing primarily in A/B counties. I think we’ll see continued retrenchment in the number of underperforming Walmart stores (in the U.S. there are 3500 Supercenters, 700 Neighborhood Markets) and continued consolidation among supermarket chains (Kroger’s, Albertsons, etc.) to remain competitive w/ supply chain. I can also see margin erosion among CPG companies who will increasingly be squeezed by supply chain pressure created by industry consolidation. Trader Joe’s is the king of private label IMO and WF should be doing more to market their 360 line of products. WF needs higher margins to offset their high overhead and large retail spaces. AMZN will deliver the needed incremental volume.

          21. awaldstein

            They are and will.They are doing it appears less overt 360 brands and a lot more of joint partnerships creating a new brand to push diversity on the shelf.The economics of them doing this is the obvious direction for this.

          22. PhilipSugar

            I am seriously shocked that income number is so low for Amazon Prime, but Whole Foods is $125k

          23. Salt Shaker

            I’ve seen conflicting income data. My understanding is early Amazon Prime growth was high end affluent with more recent growth coming from $50K+ HH’s. Clearly, Walmart is hitting low and WF/AMZN will mostly hit high. The middle will get squeezed. Sound familiar?

          24. Vasudev Ram

            >Ex–they replaced the entire cold pressed juice market with their own. Bought massive cold pressers, and every night cleaned out the perishable section and pressed it. Brilliant for them, death to the brands.Wow. Brilliant and deadly. Crazy like a fox, as they say.I had read “Made in America”, the autobiography of Sam Walton (Walmart founder). Very interesting. They did a lot of different things to grow, both individual stuff in their early days (e.g. driving longer distances to buy stuff cheaper, incl. crossing state borders), he and his brother flying their own small planes to scout for new store locations, “blowing stuff out of the store” via discounts, and later, when they got more organized and corporate, bringing in heavyweights in the distribution area (and the computerization of it), which helped them to grow faster and more.The only thing that was a bit of a downside was that he admitted to being somewhat chintzy with his employees, in terms of pay. Then again, he said that he did sell / give them shares, and many became well-off (if not rich) from that.…(Didn’t find Wikipedia link for the above one)”Made in Japan” by Akio Morita (Sony founder) is another good one which I read.

          25. awaldstein

            I will check out Made in Japan as about to take a week off and need plane reading.BTW–Whole Foods is not that great to its employees. The best rise, most of the remainder move on.The number of buyers I have seen cross the 12 NY city stores in the time I participated in my fiancees beverage company was 2-3x a year changes.

          26. PhilipSugar

            Wesley tells a story where Sam Walton made him return a Lincoln he bought for his wife. I asked….but Wesley you have a diesel dually pickup truck. So much more than a Lincoln. Sam said truck ok, Lincoln not.

          27. LE

            Employees at Whole Foods because of benefits and conditions really are nicer to customers, and their shoppers like that we will see what happens.Well hopefully they will not turn into what I have called ‘supermarket grade’ employees. Until recently (at the store that I shop regularly at) they had a certain bounce in their step. Could be a coincidence but with the sales drop (or lack of gain) seems less enthusiasm. You know it could be little subtle things. You go into the local supermarket and if the fish guy is cutting fish he doesn’t even know you have walked up. At WF typically they do (this is practically a made up example to illustrate my point). Little things as a result of being able to hire the right crew is why I primarily shop there. Also atmosphere. Quality of product (the fish or produce). Any of that changes I will not go out of my way (I currently do) to buy there. You know it’s a habit right now. Organic? Not the main driver at all of why I am a customer.Bezos says your margin is my opportunity.This was the strangest thing to me about this. In (traditional) supermarkets there is little margin. If WF has high margins it’s because of how they spend money to be able to charge those prices. (My thoughts from previous paragraph).

          28. PhilipSugar

            You and I both agree on Wawa. It makes a difference.That is the biggest risk.Bezos is no different than Sam Walton. Willing to play the long game get big enough and kill your competition. New competitors can’t come in unless they are just willing to bleed and have somebody to fund them.

          29. Girish Mehta

            I am thinking about his other statement. What is he thinking in the WF purchase in terms of “What will not change in the next 10 years”..

        2. Richard

          Blue apron and others are, if WFs gets their prepared food quality up a notch or two, in a world of trouble.

          1. awaldstein

            i never count out the small brands as that is what I build mostly but if you are any boutique or supermarket exec, any artisanal brand, any shipping or logistics or home delivery org, i know what you were doing yesterday!

