Ben Thompson: recommendation

Transcript context

…Will Amazon have any impact on healthcare? As you know, there’s a new initiative. I don’t know. Amazon is the sort of company where it’s very difficult to doubt them, and they do have a model where they figure out stuff for themselves first. Then they figure out a way to productize it and make it available to anyone. So, I would always be hesitant to bet against them. The other thing to note, too . . . I was going to say all the difficulties in healthcare and regulation. The thing Amazon does . . . Amazon does really hard problems. I think I mentioned that: that venture capitalists need to change their mindset, generally, to be willing to go into spaces where upfront capital investment is not sufficient — there needs to be sufficient ongoing expenditure on a marginal basis for a product — and be willing to accept that. Amazon does stuff like that. They actually go out, and they build a bunch of distribution centers, and they build out a logistics chain. They do all this really hard, expensive stuff that everyone says doesn’t make sense, and how are you going to get a good return of capital from that, without realizing that the payoff is not in the three-to-five-year range. It’s in the impenetrable moat that comes from actually having physical assets in the real world that no one can afford to compete with in the long run. Here’s a business school kind of question. The idea of synergy is made fun of quite often. Conglomerates often have had a pretty poor history. But now there’s Amazon that seems to be evolving into a conglomerate form based on synergies, and it’s working. What’s the difference now? How would you explain this in terms of the strategic model having changed?…

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