3/ The catalyst for Prime was annoyance with Amazon's existing free-shipping offer ("Super Saver Shipping").
It was too complicated:
◻️ You had to hit a min. order of $25 (which created a complicated recommendation system)
◻️ Then wait 8-10 days for the items (customers pissed)
4/ At one Oct. 2004 meeting, the idea of an "all you can eat" shipping price came up. Bezos suggested that they also bundle in "faster shipping".
One employee accidentally blurted out, "we should have it ready by the next earnings" and Bezos said “that would be a great time."
5/ The timeline coincided w/ the '04 Xmas season, when AMZN suffered major stability issues.
Despite the challenges, Bezos was fixated on the idea:"I’m going to change the psychology of people" comparing Amazon to others.
He wanted AMZN's value to be crystal clear.
6/ In the early 2000s, Costco's CEO Jim Sinegal explained to Bezos the power of memberships.
"The membership fee is a one-time pain, but it’s reinforced every time customers walk in and see 47" TVs that are $200 less than anyplace else. It reinforces the value of the concept."
7/ Bezos wanted an MVP in 4 weeks, but his team said that was impossible
In the end, he promised to delay the Amazon earnings date (and new shipping program announcement) if an MVP could be delivered in 6 weeks.
8/ The project was code-named "Futurama" and was free to poach talent from any division...in exchange, they gave out this t-shirt.
The front reads: "Futurama"
The back reads: "Shipping 6 weeks or less. Guaranteed."
9/ The secretive project pissed off a lot of people:
◻️ Other divisions randomly lost team members
◻️ Finance people worried about the economics of "unlimited free shipping"
◻️ The scalability of the program -- especially if customers LOVED it -- was a huge challenge
10/ Bezos gave the name.
He got up one meeting and said "We'll call it Prime." Marketers on the team tried to dissuade him and came up with 20 alternatives.
One employee remembers "He was so convinced Prime was the right name." (the geeks loved it b/c of "prime number")
11/ With 100hr work weeks across the team, the deadline was met.
In February 2005, Amazon Prime launched with this email.
It offered unlimited 2-day shipping on millions of items for $79/year (compared to a 2-day shipping cost of ~$10 for a book, it was a no brainer).
12/ The profitability of the project hinged on the ops team lowering the cost of 2-day fulfillment.
It became a self-fulfilling prophecy:"If customers liked Prime, the demand would go up. And because the demand would go up, we had more freedom to build new fulfillment centers."
13/ In Bezos' original plan, he wanted 2-day shipping to "draw a moat around" Amazon's customers.
Prime added to the moat over the years (there are now 30+ benefits):
2011: Amazon Prime Video
2014: Amazon Music
2015: Amazon Prime Day
2017: Whole Foods
2019: "1-day shipping"
14/ Prime members are very valuable: they spend $1500/year vs. $635/year for non-members.
For @benthompson, the Prime bundle is "churn" management" (AKA keep people in the Amazon ecosystem):
15/ The $8B+ acquisition of MGM (4k films, 17k TV shows) is the latest Amazon move to boost the media portion of its bundle:
◻️~$19B on content spend in the past 2 years
◻️$10B (over a decade) for NFL’s Thursday Night
◻️$465m for S1 "Lord of the Rings"
16/ The retention numbers for the Prime bundle are outrageous:
◻️ 64% of trials convert after a trial
◻️ 93% renew after one year
◻️ 98% renew after 2 years
17/ The launch of Prime was the start of an incredible 20-month run for Amazon that laid the ground work for its empire:
◻️ February 2005: Prime
◻️ March 2006: Amazon Web Services (AWS)
◻️ September 2006: Fulfilment By Amazon
The amount of work Hayao Miyazaki and Studio Ghibli team put into a film is mind-boggling.
Each typically has 60k-70k frames, all hand-drawn and painted with water color.
This 4-second clip (“The Wind Rises”) took one animator 15 months to do. Insane.
The docu “10 Years with Hayao Miyazaki” shows him talking to the animator (Eiji Yamamori) after its done.
It’s so good:
Miyazaki: “Good job.”
Yamamori: “It’s so short, though”
Miyazaki: “But it was worth it.”
The animator gets a second of joy (he’s pumped) but on to the next.
Miyazaki doesn’t use digital FX or computer graphics. He believes “that the tool of an animator is the pencil.”
On a related note, here’s something I wrote about another Japanese legend dedicated to the craft (Ichiro Suzuki) and the art of mastery: readtrung.com/p/jerry-seinfe…
New York City paid Mckinsey $4m to conduct a feasibility study on whether trash bins are better than leaving garbage on the street.
The deck is 95-slides long and titled “The Future of Trash”.
