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On December 14, 2015, Liam commented on Amazon: The Cycle of Victory :

Adam, thanks for commenting. I think you raise two really good points.

I definitely think you could make an argument that Amazon’s suppliers could suffer. It’s very similar to the power Walmart has had on its suppliers. I don’t know enough about these dynamics to know whether this power will drive those suppliers into the ground or whether they’re better off net-net due to the large market Amazon exposes them to. The optimist in me would say that the Internet provides fairly low barriers for e-commerce stores and price discovery is fairly easily achieved so there will be alternatives to turn to if Amazon turns the screws too hard on them. That said, Amazon’s scale and efficiency may prove too large a barrier to overcome.

Regarding your second point, from the speculation I’ve read, Amazon has some quite profitable verticals and essentially uses the cash generated from those verticals to expand to others. I suspect that were growth to stagnate, they could fall back to their core businesses and sustain themselves by putting expansion on hold. That said, if their volumes do actually start to decline, not just slowed growth, I do think that Amazon would run into significant issues as fixed costs start to erode margins.

Overall, I think you’ve identified some significant issues worth further consideration. Thanks!

On December 14, 2015, Liam commented on Chipotle and the Fast Casual Revolution :

To agassin’s comment, I don’t necessarily see the variance in order size as a weakness. While there are some hacks, like the 50/50 meat strategy, which are probably process flaws, Chipotle actually universally allows you to ask for extra quantities of almost any ingredient (with meat being an exception) at no additional cost. I think this is an extension of Chipotle’s “A Few Things, Thousands of Ways” strategy that David mentioned, which caters to individual customer preferences. I think it provides a refreshing contrast to the one-size-fits-all model you see at a lot of conventional fast food restaurants.

I eat at Chipotle a few times per week because it’s by far the best place I’ve found that balances generous portion sizes with a moderately healthy nutritional profile and reasonable price. I choose it over Felipe’s every time solely because I can engineer a massive order. I’ll acknowledge I’m on the higher end of the spectrum in terms of how much I eat, however.

For those of you who want to optimize* orders at Chipotle, this is a good read:

*Optimize to be the most full…

On December 13, 2015, Liam commented on BlackBerry: Down But Not Out? :

There are some great points raised. I think at the root of many of these problems is the fact that BlackBerry is headquartered in Waterloo, which is a relatively small (and cold!) city, far from Silicon Valley. A major takeaway for me was that the broader ecosystem in which a company is immersed is critical to fostering innovation.

Although BlackBerry successfully recruited from the University of Waterloo, which produces world-class engineering talent and was literally beside BlackBerry’s offices, it was tough to recruit non-local talent. Moving to Waterloo was a major downside for a lot of prospective employees. Coupled with the need for rapid headcount growth, it was challenging to keep the company’s human capital quality high, which is critical for a tech company that needs to innovate to stay relevant.

Waterloo’s tech scene today is actually becoming reasonably strong, but it wasn’t really the case during critical inflection points in BlackBerry’s history. Consequently, I think BlackBerry developed an insular culture. It’s much easier to stay at the forefront of tech trends when technology is pervasive in your society. Also, with increasing technological complexity comes the need for partnership, which I believe is much easier with close geographic proximity. One major dimension is the need to build a third-party app ecosystem, as zjohn mentioned.

On December 13, 2015, Liam commented on INSTACART: Fresh Food Fast :

While I haven’t yet used Instacart, I love the concept. One criticism I have heard about grocery delivery services, including Instacart, is that produce selection often isn’t to the customer’s standards. There appears to be a conflict in incentives between (i) customers, who only want the highest quality, (ii) grocery stores, who want to minimize waste, and (iii) personal shoppers, who want to maximize volume through speed. Perhaps the solution lies in pricing, both through tipping (as you mentioned) and tiering produce by quality.

It’s interesting that LaToya mentions Uber. There’s definitely the potential for head-to-head competition as Uber leverages its logistics network to rapidly expand to other verticals, but I actually think this would be a great partnership (or Instacart could be a strong acquisition target for Uber). Their core competencies are quite complementary with Instacart’s ability to quickly and accurately pick and buy groceries, and Uber’s strength in getting cargo from point A to point B through its scale.

I’d also be interested to see Instacart drive down throughput times on frequently purchased items (potato chips, soda, flour, etc.) by having their personal shoppers carry inventory in their vehicles. I think it would unlock the potential for a lot of impulse orders. It could also function as a substitute to the candy shelves at the checkout for customers who have already placed an order.