Amazon and the "Profitless" Fallacy


This morning I came across a post by fellow San Franciscan Eugene Wei on Amazon's "profitless" business model. Guy Kawasaki sent it out to his 5.2M followers on G+, so I probably wasn't the only one. 

But that's beside the point. Anyone interested in strategy, the future of retail, or who just wants to know why items that are $15 in the real world are $10 on Amazon should read this article. Here's why: Amazon matters, and Amazon's business model matters. It's a behemoth that has got sticky fingers in basically every corner of the modern economy and the economic clout to drive a lot of other companies OUT of those corners. It has also remained, despite it's massive scale and technological prowess, stubbornly profitless. In fact, Amazon was once famously called "a charity run on behalf of consumers." But it isn't that. Amazon is a retail killing machine, and it's boss Jeff Bezos is an apex predator:

"To me, a profitless business model is one in which it costs you $2 to make a glass of lemonade but you have to sell it for $1 a glass at your lemonade stand. But if you sell a glass of lemonade for $2 and it only costs you $1 to make it, and you decide business is so great you're going to build a lemonade stand on every street corner in the world so you can eventually afford to move humanity into outer space or buy a newspaper in your spare time, and that requires you to invest all your profits in buying up some lemon fields and timber to set up lemonade franchises on every street corner, that sounds like a many things to me, but it doesn't sound like a charitable organization."

Check out Eugene's full article here.

Radhika Nagpal and the Awesomest 7 Year Postdoc

I came across an excellent article this morning by Radhika Nagpal, a (now tenured) Professor in Harvard's School of Engineering. Her post appeared yesterday in the Scientific American blog under the title, "The-Awesomest-7-Year-Postdoc or: How I Learned to Stop Worrying and Love the Tenure-track-faculty-life."

It's a list of advice, of which one of the points is "stop taking advice, especially in lists." That aside, it's a must read for anyone headed down an academic path. The key line:

"It seems to me that at all levels of academia, almost regardless of field and university, we are suffering from a similar myth: that this profession demands – even deserves – unmitigated dedication at the expense of self and family. This myth is more than about tenure-track, it is the very myth of being a “real” scholar."

Being an academic entails massive sacrifice. It is, or can be, an all-consuming life. But why? I see two perspectives. On one hand, it is the very job description of an academic to ask questions and find answers. We are paid to engage with the most brilliant minds and to guide the most brilliant students to explore the very edges of human knowledge. We had best take it seriously - and who wouldn't want to?

The other perspective is economic. If it's a good life, there will be an arms race to get in: you and I both want that position, so what are you willing to do to get it?

The truth, as always, must lie somewhere in the middle. It is a tragedy however that the author felt compelled to defend 56 hours a week (and raising a family) as not being too little, and that Scientific American thought this view worthy to publish. As someone at the brink of a plunge into the academic world, this really hits home.

Check out Radhika Nagpal's article here, and check out her amazing research on self assembling systems and ROBOTIC BEES here


What's an Education Worth?

This story from the WSJ has been making the rounds today: 

Struggling Thunderbird Business School Finds a For-Profit Lifeline

It's worth a read for anyone interested (or in) management education. The short story is that the Thunderbird School of Management has leased its main campus to a for-profit campus operator in order to stay afloat. While the recession has hit every walk of graduate education, Thunderbird lacks an affiliated university and is thus particularly vulnerable to the downturn. And while it may be an extreme case (applications are down 75% over 15 years), it's worrying when viewed as a canary in the coal mine.

Thunderbird's solution (a twenty years lease to a for-profit campus operator) is also worth a pause. In the short term, it keeps the school running and allows for valuable (and substantial) investments in campus infrastructure. Over the long term, it's worth asking whether shifting a formerly non-profit educational institution into a for profit enterprise fundamentally harms its educational mission - a question that's particularly apropos in the context of the current discussion on higher education in America.

Personally, I believe that full time, dedicated, and in-person educational experiences offer an unparalleled value in terms of networks, skills, and expanded horizons they allow students to develop. At the same time, the options for free, online, and interactive learning platforms are improving, which means that the benefits of the "in the flesh" experience need to be quantified and communicated to students; especially once a school can no longer claim "education" to be it's only goal.


Caffeinate to Creativity

It only seems natural to follow up yesterday's post on grogginess with one on caffeine, picked up from Lifehacker by way of Guy Kawasaki. The buzz is all about an excerpt from Chris Chatham's book Caffeine: A User's Guide to Getting Optimally Wired (no word yet on when it gets to Amazon). Given that caffeine is the most widely used and abused stimulant in the world, people perked up a bit when a neuroscientist offered some thoughts on optimal consumption. The basic story is that consuming 20-200mg/hour delivers the best mental boost. Given that an average cuppa joe contains between 100-150mg of caffeine, one cup (or less) per hour is more than enough. He also notes that to use caffeine effectively, you should play to its (and your own) strengths: caffeine makes it easier to work harder and faster on tasks that you already had under control, but it doesn't make challenging problems or abstract puzzlers any easier. Building on yesterday's post, caffeine is going to help with the analytical tasks, but probably not the creative ones. One last interesting finding: mixing in a bit of sugar may actually be a great idea, as some studies have shown that caffeine-glucose cocktails provide cognitive benefits not seen with either one alone.

Of course, caffeine isn't just about the chemical brain boost. There's the placebo effect, and the fact that sometimes a morning isn't going to start itself without a cup of the delicious. Some studies have also suggested that long term ingestion is associated with a variety of health benefits such as a reduction in the risk of Type 2 Diabetes, Alzheimer's, and Parkinson's. As if we needed more motivation.

Scientists and true addicts should check out the Scienceblog excerpt to keep learning.