          2. Richard

            Between brokers, distributors and small retailers, I think Amazon can actually do more for artisanal brands than the current system. As for BA, It’s just that the moat around blue apron (who is just stacking ingredients) is going to dry out if you can get the the same or similar at 25% less from WF/Amazon

          3. awaldstein

            Potentially.This is a massively interesting move and excited to see how it plays out as I am the recipient as my two biggest line items are of course Amazon and Whole Foods, like all New Yorkers every month for the stuff of life.Whole other topic as now after failing miserably three times to get into the wine wine biz, they are now in (except in NY). That should be interesting but I think they are going to screw it up. Whole Foods as well has.

          4. pointsnfigures

            Watch what Amazon does in the back of the house on the distribution side. It’s where the true margins are made and lost. If I am Target, Costco, I am worried. Heard one traditional grocer say, “Amazon doesn’t know shit about the grocery business.” Grocers don’t know shit about digital businesses, but they are about to find out.

          5. PhilipSugar

            This is so true. So true. That Walmart exec that I laughed about going into the grocery business told me, yeaaaah Wharton Boy (Bentonville Drawl). They say we can’t sell groceries. You wait till they run into our logistics, systems, and buying.So this means you get killed at the high end and the low end.

          6. LE

            like all New Yorkers every month for the stuff of life.You mean all New Yorkers like you. Obviously the majority of New Yorkers are not paying Whole Foods prices.

          7. awaldstein

            You have more facts than I.In my world, I get most everything delivered from Amazon, do 100% of local fresh products and fish from the green markets and fill in around the end with WF.The more often we have green markets and the broader the distribution the less dollars whole foods gets.I am not unique in this respect if you define NY as Manhattan.

          8. LE

            You can’t be serious if you are defining ‘NY’ as ‘Manhattan’. 1.6 mil in Manhattan out of 8.4 mil in New York City.And a quick check shows that Gristedes has at least 3 times the locations in Manhattan as Whole Foods does. Just Gristedes. The few times I was in one seemed like your local shit supermarket (I could be wrong on this ..)

          9. awaldstein

            The boroughs are different economies from each other. Brooklyn is its own city.What ties the boroughs together is transportation and of course taxes.How people live in the South Bronx is as different from here as can be. Staten Island is most likely closer to place in Jersey in many parts.So no I don’t define Manhattan as anything other than itself.

          10. Salt Shaker

            Gristedes used to be high end quality. Far from that today. Their rev in Manhattan is likely a fraction of WF’s, even with 3X the locations. Company CEO ran for Mayor (twice I believe.) Parent company heavily invested in RE likely providing a buffer for supermarket chain that would be hard pressed to compete otherwise.

          11. awaldstein

            You are speaking crisply about this.Back when there were no green markets and no supermarkets in Manhattan. Large corner stores.And way back in my childhood kosher products were delivered.

          12. Salt Shaker

            It’s easy to parse one’s shopping needs in Manhattan among several outlets. There are no significant time/mgt issues since everything is so closely located. (I’d frequent Citarella for fish, Fairway for produce, Beacon/67th Street for wine, etc.) all pretty much in the same hood. It’s a different shopping experience vs. most cities, and one I frankly miss. Was in NYC last week pining for 3 things: 1) good pizza, 2) a bagel that didn’t taste like leather and 3) a good corned beef sandwich. None particularly healthy, but I did hit a trifecta on day 1.

          13. awaldstein

            Very true.Transportation makes the difference as well.Easy to have 4-5 different meetings all over in a day. In LA never going to happen.

          14. LE

            None particularly healthyThat’s a matter of quantity and frequency as much as actual content. And the anxiety over food is often more harmful I am guessing than whatever the actual food might do (which is always subject to change anyway..)

      2. LE

        Good time for M&A activity around anyone who could be impacted by this. The fear will drive that on both ends.

        1. PhilipSugar

          If you are Kroger and Safeway you are screwed. You are getting hit high and low by both big and small so hard.Walmart took your lunch money on the low end.Wholefoods is going to take your girlfriend on the high end.Trader Joes took the leadership of the small rich cool kids groupAldi is coming into lead the cool middle class group.Maybe you can sit at the cafeteria table with each other, but you still are going to be alone.

