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1/10

X : Our executive team is concerned that we need to up our game in order to out innovate Amazon.
Me : Do you map?
X : Yes
Me : Like this?
X : No. What's that?
Me : A map of a tea shop.

X : Why is that a map?
Me : Long story, all to do with how space has meaning. To keep it short, maps help people to focus on user needs, the components involved, to communicate missing components and scenario play ideas like staff becoming robots.

Me : They’re also good for measuring and managing capital flow, making investment decisions, removing bias and getting rid of duplication.
X : I don’t see how that helps with innovation?

Me : Well, innovation is a tricky word because we use it to describe many things. If you’re talking about differentiation with the adjacent unexplored then you’re experimenting in the “uncharted” space e.g. immortality with magic provided by the special custom built kettle.

X : That sounds like nonsense.
Me : A lot of what people think will be the next great innovation is nonsense. Actually, most of it is. That’s the nature of the uncharted space, it’s experimental, high risk and generally results in failure.
X : We need more reliable innovation.

For decades, Jeff Bezos shunned ads.

But now, Amazon’s ad business is huge: it’s on a $30B+ annual run rate (more than 2x the combined sales of Twitter, Snap and Pinterest).

Here’s how it happened 🧵

1/ Amazon doesn’t break out its ad business separately in financial filings. However, most analyst believe ads make up the majority of its “Other” revenue segment.

This figure has exploded from $1B in 2015 to a current annual run rate of ~$32B.

2/ In 2009, Bezos said “ads are the price you pay for a crappy product”.

But the business is so lucrative that Amazon’s interface has been swamped with ads:

◻️ First 3-7 search results (left in red)
◻️ Most of the product page (right in blue)

3/ Prior to the rise of ads, Amazon set out to build the ultimate organic customer recommendations engine.

The approach was codified in a famed 2003 research paper: “Amazon Recommendations: Item-to-Item Collaborative Filtering.”

4/ In recent years, Amazon organic recommendations:

◻️"Customers who bought this also bought this"
◻️"Customers who viewed also viewed"

Have been replaced w/ ads:

◻️ "Sponsored products related to"
◻️ "Brands related to this category"

The ancient struggle was not having enough.

The modern struggle is having too much.

Too much news, too much sugar, too much of everything at your fingertips..There's only 1 way out.

Let's lay it out:

On one side, you have "Team Dopamine":
* 24/7 news cycle, full of clickbait headlines
* Social Media, friend's pics that disappear in 24 hours
* Endless varieties of sugar & porn

going up against your tiny, 3 pound brain running 20,000 yr old software

Even if you are a smart person who tries their best to stay healthy & happy... you are going up against Fox News, TikTok, PornHub, Robinhood, Instagram

These are weapons of mental destruction.

Thousands of our smartest engineers & data scientists work at these companies.

They run constant experiments. Fighting against each other for every moment of your attention. So you open THEIR app.

It's skinner's box, rats pushing buttons for rewards. But you're the lab rat.

So what do we do?

We have everything. More than any species, at any time period in history. It's wonderful...but also deadly.

Food injected with syrup sugar
Painkillers you can't live without
Video games where you can fly and kill
Porn better than any date you'll ever have