Dear friends, 

In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate. 

I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those. 

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💡Must-read

👉 2021 Letter to Shareholders (Amazon)

• We had been iterating on and remaking our fulfillment capabilities for nearly two decades. In every business we pursue, we’re constantly experimenting and inventing. 

  • We’re divinely discontented with customer experiences, whether they’re our own or not. We believe these customer experiences can always be better, and we strive to make customers’ lives better and easier every day. 

  • The beauty of this mission is that you never run out of runway; customers always want better, and our job is both to listen to their feedback and to imagine what else is possible and invent on their behalf.

➡️ This should drive us too! 

• People often assume that the game-changing inventions they admire just pop out of somebody’s head, a light bulb goes off, a team executes to that idea, and presto—you have a new invention that’s a breakaway success for a long time. That’s rarely, if ever, how it happens. One of the lesser known facts about innovative companies like Amazon is that they are relentlessly debating, re-defining, tinkering, iterating, and experimenting to take the seed of a big idea and make it into something that resonates with customers and meaningfully changes their customer experience over a long period of time.

➡️ It takes time and iterations to make big ideas work. 

• Everybody agreed that having a persistent block store was important to a complete compute service; however, to have one ready would take an extra year. The question became could we offer customers a useful service where they could get meaningful value before we had all the features we thought they wanted? We decided that the initial launch of EC2 could be feature-poor if we also organized ourselves to listen to customers and iterate quickly. 

• This approach works well if you indeed iterate quickly; but, is disastrous if you can’t. 

• We launched EC2 in 2006 with one instance size, in one data center, in one region of the world, with Linux operating system instances only (no Windows), without monitoring, load balancing, auto-scaling, or yes, persistent storage. EC2 was an initial success, but nowhere near the multi-billion-dollar service it’s become until we added the missing capabilities listed above, and then some.

➡️ Make trade-offs! They should be hard. 

• Give Teams the Right Tools and Permission to Move Fast: 

  • Speed is not pre-ordained. It’s a leadership choice. It has trade-offs, but you can’t wake up one day and start moving fast. 

  • It requires having the right tools to experiment and build fast (a major part of why we started AWS), allowing teams to make two-way door decisions themselves, and setting an expectation that speed matters. And, it does. 

  • Speed is disproportionally important to every business at every stage of its evolution. Those that move slower than their competitive peers fall away over time.

➡️ How can we increase speed and order of magnitude more? Make faster decisions? Ping less people? More tools?

• You Need Blind Faith, But No False Hope: 

  • This is a lyric from one of my favourite Foo Fighters songs (“Congregation”). 

  • When you invent, you come up with new ideas that people will reject because they haven’t been done before (that’s where the blind faith comes in), but it’s also important to step back and make sure you have a viable plan that’ll resonate with customers (avoid false hope). 

  • We’re lucky that we have builders who challenge each other, feedback loops that give us access to customer feedback, and a product development process of working backwards from the customer where having to write a Press Release (to flesh out the customer benefits) and a Frequently Asked Questions document (to detail how we’d build it) helps us have blind faith without false hope (at least usually).

➡️ I hear often from Alaners that it is tough to be challenged. It is very human and normal that it happens. I’d like us to all build a muscle to welcome this challenge, and still digest it and move forward! 

• Define a Minimum Loveable Product (MLP), and Be Willing to Iterate Fast: 

  • Figuring out where to draw the line for launch is one of the most difficult decisions teams must make. 

  • Often, teams wait too long, and insist on too many bells and whistles, before launching. And, they miss the first mover advantage or opportunity to build mindshare in fast-moving market segments before well-executing peers get too far ahead. 

  • The launch product must be good enough that you believe it’ll be loved from the get-go (why we call it a "Minimum Loveable Product" vs. a "Minimum Viable Product"), but in newer market segments, teams are often better off getting this MLP to customers and iterating quickly thereafter.

➡️ I love this notion of MLP (already in our leadership principles).

• Adopt a Long-term Orientation: 

  • We’re sometimes criticized at Amazon for not shutting much down. It’s true that we have a longer tolerance for our investments than most companies. 

  • But, we know that transformational invention takes multiple years, and if you’re making big bets that you believe could substantially change customer experience (and your company), you have to be in it for the long-haul or you’ll give up too quickly.

➡️ Investing in the long term to have the time to iterate makes a difference. 

🏯 Building a company

👉 The Feedback Founders Need to Hear – How to Grow Yourself to Grow the Company (First Round Review)

• ‘What does the business need from you right now?’

• What’s consistent is the need to change as the company grows

• Asking ‘What do I need to get better at?’ over and over and over again signals that you’re serious about getting better.

• “You need to reward that behavior. It could be publicly saying, ‘I got this feedback from so and so, and I really appreciate the suggestion, and I'm going to start doing that.’

➡️ I should do it more!

👉 Brain Food: What You Put In (FarnamStreetNewsletter)

• There is nothing that gets in the way of success more than avoidance. We avoid hard conversations. We avoid certain people. We avoid hard decisions. We avoid evidence that contradicts what we think. We avoid starting a project until we're certain of the outcome.