      3. JLM

        .The POS war is already over. Places like Sams and WF have self-check out and it is more convenient.The challenge with groceries is the labor used in putting the purchases in bags to cart to your car in an expensive parking lot.Sams just ignores the issue of “bags” while places like WF just provide them. WF groupies bring their own unsanitary bags. I use LL Bean bags though they do get the steam cycle from time to time.The Prime membership revenue is not chickenfeed and it will go up. This is a revenue stream other grocery chains do not have.Most of the others have a loyalty program.There is a cost to delivery which cannot be ignored. It is an incremental cost and greatly increases the labor per $ of revenue. They have to get paid for it. It is not like hard goods which everyone expects to pay for.JLMwww.themusingsofthebigredca…

        1. Salt Shaker

          Costco makes its money/profit on membership fees, not product. Could other traditional supermarket chains pursue a sub model (re: discounts, yearend cash backs or credits), though as you note margins are already quite thin? Middle getting squeezed.

        2. PhilipSugar

          Self Serve versus cashier is not what I am talking about. WF has 5 different ones currently, not connected, not real time.

        3. sigmaalgebra

          I like old fashioned brown (kraft) paper grocery bags (sacks), not the newer slippery, floppy plastic ones.So, some years ago Sam’s was selling roughly traditional brown paper grocery bags, and I bought a stack of them. If stuff one of their bags inside a second one to make a double layer bag, then the result is pretty good. So, I have a dozen or so folded, stacked, and ready for use in the back of my SUV and take them with me into Sam’s.Of course, each of those double bags is vulnerable to tearing, getting wet, etc. so doesn’t last forever. Soooo, sure, slowly I return to the stack I bought at Sam’s, make up another dozen double bags, and continue on.As I shop, I put the items in the bags. So, mostly one bag has like items, say, cheese, frozen fish, milk, etc.Then at checkout, I put the bags and items not in bags, e.g., a 20 pound sack of bread flour, on the belt in an appropriate order, that is, so that the heavy stuff to go on the bottom of the grocery cart goes first past the scanner and cash register and into my shopping cart.For each bag about to pass the scanner, I remove all the items for scanning, replace the items in the bag, and place the bag in the cart. The process goes quickly.Works great!The plastic bags flop over, and the handles get tangled on each other and the items. The paper bags stand up and stay out of the way. Paper is much better.I know; I know: I’m a sinner. I am sinning against the 100% all-natural, pure, pristine, delicate, life giving, loving Mother Earth. That sin is my transgression. For that there will be terrible, swift retribution. Then for redemption I will need atonement via sacrifice. So evil are brown paper grocery bags!

        4. LE

          Not to mention that with delivery you miss out on impulse purchases which potentially have a higher profit. Now people will say they can upsell you on the website or app as well but seat of the pants doesn’t seem to be as likely the way people operate.

      4. Vasudev Ram

        >Other things I haven’t thought of to control the worldI guess Bezos had a good intuition (or had this plan) when he named his company Amazon (one of the world’s largest rivers).IIRC I read some article about long ago – about how he thought of the name – but don’t remember the details – size was sure to have been a part of it though (large river).

  6. awaldstein

    Two nits that made me smile.-My favorite new brand Allbirds was mentioned. Love this brand–I have two pairs, buying a third. Ditto with Lianna.-40% increase in packages!Every day, the doorman station in my building is buried under packages, Literally!I buy everything from toothpaste to envelopes to be delivered.and the fact that bike sharing in China has been up 1000% month over month this year. Crazy.Great gym listen.

  7. LIAD

    seems she still didn’t get the 10 slides, 20 minutes, 30 point font rule.

    1. Frank W. Miller

      Well, she said up front that the deck was designed to be read rather than presented. However, I didn’t expect that that was what she was going to do. I had to stop listening as she continued to just read verbatim the words slide after slide…

  8. LE

    Here is Meekers report for 2007 (from 2006):…I think the issue with any of these forecasts is figuring out which 50% is correct and which is not.

    1. JLM

      .50% is coin flip territoryJLMwww.themusingsofthebigredca…

      1. LE

        I am shooting fish in a barrel today. Otherwise I would have gone through that 2007 forecast to calculate the actual percentage. Seat of the pants although it had many things positive to say about mobile eating the world it certainly didn’t predict the reason why and in particular what Apple did in this area (because the iphone wasn’t released yet).Meeker herself has a really nice gig going as a partner at KCPB which bats at under 50% so I can see how this is quite helpful.I am not finding anything about what Meeker thinks about bitcoin. I see that she first mentioned it in 2014.

