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Similarities between Musk & Bezos / Tesla & Amazon after reading 'The Everything Store'


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Dec 11, 2012
Over the weekend I finished my read of The Everything Store: Jeff Bezos and the Age of Amazon, Brad Stone's 2013 (second edition 2014) book chronicling the rise of Amazon from its inception to publication time. While reading, I was struck by numerous similarities between the philosophies of Bezos and Musk, and by extension the strategies of Amazon and Tesla.

With the caveat that perhaps I'm over-simplifying my view of the two CEOs because I'm a fan of both of them and their associated companies, here are some relevant excerpted notes I took while reading the book. Perhaps they will inspire some discussion here regarding things the younger Tesla may experience that the elder Amazon has already gone through, and/or generate some take-away learnings to be gleaned from the similarities that may aid us in predicting Tesla's future strategy choices.

In any case, I highly recommend the book to anyone investing in Tesla and/or just interested in Bezos/Amazon. Apologies if this topic has come up before. I did some searching but found only a discussion of the SpaceX/Blue Origin tweet-insults. Hopefully this strikes a chord with some of you as it did with me.

Below I've excerpted some highlights from The Everything Store along with my thoughts regarding striking similarities to Tesla. I've altered the color and style on the highlights to more easily delineate my thoughts vs the excerpted portions of the book. The ordering matches the progression of the book, so they don't necessarily match Amazon or Tesla's corporate development chronology exactly.

Bezos later told the online journal of the Wharton School, “We got the normal comments from well- meaning people who basically didn’t believe the business plan; they just didn’t think it would work.” Among the concerns was this prediction: “If you’re successful, you’re going to need a warehouse the size of the Library of Congress,” one investor told him.

Sound familiar? For Tesla's business plan to succeed, they're going to need a battery factory capacity many times that of the rest of the world when the Simple Master Plan was written.

Breier’s tenure at Amazon was short and rocky. Bezos wanted to reinvent everything about marketing, suggesting, for example, that they conduct annual reviews of advertising agencies to make them constantly compete for Amazon’s business. Breier explained that the advertising industry didn’t work that way. He lasted about a year.

This one's a bit of a stretch, but shows Amazon's disregard for respecting the status quo simply because it's quo [Dr Horrible reference]. If Amazon was going to spend any money on advertising, they were going to measure its impact and adjust as necessary. While not a direct corollary, I think we've seen similar behavior from Tesla. Contrary to popular belief, Tesla does advertise, just in very inexpensive and unconventional ways--they hold the Project Loveday competition. They offer $1k incentives to buyers for owner-referred purchases, along with rewards to current owners for successfully using that program. They produce slick commercials and release them on social media. I'm sure the ROI calculations on each of these modalities are being run frequently.

Unlike traditional retailers, Amazon boasted what was called a negative operating cycle. Customers paid with their credit cards when their books shipped but Amazon settled its accounts with the book distributors only every few months. With every sale, Amazon put more cash in the bank, giving it a steady stream of capital to fund its operations and expansion.

This is something that's just starting to hit Tesla, but we've heard on recent quarterly calls that with the 3's anticipated volume Tesla was able to negotiate much more favorable payment windows on supply orders than they had seen in the past.

In 1998, Barnes & Noble would spin off its dot- com subsidiary with a $ 200 million investment from German media giant Bertelsmann and later take the company public. Amazon would then outflank the bookseller by rapidly expanding into other product categories like music and DVDs. Bezos had predicted that the chain retailer would have trouble seriously competing online, and, in the end, he was right. The Riggios were reluctant to lose money on a relatively small part of their business and didn’t want to put their most resourceful employees behind an effort that would siphon sales away from the more profitable stores. On top of that, their company’s distribution operation was well entrenched and geared toward servicing physical stores by sending out large shipments of books to a set number of locations. The shift from that to mailing small orders to individual customers was long, painful, and full of customer- service errors. For Amazon, that was just daily business.