• To justify our avoidance, we lie to ourselves. We tell ourselves that we’re noble — we don’t want to hurt someone’s feelings. We tell ourselves we don’t want to offend others. We tell ourselves that things will get better. We tell ourselves that things will get easier. We tell ourselves that we can avoid the real issue without any impact. We tell ourselves we'll start when the time is right.

👉 Sequoia Productive Capital (Stratechery)

• Here again Amazon is the ultimate example of this model: the company has made massive investments in everything from its online store to its distribution centers to even its own planes and delivery vehicles, and an ever-increasing share of its e-commerce revenue comes from merchants effectively renting access to the entire stack; merchants are still selling goods, and consumers are still receiving them, but everything in the middle is a software-driven service with a software-derived business model.

🗞 In the news

📱Technology

👉 Beyond Aggregation: Amazon as a Service (Stratechery)

• Amazon also operated a service that let independent merchants run their websites, called Webstore. Bang & Olufsen, Fruit of the Loom, and Lacoste were among the 80,000 or so companies that used it to run their online shops. 

  • If he wanted to, Bezos surely had the resources and engineering prowess to crush Shopify and steal its momentum. 

  • But Amazon execs from that time admit that the Webstore service wasn’t very good, and its sales were dwarfed by all the rich opportunities the company was seeing in its global marketplace, where customers shop on Amazon.com, not on merchant websites…

  • In late 2015, in one of Bezos’ periodic purges of underachieving businesses, he agreed to close Webstore. 

  • Then, in a rare strategic mistake that’s likely to go down in the annals of corporate blunders, Amazon sent its customers to Shopify and proclaimed publicly that the Canadian company was its preferred partner for the Webstore diaspora. 

  • In exchange, Shopify agreed to offer Amazon Pay to its merchants and let them easily list their products on Amazon’s marketplace. Shopify also paid Amazon $1 million—a financial arrangement that’s never been previously reported.

➡️ Very interesting how they made the decision.

• What has changed is the composition of Shopify’s business. While the company started out with a SaaS model, the business has transformed into a commission-based one

➡️ What would it mean for us? What could be similar ideas?

• Amazon.com Inc. is extending some of the offerings of its popular Prime membership program to merchants off its platform with a new service that embeds the online retailing giant’s payment and fulfillment options onto third-party sites. Called Buy with Prime, the service will allow merchants to show the Prime logo and offer Amazon’s speedy delivery options on products listed on their own websites… 

• The company said the Buy with Prime offer will be rolled out by invitation only through 2022 for those who already sell on Amazon and use the company’s fulfillment services. Later, Amazon plans to extend Buy with Prime to other merchants, including those that don’t sell on its platform.

➡️ What would be “Health with Alan”? 

• Consumers have those expectations from Amazon that shipping should be free, it should be two days, and whatever those are expectations are, returns should be free. That is still carried over when I’m buying on this branded website. If the expectations are not met, consumers decide to buy somewhere else…

• Merchants are constantly trying to play catch up, whatever Amazon is doing they need to follow suit.

➡️ It should be the same for us: setting the standards of the market.

• Amazon may have given away business to Shopify in 2015, but that doesn’t much matter if said business ends up being a commoditized complement to Amazon’s true differentiation in logistics. 

• That business, thanks to the sheer expense necessary to build it out, has a nearly impregnable moat that is not only attractive to all of the businesses competing to be consumer touchpoints — thus increasing Amazon’s addressable market — but is also one that sees its moat deepen the larger it becomes.

➡️ Where is our true moat?

👉 Adam Grenier: @netflix DON’T TAKE A GENERIC ADS APPROACH!!!! (PingThread)

• Amazing monetization should appreciate what a customer expects to happen.

• If possible, don't send customers OFF Netflix. Your first goal should be to see if you can leverage ads to bring more commerce TO Netflix, not just revenue from ads.

• Examples:

  • Micro-transactions (i.e. skins, icon packs, etc.)

  • Content distribution (YT creators, Game and Movie trailers, MasterClass courses, etc.)

  • Creator tools (i.e. a "show" page that can pull in Shopify SKUs, community playlists, commentary-driven content, etc.

  • Ads supporting the ecosystem are much more likely to add depth to your customer experience vs. ads for the sake of CPMs.

  • Plus in a cookie-less future and with your inherent cross-device nature, this will be easier to drive accountable sales.

🏥 Healthcare

👉 OpenAI engineer saying health ML is 2 year away (twitter)

👉 Broken business models (Healthcare Insights)

• The Covid-19 pandemic has been linked to a steep rise in mental health issues, with about 40% of US adults reporting symptoms of anxiety or depression.

• Consumers are increasingly using psychedelics – such as LSD and psilocybin – to self-medicate for mental health conditions.

➡️ Interesting to check those stats.

• Real-time pricing. Wheel, a telehealth service vendor, has partnered with drug transparency app GoodRx to integrate real-time medication pricing at the point of care. The partnership aims to drive down the cost of care and improve health outcomes at scale. (FierceHealthcare)

➡️ What would be the value to give real time pricing of medication to our members?

• Hims & Hers & Theirs. D2C virtual health company Hims & Hers appointed 10 new members to its Medical Advisory Board to better serve its diverse customer base. The news comes nearly a year after the company went public in a $1.6B SPAC deal. (MobiHealthNews)

➡️ Inspiration for the medical advisory board?

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