Some highlights:
▫️The official term is “containerization”, which is the “storage of waste in sealed, rodent-proof receptacles rather than in plastic bags placed directly on the curb.”
▫️Two main types of containerization: 1) individual bins for low density locales; 2) shared containers for high-density.
▫️NYC needs to clean up 24,000,000lbs of garbage a day
▫️Containerization has only become the norm worldwide in major cities in the past 15 years.
▫️New York City first considered containerization in the 1970s but never conducted a feasibility study until now (Mckinsey’s sales team has been dropping the ball)
▫️Key considerations for container viability:
• POPULATION DENSITY: NYC has 30k residents per square mile (more dense than comparable big cities)
• BUILT ENVIRONMENT: Few places to “hide” containers due to history of infrastructure development.
• WEATHER: Snow creates challenges for “mechanized collection” in the winter.
• CURB SPACE: Mostly taken up by bus stops, bike lanes, outdoor dining and fire hydrants.
• COLLECTION FREQUENCY: NYC needs to double frequency of pick-up for estimated speed of trash that bins would accumulate.
• FLEET: A new garbage truck will needs to be designed to collect rolling bins at scale.
▫️ The proposed solution (literally garbage bins and shared containers) covers 89% of NYC streets and 77% of residential tonnage.
▫️The three case studies — because you gotta have solid case studies — are Amsterdam, Paris and Barcelona.
▫️There is a slide called “Why containerization matters” and three reasons are “rats”, “pedestrian obstruction” and “dirty streets” (the 21-year intern that did this slide billed at prob $10k an hour is my hero).
The study is actually pretty interesting.
I have no idea if $4m is a rip-off to learn that “yeah, we should put garbage in bins so rats don’t eat it” but I would have happily done it for 10-20% of that budget (and come to a similar conclusion).
It is actually an interesting deck. Just the thought of a 20-year old newly grad getting billed at an obscene rate to say”rats get to garbage” is kinda funny
Four more solid slides:
— By the numbers (daily garbage = 140 Statue of Liberty a day!!)
— City comparison
— Container comparison (looks like they did select the “scalable” trash bin)
— Curb side analysis
Think Mckinsey telling NY to “put garbage in bins so rats don’t eat it and people can walk” will work out better than when it told AT&T in 1981 that cellphones would be “niche.”
The Economist latest cover story on solar energy is packed with interesting stats.
▫️Solar energy will be the primary source of human energy use by 2040
▫️$500B spent on buying and installing solar panels in 2024 (nearly same “sum being put into upstream oil and gas”)
▫️Solar on track to produce “more electricity than all the world’s nuclear power plants in 2026, than its wind turbines in 2027, than its dams in 2028, its gas-fired power plants in 2030 and its coal-fired ones in 2032”
▫️Since the 1960s…the levelised cost of solar energy—the break-even price a project needs to get paid in order to recoup its financing for a fixed rate of return—has dropped by a factor of more than 1,000
▫️From the mid-1970s to the early 2020s cumulative shipments of photovoltaics increased by a factor of a million, which is 20 doublings.
▫️Over the same span, the “prices dropped by a factor of 500. That is a 27% decrease in costs for each doubling of installed capacity, which means a halving of costs every time installed capacity increases by 360%.”
▫️The cost of a kilowatt-hour of battery storage has fallen by 99% over the past 30 years.
The chart below — which they made vertical (kind of weird) — shows global useful energy consumption over the past century.
I’ll add two more posts after this one with excerpts on obstacles and opportunities.
— A lot of A/C for Sub-Saharan African (need 2TW of new solar just for Africa to reach India level of electricity use)
— Filter air continuously (reduce spread of airborne diseases)
— Carbon removal
— Water desalination
— AI/Data energy needs
Details from Red Lobster’s bankruptcy filing are wild and so much mismanagement:
▫️$1B in debt, $30m in cash
▫️Previous PE owner sold land and leased it back to Red Lobster at “above market rates”
▫️$20 Endless Shrimp cost it $11m but the interesting part is that one of the chain’s owners is Thai seafood firm Thai Union (which also owns Chicken By The Sea) and it may have used Endless shrimp to dump its own shrimp supply through the 578 restaurants in North America
▫️Thai Union became the only Red Lobster shrimp vendor, overcharging for shrimp and skipping quality reviews (Thai Union has written off its $500m+ investment)
▫️Red Lobster has had 5 CEO in the last 5 years (!!!)
▫️Sales down 30% since 2019
Red Lobster needed Yukitaka Yamaguchi — aka Japan’s Tuna King (sleeps 3 hours a day and knows where any fish is from on a single bite) — to run quality control.
Also, never forget Beyoncé name dropped Red Lobster with some R-rated verses in 2016 (“Formation”) and Red Lobster social responded and there was actually a brief sales surge.