This one could virtually be rewritten with just a few changes to relate directly to Tesla. I'll give that one a go:

In 2017, Delphi / <insert one of several auto manufacturers considering an electric spin-off, such as Smart> would spin off its <EV powertrain / EV> subsidiary with a <middling-to-large> investment and later take the company public. Tesla would then outflank the manufacturer by rapidly expanding into other development strengths / product categories like autonomous driving, battery production, internal software development, short- and long-haul trucking, and energy production. Musk had predicted that the legacy manufacturers would have trouble seriously competing on electric-powered vehicles, and, in the end, he was right. The <legacy owners> were reluctant to lose money on a relatively small part of their business and didn’t want to put their most resourceful employees behind an effort that would siphon sales away from the more profitable powertrain. On top of that, their company’s distribution operation was well entrenched and geared toward servicing third-party dealerships by sending out large shipments of vehicles to a set number of locations. The shift from that to producing custom orders to individual customers was long, painful, and full of customer- service errors. For Tesla, that was just daily business.

Bezos would describe Kaphan as “the most important person ever in the history of Amazon.com.” But Kaphan felt bitter resentment about his five- year odyssey. He calls Bezos’s decision to remove him from active participation in Amazon “a betrayal of a sacred trust” between people who had started a business together and says that the way he was treated “was one of the biggest disappointments of my entire life.” It was a distilled version of the dissatisfaction felt by many early Amazon employees. With his convincing gospel, Bezos had persuaded them all to have faith, and they were richly rewarded as a result. Then the steely- eyed founder replaced them with a new and more experienced group of believers. Watching the company move on without them gave these employees a gnawing sensation, as if their child had left home and moved in with another family. But in the end, as Bezos made abundantly clear to Shel Kaphan, Amazon had only one true parent.

It's well known that Musk has had numerous major clashes with various other executives, dating back to Martin Eberhard, along with a bunch of disgruntled ex-employees as detailed in the Ashlee Vance biography. It seems to me that Bezos and Musk share this trait of focusing so intently on the ultimate goal that there's no tolerance for anything but the perceived best folks working around and under them. This thread would come up numerous other times in the book.

In early 1997, Jeff Bezos flew to Boston to give a presentation at the Harvard Business School. He spoke to a class taking a course called Managing the Marketspace, and afterward the graduate students pretended he wasn’t there while they dissected the online retailer’s prospects. At the end of the hour, they reached a consensus: Amazon was unlikely to survive the wave of established retailers moving online. “You seem like a really nice guy, so don’t take this the wrong way, but you really need to sell to Barnes and Noble and get out now,” one student bluntly informed Bezos. Brian Birtwistle, a student in the class, recalls that Bezos was humble and circumspect. “You may be right,” Amazon’s founder told the students. “But I think you might be underestimating the degree to which established brick- and- mortar business, or any company that might be used to doing things a certain way, will find it hard to be nimble or to focus attention on a new channel. I guess we’ll see.”

No comment needed to drive this one home--we're still seeing this sort of thinking on a daily basis. How'd that work out for Barnes & Noble?

But through it all, Bezos never showed anxiety or appeared to worry about the wild swings in public sentiment. “We were all running around the halls with our hair on fire thinking, What are we going to do?” says Mark Britto, a senior vice president. But not Jeff. “I have never seen anyone so calm in the eye of a storm. Ice water runs through his veins,” Britto says.

Sound familiar?

“The number of employees at that point other than Jeff who thought he could turn it into an eighty- billion- dollar company— that’s a short list,” says Doug Boake, who departed for the Silicon Valley startup OpenTable. “He just never stopped believing. He never blinked once.” They all had their reasons. David Risher left to teach at the University of Washington’s business school. Joel Spiegel wanted to spend more time with his three teenage kids before they left home. Mark Britto wanted to get back to the Bay Area. Harrison Miller was exhausted and needed a change. Chris Payne left for Microsoft, where he would help launch the Bing search engine, after which he would end up as a top executive at eBay. And on and on. People left and afterward they took a breath and felt disoriented, like they had escaped a cult. Though they didn’t share it openly, many just couldn’t take working for Bezos any longer. He demanded more than they could possibly deliver and was extremely stingy with praise. At the same time, many felt a tremendous loyalty to Bezos and would later marvel at how much they accomplished at Amazon. Kim Rachmeler shared a favorite quote she heard from a colleague around that time. “If you’re not good, Jeff will chew you up and spit you out. And if you’re good, he will jump on your back and ride you into the ground.”