  9. JLM

    .Every business Amazon has gone after has had big margins, hence, “Your margin is my opportunity.”The grocery business has notoriously thin margins. WF managed to increase their margins with the whole organic shtick.Others have found out this trick and are pressing from all sides. Today, in the ATX, it is a toss up amongst WF, Central Market (HEB), and Trader Joes. You want the best corn? You get it at Central Market.I don’t think you buy fruits and produce unless you can touch them and smell them. Who buys a watermelon without thumping it?There is no question Amazon will inject all kinds of supply chain efficiency and they will make WF into a more streamlined, data driven business. They may convert stores in urban areas to fulfillment centers in rural areas.The question is whether there is a return for that incremental business investment or is the grocery business just going to become more efficient while still plagued by thin margins.Amazon has typically applied its eCommerce genius to companies it does not own. This is a huge real estate play, likely to get bigger.At the instant Amazon made its move, WF was struggling with converting revenue growth to earnings growth. Revenue was slightly up (1% range) while earnings were down 20%+.From a 2013 high of $65 and a low of $27, the deal got done at $42. BTW, Amazon stock increased in value a multiple of the deal which means emotionally it cost Amazon nothing. Not perfect math, but the applause from the market is deafening.This is not a scalable business in the way tech businesses are. It is a thin margin, high fixed assets (real estate), people intensive, inventory degradable and perishable, emotional, and taste driven business.I love Amazon, but this doesn’t feel like the right fit. Don’t get me wrong — between Walmart and Amazon/WF the grocery business is over. You will see a couple of major chains puking up their guts shortly and trying to peddle their leases.I just don’t see the margins increasing.This deal breaks nicely for Jana if you understand what that means, proving activist and vocal ownership can be profitable.JLMwww.themusingsofthebigredca…

    1. Salt Shaker

      AMZN will deliver backend expertise (e.g., data/systems mgt) that potentially will squeeze a point or two. Combined w/ incremental store/door volume among an affluent base, this dog will likely hunt. Nothing wrong w/ a low margin high volume biz. Of course, WF retail lease terms is the big unknown and potentially a large albatross. Can’t imagine AMZN didn’t do full due diligence there, though.

      1. LE

        Of course, WF retail lease terms is the big unknown and potentially a large albatross.I gave thought to this already. Amazon goes in to landlord where lease is locked for a long time and says they will simply build a new store down the street unless landlord renegotiates on more favorable terms. And if they vacate the shopping center (the bluff even if they pay rent) it will lose the WF which brings business to the rest of the center. Ghost center. Any deal can be renegotiated with that type of leverage.

    2. LE

      I don’t think you buy fruits and produce unless you can touch them and smell them. Who buys a watermelon without thumping it?Millenials and newly hatched. [1] My brother in law pre rise of buying jewelry on the internet ‘people will never buy diamonds without seeing them’. Family run jeweler (since 1930’s). People want to see the merchandise. When he married my sister my dad thought it was great to marry into this family. Well they are out of business now and he is working for another jeweler. To my dad they were ‘diamond people’. That’s from the old country.In business these dynasties never last forever. Right now we are at ‘peak Amazon’ and ‘peak Facebook’ and ‘peak Netflix’ and so on. Won’t last forever.The other thing is most threats in business aren’t this obvious. You know their wasn’t a big announcement when the Japanese rolled in and change the auto market. Ditto the threat from Apple’s iphone wasn’t apparent from the start to most pundits. Ditto for AWS for that matter.[1] I mean for god’s sake. The idea of a stranger renting part of your house (unless you are poor) doesn’t make much sense to old timers. You know my mom (and even my wife) cleans up before the cleaning lady comes to clean. My wife’s much younger brother (25 years between me and him) he got married and went on business trips and let his really hot wife share the house with strangers (until she complained he didn’t see the problem). And ride sharing? I own two nice cars one is not enough. And get rid of them way before the warranty expires. If not sooner (kept one 1 month didn’t like it).

    3. PhilipSugar

      I think Amazon looked at Apple and thought ok, do I want to do stores for my stuff, but how? Cheaper to buy than build.I know they tried to put their lockers and brand with 7-11 but that is a low end brand.Go for Whole Foods, that is why the market liked it.

      1. Girish Mehta

        Scott Galloway’s comment on recode last month…”“I can’t imagine why they wouldn’t buy Whole Foods, for example, just because of the urban locations. They could close them down and just turn them into warehouses and I think they could justify the price.”I don’t know about the turn into warehouses part.

      2. cavepainting

        Exactly! WF is high-end grocery and customer base is a better fit with the Prime member base. $13B is a drop in the bucket for Amazon’s valuation and it is the right long-term bet, notwithstanding the risks.

