All posts in “Amazon”

What Essential Lesson Can Today’s Tech Titans Learn From The Xerox Collapse? And… Where’s The Opportunity For Your Next Startup?

I know the stock market is going crazy these days and churning up a lot of stomach acid, but It’s a fact of life that stock prices will always go up and down. The only sure thing is to keep your eye on the actual company performance and invest in the real winners.

This recent New York Time story that talks about the “absorption” of Xerox by Fujifilm Holdings of Japan is significant. The news is not exactly earth shaking since we have all seen the business use of paper documents collapse over the last 20 years.  Xerox was a paper moving business that could nit leave the paper world behind and really innovate.

The introduction of reasonably prices fax machines in the 1980s and the subsequent integration of electronic fax modems into desktop computers back in the early 1990s should have been a strong warning to Xerox that paper documents could be on the way to extinction.

But the introduction and wide use of Business eMail and electronic documents with the help of software like Adobe Acrobat, first released on June 15, 1993 should have really sent a message to Xerox.  Now you can even sign and return legal documents without printing them. The days of multi-acre office spaces stacked with files cabinets full of paper documents, and the need for multiple copies, is long gone.

But enough with the ancient history lesson… What does this Xerox collapse mean for technology companies today and for your next startup?

No More File Cabinets Required

It all comes down to one huge problem for large companies…

The bigger they get the harder it is to really innovate. Probably every Fortune 1,000 CEO has this rule on a piece of paper tucked into his (or her) wallet.

How could this big company innovation roadblock rule actually be true?

The fact of the matter is these big companies are designed to deliver product (maybe even a service) for the lowest possible cost. There is a specific skill set involved to design, control, and execute low cost/high reliability product delivery systems.  It is very different from the skill set needed for relentless pursuit of the next big (or even small) thing and the open minded discovery that leads to company transforming innovation.

The main problem is that the end-to-end innovation process has three guaranteed components:

  1. It will be extremely risky – Like new business startups there are so many unknowns and uncontrollable variables that these type of projects within big companies are at the extreme high end of the risk curve. No one in a big company wants to spend a few years dealing with hundreds of unknowns. It can be bad for their annual bonus.
  2. There is a high probability of failure – Most innovation projects will fail. And failure is no way to advance in a big company. And… It’s can be bad for your annual bonus.
  3. It will take time to build an innovation into a real business – These kind of innovative products (or services) may not see their first dollar of revenue for over a year. And because of bloated big company organization structures, procedures, and approval processes profitability may be several business cycles away in a world of quarter-to-quarter profit reports. Definitely not good for your annual bonus.

The Xerox Computer That Inspired The Macintosh

Are you seeing a theme here?

Hint: How can a big companies innovate if no one in the organization structure is ready to put their bonus or even actual job on the line?

The simple answer is that they can’t really innovate. It does happen form time-to-time but it definitely is not that often.

So in a world where companies are faced with the innovate or die choice every year what can they do?

They usually wait for some smart startup to take all the risk then buy the startup.

A great example is a recent story that talks about how Walmart’s Store No 8 Incubator is acquiring Spatialand, a company that builds Virtual Reality (VR) products for retail stores and websites.  Sounds like a whole new way to shop and a possible Amazon killer.  Any edge against Amazon is a must-have for WalMart.

Why should Walmart take the immense risk, and put some executives bonu’s in jeopardy so they can develop cutting edge advanced shopping technology when they can wait for some smart startup team to take all the risk and deliver something they can just pick off a shelf and call their own.

The Guy Who Took The Risk And Turned That Xerox Technology Into Apple Computer

Walmart is a company that is really good at sourcing packaged goods and other consumer products in mass quantities from independent manufacturers all over the world and putting it on their multitude of store shelves then keeping the product restocked.  This does not resemble in any way the skills needed to design, develop, manage, and deploy a high-tech VR shopping experience. If Walmart tried this they would fail. And spend a lot of money and time doing it.