Sound familiar?

“Whatever image he had of his own future, it always involved becoming wealthy,” Ursula Werner says. “There was no way to get what he wanted without it.” What exactly did he want? “The reason he’s earning so much money,” Werner told journalists who contacted her in the 1990s, seeking to understand the Internet magnate, “is to get to outer space.”

Sound familiar?

In retrospect, it almost seems like Bezos was taunting the media with his top- secret space plans. He clearly couldn’t resist obliquely referencing them. Discussing concerns about the long- term health of the planet with Wired magazine in 1999, he told an interviewer, “I wouldn’t mind helping in some way. I do think we have all our eggs in one basket.” He told Fast Company in 2001 that it would be great if the novel Dune, in which humanity has colonized other planets, was “nonfiction.”


Aided by an extremely convenient discovery I’d made that night— a sheaf of coffee- stained drafts of a Blue Origin mission statement— I reported that the long- term mission of the firm was to create an enduring human presence in space. The company was building a spaceship called New Shepard, after Alan Shepard, the pioneering Mercury astronaut, which would take tourists into the upper reaches of the atmosphere. The unique designs called for a vertical takeoff and thrusters to control a vertical landing so that the vehicle could be economically reused.

I don't believe Musk was nearly as secretive about SpaceX's ambitions as Bezos originally was with BlueOrigin, but the ultimate goal sure sounds in the same ballpark.

In the meeting that day at Fernley, the executives and engineers questioned the prevailing orthodoxies of retail distribution. In the late afternoon, everyone headed back onto the facility floor and watched orders move haltingly through the facility. “I didn’t know Jeff Bezos but I just remember being blown away by the fact that he was there with his sleeves rolled up, climbing around the conveyors with all of us,” says Stephen Graves, the MIT professor. “We were thinking critically and throwing around some crazy ideas of how we can do this better.” At the end of the day, Bezos, Wilke, and their colleagues reached a conclusion: the equipment and software from third-party vendors simply wasn’t designed for the task at hand. To escape from batches and move toward a continuous and predictable flow of orders through the facility, Amazon would have to rewrite all the software code. Instead of exiting the business of distribution, they had to reinvest in it. Over the next few years, “one by one, we unplugged our vendors’ modems and we watched as their jaws hit the floor,” says Wegner. “They couldn’t believe we were engineering our own solutions.”

That's another one that could practically be rewritten with very few changes and would apply to Tesla--Musk on the production line, tossing vendors of critical components only to rewrite them in-house (Mobileye, anyone?)

The other change was also peculiar and perhaps unique in corporate history. Up until that time, Amazon employees had been using Microsoft’s PowerPoint and Excel spreadsheet software to present their ideas in meetings. Bezos believed that method concealed lazy thinking. “PowerPoint is a very imprecise communication mechanism,” says Jeff Holden, Bezos’s former D. E. Shaw colleague, who by that point had joined the S Team. “It is fantastically easy to hide between bullet points. You are never forced to express your thoughts completely.” Bezos announced that employees could no longer use such corporate crutches and would have to write their presentations in prose, in what he called narratives.

I don't have any knowledge of Tesla taking this as far as Bezos did, but it's well-known that Musk is not a fan of PowerPoint presentations.

