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“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

- Mark Twain, Humorist.

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Artwork from Shan Jiang, The Southsea Fish Paradise.

Dense Discovery

A Week In Summary: Security, Data Privacy and TikTok!

  • App Annie, the company offering analytics for mobile apps, released their 2021 State of Mobile report and they wrote that mobile adoption advanced “2 to 3 years” in the past 12 months. Daily time spent on mobile increased 20%, as did mobile spending. Other interesting snippets reveal that TikTok had a 325% Year-Over-Year growth with users spending an average of 21.5 hours per month on it.

 
  • Google threatened to withdraw its search engine from Australia if the Australian government implements a regulation that will require the company to pay for news content. The News Media Bargaining Code proposed by the Australian government would require tech companies (starting with Google and Facebook) to pay certain Australian news outlets for featuring snippets of their content. Google has been lobbying against the proposed law for months. A similar concept around media has been explored by the UK Government. Australia’s PM says the country doesn’t respond to threats. Having gone up against China in investigating the origins of COVID-19, will Australia now fight a new battle?
     

  • On December 11, 2019, Jack Dorsey announced Bluesky, an open and decentralised standard for social media. This week, more details were announced. They released a 61-page Ecosystem Review on the most viable social network protocol and apps. It remains unclear however whether Twitter would implement this decentralisation model (given the monetisation challenges) or how they would do so.
     

  • Signal has grown massively since Facebook’s announcement of Whatsapp data integration. It has also seen an uptick in China. The Signal team held their first AMA and shared their future roadmap. Highlights include the notion of whether Signal would be sold to another tech company - the way Signal is structured in their service and also as a non-profit entity, means that they remain committed to being private and secure.

Marc Lore, The Man Who Challenged Amazon

Marc Lore is a man who has gone up against Amazon several times and has been successful. For the past five years after starting Jet.com and being acquired by Walmart, he has been at the helm of Walmart’s e-commerce business efforts against Amazon. Last week he stepped down. This week we cover the lore.

 

Amazon is a really tough business to go up against. There are very few entrepreneurs who have gone up and succeeded.

 

How Amazon operates and behaves is almost like a monopsony. It controls or dominates the demand for goods and services with its marketplace and own brand products. It is very challenging to beat Amazon, because Amazon like most Big Tech do not portray themselves as a monopoly but have similar staying power. 

 

Shopify’s mantra of “arming the rebels” is a direct reference and challenge to the retailing empire that Amazon has built -  although what Shopify is doing may not actually be harming Amazon. Shopify’s arming the rebels is a nice marketing spiel, in reality they are arming everyone - arming of rebels requires Shopify to back a specific side. When Shopify arms everyone, no one is really armed. In such an environment, the ones with the bigger marketing budget and ability to distribute their goods is the winner… Amazon!

 

But when it comes to a case study on how to beat Amazon, one of the most notable is Quidsi. As one of Amazon’s largest acquisitions, Quidsi ran several sites with prime keyword domain names such as Diapers.com, Soap.com and Wag.com. Six years after the acquisition, Amazon had to shut down Quidsi as they weren’t able to get it to be “profitable”. 

 

The founder of Quidsi and serial entrepreneur, Marc Lore, has gone up and won against Jeff Bezo’s Amazon. Lore also has some serious hustle. Having found opportune moments of arbitrage, he has gone up against Amazon several times successfully. He has made massive business exits from going up against Amazon and is quite a business creator!

 

📕 Marc’s Lore

 

I am not going to accept that it can’t be done unless someone proves it is a zero probability. Often the case, you can’t prove it is zero. There is always some non-zero probability. It is typically the stuff that is close to the non-zero that nobody else is touching and that is where the opportunities are”.

 

Marc Lore’s story paints him in the light of having some of the stereotypical entrepreneurial traits. As a kid, he charged his family 5 cents whenever they wanted to watch Casper the Friendly Ghost on his slide projector - and he made up a story for each frame. He did other gigs that would make some money too, mowing lawns, picking weeds, selling newspapers and washing cars.

 

At 14, he started trading on the stock market and baseball clubs. Marc Lore was also a ‘numbers guy’. During high school, he snuck away to Atlantic City casinos to count cards. After high school, he did a Bachelor’s degree in Business Management and Economics. This was followed by a six years career in Investment Banking positions where Marc ended up heading the Risk Management divisions. 