Now all we need is a way for risk averse process-capable big companies to work with risk hungry technically-proficient startup companies to a keep steady stream of innovations flowing to the big companies.

I have some ideas on how this could actually work and benefit both large companies and startups, but I will save it for a future article.

Xerox will not be the last titan to fall… Who will be next?

What Will Really Disrupt The Disruptors?

The world is changing fast… The Tech World even faster.

And every day it seems like a new technology incubator/accelerator pops up.  Universities, venture capital firms, big companies, and governments are jumping on the Incubator/Accelerator bandwagon like never before…

Everyone involved with these business startup factories hope the next crop of disruptors is just a few weeks away.  But they just might be wrong. Very wrong.


People who have been around for a while probably know that when everyone seems to be jumping on the bandwagon it usually means a bubble is forming. And there are a few other signs that flash warnings  about the strong possibility we may be seeing the peak of this startup accelerator trend.  Going forward in this article I will use the term accelerator to refer to Incubator/Accelerators.

First of all, lets nail down the basic accelerator’s goals…

Accelerator operators like TechStars, Y-Combinator, Capital Innovators, and countless others want to attract and nurture great teams who can work with a target customer group to build products/services that will disrupt some business sector and build a billion-dollar business. And… Preferably they should do this overnight. Ten weeks at most.

Think Uber, ETrade, Travelocity, AirBNB, Amazon, Google, and other startups that have caused great upheaval in some marketplaces. Who uses a travel agent, full service stock broker, the Yellow Pages, or a Sears store anymore?

But now with most major markets disrupted there are only two places where the next batch of startups can really thrive and deliver exponential growth with their innovations. (1) Smaller, more narrow niche, markets where it will be difficult to build a big enough business to attract the large sums of capital needed, and/or (2) Disrupt the disruptors.

Smaller niches are always a crap shoot while disrupting the disruptors is an interesting proposition…

Don’t think it is not going to happen. As we have seen many times, market leaders can only retain their dominance until the next big thing comes along. In a world where all it takes is one click to try something new the current market leaders could be living on borrowed time.

What new unexpected company will take Amazon’s ecommerce market away? What upstart financial innovator will out maneuver Etrade? What company that just locked in a pocket full of Seed money and a spot in a hot accelerator will take travel to the next level?

Well… It may not be one of the well-known brand-name accelerators who will shepherds along the next billion-dollar unicorn destined to disrupt a disruptor. The process, procedures, contact networks, and mentors these established accelerators used in the past were great at producing last decade’ s disruptors…   But they might not work going forward.  Whole new processes, procedures, contact networks, and mentors will need to be built from scratch…

Why is this true?

How about some real-world evidence?

The number of true accelerator graduates (companies that have achieved traction and grown exponentially) has collapsed. I will use two data points to illustrate this:

  1. TechStars, the largest accelerator, is now expanding on the backs of corporations and governments looking for innovation. New TechStars accelerators are being funded by the likes of Target, Disney, Sprint, and more… Why would TechStars give high-growth company equity away (or waste valuable resources) to these corporations and governments? Easy answer… Because the companies in these new accelerators will probably not be true Unicorn disruptors. In fact, they may collapse as soon as their corporate or government benefactors stop funding losses.
  2. Investors are having a hard time finding startups with promise. These recent articles document this enlightening trend… “Once-Flush Startups Struggle to Stay Alive as Investors Get Pickier” and “Startup Investors Hit the Brakes” and “Seed funding slows in Silicon Valley .

Smart investors will usually wait on the sidelines while others take the substantial and painful risks to identify and exploit the next big trend. Why take more than an acceptable risk their money? They let someone else take the big risks and shoulder the losers. Smart investors will be there to cherry-pick the most promising new companies.

Where will the next batch of unicorn level disruptors come from?

There may be a few that just pop out of some garage, basement or big city co-working space but look for them to appear out of accelerators with a different nurturing and growth model…

Like what?

Not just churning through startup teams… These new accelerators with have a different playbook all together. The only way to produce tomorrow’s disruptors is to disrupt the entire concept of startup accelerators.