Some Amazon employees currently advance the theory that Bezos, like Steve Jobs, Bill Gates, and Larry Ellison, lacks a certain degree of empathy and that as a result he treats workers like expendable resources without taking into account their contributions to the company. That in turn allows him to coldly allocate capital and manpower and make hyperrational business decisions while another executive might let emotion and personal relationships intrude. But they also acknowledge that Bezos is primarily consumed with improving the company’s performance and customer service, and that personnel issues are secondary. “This is not somebody who takes pleasure at tearing someone a new asshole. He is not that kind of person,” says Kim Rachmeler. “Jeff doesn’t tolerate stupidity, even accidental stupidity.”

Clearly similar to Musk, per the Vance biography among other anecdotes (eg Glassdoor).

Bruce Jones, the former Amazon vice president, describes leading a five-engineer team working to create algorithms to optimize pickers’ movements in the fulfillment centers while the company was trying to solve the problem of batches. The group spent nine months on the task, then presented their work to Bezos and the S Team. “We had beautiful documents and everyone was really prepared,” Jones says. Bezos read the paper, said, “You’re all wrong,” stood up, and started writing on the whiteboard. “He had no background in control theory, no background in operating systems,” Jones says. “He only had minimum experience in the distribution centers and never spent weeks and months out on the line.” But Bezos laid out his argument on the whiteboard and “every stinking thing he put down was correct and true,” Jones says. “It would be easier to stomach if we could prove he was wrong but we couldn’t. That was a typical interaction with Jeff. He had this unbelievable ability to be incredibly intelligent about things he had nothing to do with, and he was totally ruthless about communicating it.”

Sound familiar?

The complete software rewrite of the logistics network was having its desired effect. Cost per unit (the overall expense of fulfilling the order of a particular item) fell, while ship times (how quickly merchandise ordered on the website was loaded onto a truck) shortened. A year after the Fernley meeting, the click-to-ship time for most items in the company’s FCs was as minimal as four hours, down from the three days it had taken when Wilke first started at the company. The standard for the rest of the e-commerce industry at the time was twelve hours. Amazon’s ability to ship products efficiently and offer precise delivery times to customers gave the company a competitive edge over its rivals, particularly eBay, which avoided this part of the business altogether. Fulfillment was a lever that Bezos had invested in, and he started using it to guide strategy.

This one is more future-oriented, but I wonder as Tesla continues to in-source a lot of stuff and focus on their so-called Alien Dreadnought tech of more efficiently building machines by focusing on the machine that builds the machines, if a similar advantage will surface to Amazon's unparalleled processing/shipping efficiency.

Over the years, unions like the Teamsters and the United Food and Commercial Workers tried to organize associates in Amazon’s U.S. FCs, passing out flyers in the parking lots and in some cases knocking on the doors of workers’ homes. Amazon’s logistics executives quickly met these campaigns by engaging with employees and listening to complaints while making it clear that unionizing efforts would not be tolerated. The sheer size of Amazon’s workforce and the fact that turnover is so high in the fulfillment centers make it extremely difficult for anyone to organize workers. Most recently, in 2013, workers at two Amazon FCs in Germany went on strike for four days, demanding better pay and benefits. The company refused to negotiate with the union. The unions themselves say there’s another hurdle involved—employees’ fear of retribution. In January 2001, the company closed a Seattle customer-service call center, as part of a larger round of cost-cutting measures. Amazon said closing the facility was unrelated to recent union activity there, but the union involved was not so sure. “The number one thing standing in the way of Amazon unionization is fear,” says Rennie Sawade, a spokesman for the Washington Alliance of Technology Workers. Employees are “afraid they’ll fire you—even though it’s technically not legal. You’re the one who has to fight to get your job back if they do.” Amazon often had to contend with something even more unpredictable than stealing, unionization, or truancy in its FCs: the weather. Company managers learned quickly that they had no choice but to install air-conditioning in their first fulfillment centers in Phoenix, where the summers were brutal, but they skimped on what they viewed as an unnecessary expense in colder climates. Instead, fulfillment-center managers developed protocols to deal with heat waves. If temperatures spiked above 100 degrees, which they often did over the summer in the Midwest, five minutes were added to morning and afternoon breaks, which were normally fifteen minutes long, and the company installed fans and handed out free Gatorade. These moves sound almost comically insufficient, and they were. In 2011, the Morning Call, an Allentown newspaper, published an exposé about poor working conditions in Amazon’s two Lehigh Valley fulfillment centers during that summer’s brutal heat wave. Fifteen workers suffered heat-related symptoms and were taken to a local hospital. An emergency room doctor called federal regulators to report an unsafe working environment. In a detail that struck many readers and Amazon customers as downright cruel, the newspaper noted that Amazon paid a private ambulance company to have paramedics stationed outside the FCs during the heat wave—ready to deal with employees as they dropped. Jeff Wilke argues that Amazon’s overall safety record, as reflected in the low number of incidents reported to the Occupational Safety and Health Administration, or OSHA, demonstrates that it is safer to work in the company’s warehouses than in department stores. (The low number of recorded complaints to OSHA regarding Amazon facilities backs up this contention.3) In terms of public perception, though, it didn’t matter. The report sent shock waves through the media, and the following year, battered by the negative publicity, Amazon announced it was paying $52 million to install air-conditioning in more of its fulfillment centers.