 

Marc Lore’s first foray into the startup game was to find a niche and compete with another ecommerce giant, eBay. In 1999, Lore co-founded The Pit, Inc., an Internet market-making collectible company alternative to eBay. Two years later, he sold the company to The Topps Company for $5.7 million.

 

According to Marc, one of the ways he is able to get huge wins is by putting himself in a position where the situation means what he is doing can’t not work

 

For The Pit, Marc put all of his money - every penny into it. 

 

In his second business, Quidsi (Diapers.com), Marc had most of his friends and family invest into it. That investment drove Marc to make it succeed as he didn’t want to disappoint those whom he cared about. Marc had to react, to go in. According to him, “once you are in the gear, you don’t think about it… run as hard as you can and you don’t look back”. 

 

The other strategy is to do what others struggle with. When someone says something can’t be done, Marc Lore gets excited for the market opportunity.

 



🛒 How do you go up against Amazon in e-commerce?

 

Quidsi annoyed Jeff Bezos. It annoyed Bezos so much and frustrated his company’s efforts in crushing it that Amazon spent $545 million dollars to acquire it in 2010. 

 

Quidsi was a parent company of some valuable one word letter domains: diapers.com, soap.com, wag.com, beautybar.com, case.com, yoyo.com etc. Started originally as 1800Diapers in 2005, the company, Diapers.com, focused on selling diapers to mothers with children up to the age of three. Marc and his co-founder, Vinit Bharara, focused on building a brand with strong customer loyalty. They also had really optimised packaging.

 

The company that Marc Lore and Vinit Bharara had founded was doing what Amazon had done a decade ago. Diapers.com was an e-commerce company in just one category but really crushing it. The business profit of doing so would be similar to what Amazon had previously done… own one category well and then expand. Diapers.com was creating a flywheel on customer delight. They were providing cheaper ground-shipping rates than competitors through warehouses positioned close to metropolitan areas and were able to provide overnight shipping that in many cases were faster than Amazon’s own shipping methods.

 

Prior to Diapers.com, Amazon didn’t sell diapers. It took Amazon one year after Diapers.com to begin competing with the startup. For Amazon at the time, diapers were seen as being too bulky and too low-margin to be delivered profitably. What Marc and Vinit had been able to do was with the same method as what Bezos had previously done is so proud of. 


Online retailers don’t typically scare Amazon. Quidsi’s success in delivering a product profitably which Amazon had thought was impossible - scared them. In an internal Amazon email, Amazon’s senior executives (the ‘S Team’) fretted about their failure to price match Quidsi, their worries of Quidsi as their #1 short-term competitor and Quidsi’s growth:

Shortly after the email by Amazon’s S Team, some of Amazon’s executives went to meet the Quidsi founders to encourage them to sell their company. 

 

Marc Lore and Vinit Bharara declined.

 

Amazon went to war. Amazon started slashing prices of their diapers by 30%. 

 

How do you win against Amazon?

 

Instead of caving into Bezos pressure, Lore and Bharara decided to open a second category of product. In June 2010, Quidsi launched soap.com. Bezos got worried.

The Amazon S-Team and Bezos kicked off their war room and formulated a “Plan To Win”.  

 

Quidsi managed to hold on. Their customer loyalty held. But the pricing war was beginning to hurt Quidsi.

 

Unfortunately for Quidsi, Amazon had a larger war chest and looked to employ a pricing war with its reserves to put Quidsi out.

 

According to HBR, one way companies can avoid a price war is to emphasise other negative consequences (such as the risk of poor product quality) from their competitors. Since Amazon and Diapers.com stocked the same goods, this was not possible. Quidsi’s executives calculated that based on wholesale prices of Procter and Gamble’s Pampers, it appeared that Amazon’s aggressive pricing tactics against Quidsi was set to have Amazon lose $100-200 million. 

 

Amazon was offering discounts on discounts specifically on the diapers category. Quidsi could not compete with Amazon in a protracted pricing war. Marc Lore and Vinit Bharara folded and Quidsi was sold to Amazon in November 2010. 

 

Marc didn’t forget about e-commerce though and after some time at Amazon, he went back to war with Amazon again.

 

Creating Jet.com in 2014, Lore speculated on creating an Amazon Prime competitor but instead of competing on fast free shipping, they would compete on trying to save consumers more money. Lore modelled his ideas on a fee-based membership model like Costco and Sam’s Club.