        1. PhilipSugar

          Exactly. We agree 100% Hell they increased their valuation by more than that. That is why I don’t understand “accounting goodwill”They will have to put the difference between paid value and asset value as goodwill. But they are the one that gained “goodwill”

    4. cavepainting

      I think there is a real and growing market for people who want grocery to be delivered to them. Delivering consistently high quality goods that are perishable is no joke, but if anyone can figure this out, it is Amazon.Grocery is low-margin because of real estate, staffing, high % of wasted inventory, supply chain inefficiencies, etc. There are opportunities to address all of these.I would not be surprised if the following come to pass:1. Amazon shuts downs some stores and makes them more like storefronts where people can scan and order and the goods get delivered.2. Some stores are transformed into stores of the future where people can shop and leave without interacting with anyone or staying in line for checkout.3. They already have a loyalty system (Amazon Prime) in place. They will plug WF into Amazon Prime to provide members discounts and promotions that incentivize repeat purchases.4. “Dash” button equivalents for Grocery items. After all, almost all grocery is recurring.WF is premium grocery and might align nicely with the prime customer base.I am more positive about this deal. It is an experiment and will take some iterations to get it right. But undoubtedly It is the right long-term bet.

    5. sigmaalgebra

      > The question is whether there is a return for that incremental business investment or is the grocery business just going to become more efficient while still plagued by thin margins.My guess is that Bezos doesn’t quite yet know just why he bought WF. Instead, my guess is that he does want to do better in groceries. Actually he’s been selling groceries, especially canned foods, via just his main Web site for a long time.Well, to do better in groceries, I’m guessing that he’s guessing that he doesn’t yet quite know just how the heck to do that. But he wants to know more, in particular, enough more to know how to do that.So, he bought WF basically to learn that part of the grocery business, THEN try to figure out how to do better in the grocery business, and THEN, with his ownership of WF, use that as his start in actually executing better in the grocery business.Maybe he won’t see how to do significantly better in the grocery business. Okay: Maybe he will just sell it all off or let it just run as it is for some years and look again or just shut it down and use the real estate for his push to local retail and his distribution system.He bought some airplanes, too: I know something about FedEx. I bet he can’t really beat FedEx, either. But, he can try.He does know how to hire and manage people to set up a big Web site and server farm. Very good. Not great, but very good. Great? He’s not nearly the first: Microsoft,Facebook, and maybe some large banks did well, too.In his thinking, he doesn’t try to drill down 10,000 feet or even 1000 feet. Instead, he’s done well, $80 billion or so, always being only about six inches deep. So, in his buying his airplanes and WF, I’d look for his thinking as again being only six inches deep.

  10. george

    Recommend more analysis around consumption rather than distribution. Content is growing and mainly consumed for free today; new measures need to be considered.

  11. avip

    Where’s the fraud graph? No one should bother looking at ads-stats (“growth”) that don’t factor in fraud.

  12. jason wright

    I don’t drive.

  13. PhilipSugar

    Now I’ve really hijacked this thread, but it’s a Saturday. I’m sure Arnold could really tell you the difference, but I’m sure it has to do with heating it which must break down some of the stuff you are drinking it for in the first place.

  14. awaldstein

    I’m not jumping in.Amazes me that such really smart people are so comfortable with their ignorance about what they put in their bodies. Not being negative about this but nutrition, food and exercise is science’s gift to us, giving us not just a longer life but a way of putting those years in the middle of life.Glad to respond in a call sometime, i’m going to go for a long bike ride now instead.

  15. awaldstein

    ;)Can’t do this now.Need to say that the state of ignorance of really smart people around nutrition and what we eat is amazing. Such a gap.Been spending some time on a project that has thrown me headfirst in what is going on in genomics. Even me coming from a strong understanding of food science and nutrition and an advisor to an organic supplement company, is amazed at what is going on. And that in a very short time, a lot of what we eat and the entire supplement industry will be transformed through this.

  16. awaldstein

    Unlikely it is fermentation in the fridge, very likely it is microbial growth.One creates alcohol the other well–bad shit for you to put in your body in almost all cases.

  17. Vasudev Ram

    Out here in India juice in cartons comes with the warning – do not buy if pack is puffed – and puffing usually means spoiling here. But avg temp here is higher than avg US temp, and you are using a fridge (assuming you are in US).

  18. awaldstein

    Organic in food (and wine) is 100% tied to the ingredients that you start with.It has nothing to do with what is added, how it is processed or preserved.In many instances the later pieces are equally if not more problematic for you body.

  19. Vasudev Ram

    Interesting. Maybe poor quality in some way, then, as you surmised. Just as a data point – I used to buy regular juices earlier, but some time back I started trying to buy only organic ones, or at least ones without added sugar. Extra sugar is a huge problem here, people pile it on. There are jokes in some places, like tea so strong you can stand a spoon in it – strong from sugar, not tea 🙂