This is more of a tangential observation, but it's interesting that just as Amazon was becoming a juggernaut, unionization and bad fulfillment center PR became a thing. Tesla is on the cusp of becoming a much bigger success, and we see similar unionization efforts and safety PR in Fremont. Coincidence?

Despite how far Amazon.com had come, it was still often a media afterthought. It was now officially the age of Google, the search-engine star from Silicon Valley. Google cofounders Larry Page and Sergey Brin were rewriting the story of the Internet. Their high-profile ascent, which included an IPO in 2004, was universally watched. Suddenly, clever online business models and experienced CEOs from traditional companies were passé in Silicon Valley, replaced by executives with deep technical competence. This, it seemed, was to be the era of Stanford computer science PhDs, not Harvard MBAs or hedge-fund whiz kids from Wall Street, and the outside world did not believe Amazon would fare well in this profound shift. In the year leading up to its birthday celebration, Amazon’s stock fell 12 percent as Wall Street focused on its slender margins and the superior business models of other Internet companies. Eighteen of the twenty-three financial analysts who covered the company at the time of the anniversary event expressed their skepticism by putting either a hold or a sell rating on Amazon’s stock. The market capitalization of eBay, still viewed as a perfect venue for commerce, was three times larger than Amazon’s. Google’s valuation was more than four times Amazon’s, and it had been public for less than a year. Fixed-price online retail was simply out of vogue. Ever since the late 1990s, Bezos had been claiming that Amazon was a technology company pioneering e-commerce, not a retailer. But that sounded like wishful thinking. Amazon still collected a vast majority of its revenues by selling stuff to customers. Despite Bezos’s protestations, Amazon looked, smelled, walked, and quacked like a retailer—and not a very profitable one at that.

Sound familiar? This was just prior to Amazon Web Services taking off. "Despite Musk's protestations, Tesla looked, smelled, walked, and quacked like an automaker--and not a very profitable one at that." I wonder if there are any other areas Tesla's investing in that may soon show revenue? /s

Investor Bill Miller from Legg Mason often discussed the digital transition with Bezos when the two got together. “I think the thing that blindsided Jeff and helped with the Kindle was the iPod, which overturned the music business faster than he thought,” says Miller. “He had always understood this stuff was going digital, but he didn’t expect to have his CD business eviscerated like that.” Bezos ultimately concluded that if Amazon was to continue to thrive as a bookseller in a new digital age, it must own the e-book business in the same way that Apple controlled the music business. “It is far better to cannibalize yourself than have someone else do it,” said Diego Piacentini in a speech at Stanford’s Graduate School of Business a few years later. “We didn’t want to be Kodak.” The reference was to the century-old photography giant whose engineers had invented digital cameras in the 1970s but whose profit margins were so healthy that its executives couldn’t bear to risk it all on an unproven venture in a less profitable frontier.