 

This time around, Jet.com was acquired by Walmart for $3.3 Billion in 2016. He then tried to help Walmart compete with Amazon with Walmart also launching free one-day shipping in 2019 to rival Amazon Prime. 

 

Marc Lore’s Big Tips On Building A Team

According to Marc, what has helped him beat Amazon and succeed in business is his team. For him, it is really important to empower people. When he looks to hire, he looks out for self-motivated people who are “more missionaries than mercenaries”.

 

He has an acronym:

 

SPOTAK

 

Smart: Curiosity and applied knowledge.

 

Passionate: Fire to drive forward.

 

Optimistic: Big change requires big ideas and big ideas require a sometimes naïve belief that you can accomplish anything.

 

Tenacious: Find a way no matter how arduous the path.

 

Adaptable: No sacred cows. Being tenacious is not about being stubborn. Make changes where necessary.

 

Kindness: An environment where people want to come in every day and create a springboard for step-change improvements.

How To Build A Community

Although communities feel magical, they don't come together by magic. 

 

Bailey Richardson has participated in hundreds of communities and interviewed several hundred community leaders too. As one of the first employees at Instagram, author of Get Together and current Partner at People & Company, Bailey is the person that knows all things related to building communities. 


Come listen, learn and ask about what makes awesome communities. Join us this Wednesday by signing up here.

Five Luminary Lines

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Creator: Michelle Reid the Jazzy Host 🎷

A Phrase Worth Remembering

“Joy is the essence of success”. - Yogi Tea.

A Concept Worth Understanding

My concept for 2020 was: Honour your Health, Love Yourself.

Meaning we must take our health into our own hands and not rely upon external sources to make the right choices for individuals. Listen to what your body is whispering (or screaming in some cases) and try to love yourself and the process.

Deep health and longevity is a long term and lifetime strategy. We are capable of this but it takes commitment and work, which a lot of people are averse to.

An Activity Worth Trying

Daily movement is non-negotiable.

Focus on all forms of Non-Exercise Activity Thermogenesis (NEAT) or energy expended for everything we do that is not sleeping, eating or sports-like exercise.

A Habit Worth Having

Putting my BLUblox Sleep+ glasses (blue and green light blocking lens) on a couple of hours before I go to bed around 22:00. These help to optimise my sleep by supporting melatonin (sleep hormone) production. They are also pretty damn cool so I wear them when I'm out too. ,-)

A Creator Worth Viewing

I have a couple of handfuls that I subscribe to on YouTube but if I had to choose, here are two rad chicas:

Yoga With Adriene. I was introduced to YWA during the first Spanish lockdown in the spring of 2020 and I'm still faithfully enjoying and sharing her (free) yoga-inspired content today.

Natacha Océane. A Londoner who promotes fitness, food and fun.

Brain Gems
 


Getting Inside The Mind Of A Plagiarist
(by Kevin Young)

If a thief, Shakespeare was a thief of the highest order. In 2010, Adam Wheeler was convicted of plagiarising and faking his credentials to receive entry into Harvard and a string of prizes including nomination for the Marshall Scholarship. He had managed to deceive the Harvard Admissions, the Harvard Academic Board and a string of other venerable institutions including Stanford for 4 years. 

 

The person he plagiarised? Stephen Greenblatt, a Harvard professor of the Humanities. Young theorises on how a Plagiarist thinks.

 

Nihilism for Oligarchs
(by Sophie Pinkham)

Russian and Soviet culture once gripped the world. In the 1990s, the old landscape and cultural infrastructure of the Soviet period went through a shock. Russian cultural producers had to reinvent themselves, cultivate an online following and find a patron. Those that did not, would need to tow more of the Government’s interest and depend on the Ministry of Culture for funding. 

 

What happens when an Oligarch, Sergei Adoniev, bankrolls enfant terrible director, Ilya Khrzhanovsky? A massive creation of a real life Soviet Truman show... A brutal, bizarre and deranged art freakout not seen since Nero burned Rome.

 

GRADATIONs
(by Daihei Shibata)

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When we gradate the boundaries between two polarized things, the two become smoothly connected. By blurring the various boundaries, we can find complexity, diversity, and richness of information”.



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Looking forward to your thoughts!

 

- Daniel

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