Ben Gilbert: evaluation

Transcript context

…Okay. We talked a little bit about what would have happened otherwise with Apple. We talked about it as we went along with the other big technology companies. Should we move on to playbook? Yeah, let's do it. My first thing to highlight in playbook is a perfect transition from the Seven Powers, because I do think this is actually the best scale economy business of all time. Because the fixed costs are so enormous, you amortize them across a huge customer base, you're rewarded for that massive scale, and for making these ungodly large investments, for the first time, they just invested so much in building out new data centers for AWS. They actually took Amazon cashflow negative. Their free cash flow is massively negative over the last 12 months because of these continued unbelievably large investments. I think this is a business that would have taken enormous scale to get to profitability at all. Now that they have it, it's one of these self-fulfilling prophecies, where now that they're massively the market leader, they just have to keep going. There could be a self-inflicted wound or soccer people call it an own goal, but once you have this scale economies power going, I just think it's pretty hard to drop the ball at this point. We've alluded to this for years on Acquired. We've talked about it a lot on this episode. AWS is a utility company. Think about what a utility company is. It's exactly what you described. It's the ultimate scale economy business. It is something that requires so much capex that society as a whole decides that there should be a centralized provider of this. In most other utility cases, they are regulated by the government about how much profit margin they can take, because otherwise, they could take massively exorbitant profits and extort customers. AWS happens to be an unregulated utility for the Internet, which is maybe the biggest market of all time.…

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