Sound familiar?

Bezos and his executives had devoured and raptly discussed another book that would significantly affect the company’s strategy: The Innovator’s Dilemma, by Harvard professor Clayton Christensen. Christensen wrote that great companies fail not because they want to avoid disruptive change but because they are reluctant to embrace promising new markets that might undermine their traditional businesses and that do not appear to satisfy their short-term growth requirements. Sears, for example, failed to move from department stores to discount retailing; IBM couldn’t shift from mainframe to minicomputers. The companies that solved the innovator’s dilemma, Christensen wrote, succeeded when they “set up autonomous organizations charged with building new and independent businesses around the disruptive technology.”9 Drawing lessons directly from the book, Bezos unshackled Kessel from Amazon’s traditional media organization. “Your job is to kill your own business,” he told him. “I want you to proceed as if your goal is to put everyone selling physical books out of a job.” Bezos underscored the urgency of the effort. He believed that if Amazon didn’t lead the world into the age of digital reading, then Apple or Google would. When Kessel asked Bezos what his deadline was on developing the company’s first piece of hardware, an electronic reading device, Bezos told him, “You are basically already late.”

Tesla innovates quickly enough that they must have some worry about cannibalizing their own current sales with ongoing updates, but we know that Musk also lionized the Christensen book and doesn't let that fear motivate the company's thinking.

Over the next few years, Dalzell watched Amazon from afar and marveled at how Bezos turned himself into one of the world’s most admired corporate chiefs. “Jeff does a couple of things better than anyone I’ve ever worked for,” Dalzell says. “He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around the best truth at the time. “The second thing is that he is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.”

Sound familiar?

This, from an email to the book's author from Joy Covey, an early CFO at Amazon who worked closely with Bezos for years:

I found myself thinking about what it takes to accomplish things as big as they both did, when a lot of what you are doing is unconventional. It may very well be that the absolute intensity of drive and focus is essential and incompatible with all of the nice management thought about consensus and gentle demeanor. I think about how effective and quick Jeff was and how important it was that he didn’t slow down too much or modify his ideas to make others feel comfortable. I think about the early days and the level of clarity, vision, potential, and values that Jeff brought. And then I look at Amazon today, and reflect on some conversations I have had with him in the intervening years. It is easy to draw a straight line from the vision he had back then to the Amazon of today. There were a few little wobbles and detours in places, but really I don’t know any other company that has created such a juggernaut that is so consistent with the original ideas of the founder. It is almost like he fired an arrow and then followed that arc. Can we really think of any other company approaching Amazon’s size or age that continues to move forward with the boldness, risk-taking, innovation, and the long-term perspective that Amazon shows? Jeff’s clarity, intensity of focus, and ability to prioritize, which has no doubt become ingrained in his key team, is unusual and behind his ability to keep leaping forward versus protecting existing ground.

I can think of one example beyond Bezos...
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Great write up. I had some good friends that worked at Amazon a decade ago told me point blank that they were going to take over the world. I agreed that they were a great company, but I considered myself a "value investor" at the time and did not buy the stock. I will not make that mistake with Tesla, although I am sure I am probably making some other mistake I have yet to discover. Like everyone else, I am fighting my last war.
As I was reading this treatise on Amazon Go stores by Stratechery this morning, I was again struck by similarities between Amazon and Tesla. Many folks probably view these links as a stretch, but they ring true to me.

Thompson begins with a discussion of fixed vs marginal costs, as a lead-in to the importance of tech R&D as a means of greatly scaling without any/significant marginal costs:

This, though, is why the activity that is accounted for in R&D is so important to tech company profitability: while digital infrastructure obviously needs to be maintained, by-and-large the investment reaps dividends far longer than the purchase of any physical good. Amazon Go is a perfect example: the massive expense that went into developing the underlying system powering cashier-less purchasing does not need to be spent again; moreover, unlike shelving or refrigerators, the output of that expense can be duplicated infinitely without incurring any additional cost.