How? More on this in my next article…

What Can Startups and Investors Learn about “Pain Points” From, Amazon, and Uber?

amazon_headquartersTwo online retail sales forces are colliding this week… a potential Amazon rival went live and Amazon is announcing earnings. has a great story ( link here)…   The former online retail guru who sold his suite of companies including and to Amazon for $545 Million is now back in the online retailing game and gunning for’s customers.

His non-compete agreement must have just expired but is this really the best use of his time and his investors’ money? Why try to go up against Amazon when this online retail leader  can’t even seem to make money in this online retail business?

That’s the other thing that hit this week. Amazons earnings report!

Amazingly Amazon reported a profit of $92 Million on revenue of $23.19 Billion for the quarter ended June 30. This is the first profit in a while and compares to a $126 Million loss on $19.34 Billion in revenue a year earlier.  When you do the math Amazon makes less than 0.4 cents on every dollar it takes in. That’s less than half a cent. Not so good. Lots of activity not a lot of profit.

jet3So if Amazon is having a difficult time creating profits out of our intense need for stuff delivered right to our door within two days, then why does think they can make any money at this?

Their marketing pitch is full of stuff to hopefully make us believe they can serve up goods a prices lower than anybody else on the internet. “Club price savings on pretty much anything you buy.”  A quick search of the stuff I buy on Amazon shows Jet’s prices are exactly the same but I pay a shipping fee on Jet. Since I am a Prime Member I pay no shipping fee when I order from Amazon.

The same price for the goods but I pay extra for shipping…. What was Jet thinking?

I’m sure Jet offers some items at a lower price than Amazon but unfortunately nothing I buy. If you test Jet with your items and come up with a significant savings let me know.

Usually before smart people start a new business or invest in one they identify a series of consumer perceived “pain points”. So let’s list what we hate about Amazon to identify potential “pain points” that could give a competitor an edge:

  • Amazon reliably ships me what I order on time or earlier.
  • Amazon has a simple return system so with a few clicks I can return stuff when I need to.
  • Amazon has my order information so ordering is just a few simple clicks.
  • Amazon prices are usually the lowest you will find.
  • Amazon provides me all kinds of free stuff like movies and electronic books with my Prime membership.
  • Amazon pays me a $1 per order credit if I elect to get my stuff in less than two days.
  • If I ever need help I can always get someone from Amazon on the phone.
  • When I am in a bricks and mortar store and I see something I want I can use my phone to scan the barcode and find out what Amazon charges then order the product.
  • Amazon has been doing this for over 20 years.

Sorry… I couldn’t ideAmazon1ntify any “pain points”. So where is the opportunity for

I just don’t see any reason to exist. And even if they are successful at poaching Amazon customers with their lower price pitch those buyers will be the more price sensitive customers that were actually costing Amazon money.  Ultimately will be helping Amazon make more profits. They should expect a nice Thank You note from Jeff Bezos.

To sum things up… has entered a low margin (probably a losing) business category with a single strong entrenched competitor who appears to be doing everything right to keep customers happy.  It’s not like Amazon is leaving us out in the rain to compete with a ninety-year-old lady for a lone yellow taxi.

So as a comparison let’s consider Uber…

UBER RUBIOThis leading ride sharing business who appeared to come out of nowhere and rocket to a reported $50 Billion valuation entered a fragmented market with no clear leader where it took many steps to hail an inconsistent ride. And before Uber when your ride showed up you probably paid more to get to your destination in a smelly vehicle with a gruff distracted driver. Then there is Uber’s App where you can see those little cars circling. With a few clicks you see your ride on its way.  At the end of the ride no money changes hands. It’s all automatic.  No scrambling for cash, waiting for a receipt, or agonizing over how much to tip.

When you are looking for a company concept for a startup or to invest in think about and Uber. Identify the pain points and be sure people care enough about those pain points to use your product/service and pay enough for it so you can make a reasonable profit.

[DISCLOSURE: I do not directly own any shares of]