David Rosenthal: belief

Transcript context

…So yeah, that’s an interesting thing that like if it really is true that they’re going to let Jet continue to be its own thing. I mean, it’s a tall order to hold Walmart to their word of continuing to pour money into this thing. We don’t know what promises were made but this thing needs a ton of capital to grow. Walmart’s effectively the best private investor or maybe the best since they didn’t have access to the public markets and definitely couldn’t have IPO’d. It’s like hey, this is actually a great place if they’re committed to it, fulfill our mission and just pour a ton of money into growing. I think that’s #2 which was Doug Mcmillon, the CEO of Walmart, you know, well, at least if you listen to the interviews after the acquisition and the press release, clearly has a man crush on Marc Lore. Doug has said Marc is basically going to have Carte Blanche to do what he needs to do to make this a successful business and all the resources he needs. Then I think the third asset that if I’m Marc I’m excited about is the customer base of Walmart, like the vision of Jet originally was to serve the middle class Americans that are price conscious, and that’s Walmart’s customer base. Yeah, that’s true. Then before we move on, there was one other thing I was thinking is it’s really difficult to compete with Amazon now merely because of how razor think their margins are. Amazon famously, your margin is my opportunity. It’s a Jeff Bezos quote from a long time ago when they were starting Amazon. And he was saying that about Walmart, you know, that they were making, what, 3, 4 or 5 percent of profit margin on each sale. Amazon makes in the neighborhood of 1 or less. Amazon was growing up in this world where there was opportunity to compete on price there. Jet had a really hard time obviously competing with Amazon price since there just wasn’t much margin left. Do you know of any historical precedent where it was already raised to the bottom, one company became dominant because they were incredibly cheap on razor thin margins, like how were they upended? Because presumably you have to compete with them on some other access or some new technology comes around and upend them.…

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