The target here is Amazon Go--Amazon's clearly spending an outsize R&D budget on Go which they will presumably use on many, many more Go locations. He gives several examples of other tech companies doing similar things:

  • It was expensive to develop mainframes, but IBM could reuse the expertise to build them and most importantly the software needed to run them; every new mainframe was more profitable than the last.
  • It was expensive to develop Windows, but Microsoft could reuse the software on all computers; every new computer sold was pure profit.
  • It was expensive to build Google, but search can be extended to anyone with an Internet connection; every new user was an opportunity to show more ads.
  • It was expensive to develop iOS, but the software can be used on billions of iPhones, every one of which generates tremendous profit.
  • It was expensive to build Facebook, but the network can scale to two billion people and counting, all of which can be shown ads.
In every case a huge amount of fixed costs up front is overwhelmed by the ongoing ability to make money at scale; to put it another way, tech company combine fixed costs with marginal revenue opportunities, such that they make more money on additional customers without any corresponding rise in costs.

I view Tesla's spending on Autopilot development to be similar--unlike most 'car companies,' Tesla is developing their Autopilot system--from technology choice to in-car software to back-end neural net--on their own. This is a large cost compared to revenue currently, but will soon be a much smaller percentage of rev, with much higher volume of Autopilot sales leading to large profit opportunity. This, compared to most other manufacturers who pay a licensing fee per-vehicle for their driver assist technologies. Tesla's taking the hit now in hopes of greater future marginal revenue opportunity.

Thompson then proceeds to discuss how most tech companies largely restrict their R&D budgets to software, while Amazon also invests heavily in hardware:

The most important difference between Amazon and most other tech companies is that the latter generally invest exclusively in research and development — that is, to say, in software. And why not? As I just explained software development has the magical properties of value retention and infinite reproduction. Better to let others handle the less profitable and more risky (at least in the short term) marginal complements. To take the three most prominent examples:

  • Microsoft builds the operating system (and eventually, application software) and leaves the building of computers to OEMs
  • Google builds the search engine and leaves the creation of web pages to be searched to the rest of the world
  • Facebook builds the infrastructure of the network, and leaves the creation of content to be shared to its users

Autopilot is a mix of the two, but the 'alien dreadnought' project is quite clearly hardware-focused (albeit with a significant software component, as recently demonstrated by the Model 3 pack manufacturing line software debacle in Reno). This rang similar to me to another topic Thompson discusses--Amazon's purchase of Kiva Systems for $775M:

In 2012 Amazon acquired Kiva Systems for $775 million, then the largest acquisition in company history. Kiva Systems built robots for fulfillment centers, and many analysts were puzzled by the purchase: Kiva Systems already had a plethora of customers, and Amazon was free to buy their robots for a whole lot less than $775 million. Both points argued against a purchase: continuing to sell to other companies removed the only plausible strategic rationale for buying the company instead of simply buying robots, but to stop selling to Kiva Systems’ existing customers would be value-destructive. It’s one thing to pay 8x revenue, as Amazon did; it’s another to cut off that revenue in the process.

In fact, though, that is exactly what Amazon did. The company had no interest in sharing Kiva Systems’ robots with its competitors, leaving a gap in the market. At the same time the company ramped up its fulfillment center build-out, gobbling up all of Kiva Systems’ capacity. In other words, Amazon made the “wrong” move in the short-term for a long-term benefit: more and better fulfillment centers than any of its competitors — and spent billions of dollars doing so.

Sound a little like a certain German manufacturing specialist outfit purchase and subsequent move of their services fully in-house by Tesla in the recent past?

These links that I'm seeing may not ring true for others, but as a fan of Amazon/Bezos, it's encouraging to me that I see Tesla/Musk pursuing some of the less-obvious strategies that have served Amazon so well.
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