Lawyers, thieves and really cheap clothes

We’re trying a new format this week!  

So in lieu of making you read a long, slightly pompous essay before getting to the news part of the newsletter, we’re rolling with a running list of Matt Levine style ramblings on the stories of the last week.  

Drop me a note to let me know what you think of this style! 

Branded In China 

Here’s an absolutely bonkers stat buried deep in the advertising nerd annals of the internet in Brian Wieser’s outstanding newsletter, Madison & Wall.  An estimated $7B in Facebook spend is originating at Chinese addresses and running in the United States. Made, sold, and marketed by China, baby! 

First off, a massive hat tip to Wieser for even thinking to note the difference between revenue apportioned by user and revenue apportioned by billing address which requires cross-referencing earnings call information with 10-Q and 10-K filings. This, ladies and gentlemen, is the difference between a full-time analyst and some guy balancing writing a newsletter around drinking four of his homemade bathtub limoncellos and a day job.  

The real question this evokes for me is how much bigger is that delta for Amazon? Said another way, how much of Amazon’s $50B media empire is just one firm (Amazon) directly capturing value from China that used to first get split across a wealth of American middleman businesses? 

I’d venture that a number of savvy tech and service providers in the Amazon software ecosystem are asking this very question. Even if it’s a race to the bottom on price, selling picks and shovels that enable sophisticated Chinese operators to efficiently spend ad dollars on Amazon is a whole new world of opportunity. 

I’d imagine that it is also on the mind of more than a few people in Washington. Here’’s a big part of the case that David Zapolsky is trying to make against the FTC: 

If Amazon, directly or indirectly, is courting more easy China ad money to bypass the indie American seller, it doesn’t exactly bode well for its positioning as a purveyor of egalitarian American supremacy. Of course, US brands spending a fortune in ads on Amazon could be framed just as cynically. The big, bad behemoth is essentially imposing a massive tax on mom and pop operations. So far, Amazon has taken a mostly defensive position in its response to the FTC, highlighting the usual points of customer convenience, third party seller supremacy and the fact that 80% of sales still happen in physical stores.  

For the drama, I’d love to see Zapolsky go dark mode and really go on offense, positioning Amazon’s embrace of Chinese sellers as a grand patriotic gesture to take that value capture away from Chinese firms. Hey Lina, you want those dollars in the hands of Tiktok or Temu? Didn’t think so. Even if I wouldn’t fully buy it, some administrations might. 

I get the sense Amazon is trying to feel out the 2024 political climate and which way the winds tilt before really settling on its ultimate plan of attack. For all of Trump’s America First bluster, this is a man who fawned over Xi in a manner that makes Taylor’s glances at Travis look platonic. Put “the look, the brain, the whole thing” on my tombstone. 

Suffice to say, I don’t envy the tightrope Zapolsky has to walk here. But he gets paid roughly as much as every United States senator combined to walk it and has seen a cool >50X gain in Amazon stock over his 24-year tenure to boot. Not bad!  

The Lawyers Always Get Paid 

Speaking of making a few clams, here’s a spreadsheet courtesy of Cal professor Owin Kerr showing that big law associates make a whole damn clams casino: 

It’s made me question some things, mainly why my wife eschewed big law overtures to…checks notes.. spend more time with ME? It also brings to mind a quote by famous sociologist Chris Rock: 

In all seriousness, while I wouldn’t wish corporate big law on Joe Douglas as his next gig, here’s another (directional) payscale worth looking at, courtesy of Levels.

Among the big tech shops, Amazon is known as a bit of a meat grinder but it’s Italy in August compared to big law. And thousands of Amazon employees make a hell of a lot more than anyone who works in public service. Hell, a mid level Amazon ad sales rep makes more than a United States senator or federal judge. If you manage a book of say, large CPG brands on the platform, the gig consists of occasionally listening to empty threats from CMOs and media planners and responding:  “C’mon bro, are ya really gonna not advertise on Amazon?” and then cashing your $300K/yr. That’s a great job! 

One of the reasons that Packy McCormick is right on the money when he says that big tech is going to get a hell of a lot bigger is that it offers far and away the best utilitarian outcomes of any sector for employees and thus will continue to gobble up top talent. You make good money, have generally reasonable hours and do prestigious work that most folks still have a net positive sentiment about. Beats being a lawyer. 

Shein! Shein! (She Go Crazy Cause She Look Like A Flower But Sting Like A Bee)  

Wanna feel old? This spring, William Hung’s iconic American Idol audition will turn 20. Bet you can’t name two people that actually won American Idol (Carrie Underwood I think? Kelly Clarkson maybe?) but you sang this headline in Hung’s voice. #legend

Shein’s IPO is upcoming and folks, this story has everything but the popcorn. We’ve got a reclusive and mysterious CEO, allegations of forced labor, a quiet lobbying push and a major test for a US government that is increasingly viewed as asleep at the wheel on Chinese tech. Are you there Washington? It’s me Andy. 

To understand Shein's broader history and business model, I once again urge you to read this incredible analysis from Not Boring.  In McCormick’s typical cool dude techie utopian style, it’s an unabashedly uncritical look for such a controversial entity but worth your time. For my part, I’m most interested in how Amazon responds and they’ve fired a pretty large shot in lowering seller fees from 17% to 5% for apparel items that sell for less than $15. 

As much as selling <$15 apparel that is bound for landfills after a few months isn’t really a great business, Amazon had to do this. It’s pretty simple– Amazon existentially cannot afford to lose the price conscious gen Z shopper, especially when cheap clothes may prove to be Shein’s books. Shein (and Temu for that matter) is giving the vibe that it doesn’t come for Amazon’s crops and villages but to destory its hegemony, down to the last novella. If you got that reference without clicking the hyperlink, I truly love you.

Amazon’s response will also provide a fascinating data point around whether Shein is winning because of their unique(ish) shopping experience or simply because they sell a decent assortment of unfathomably cheap clothes.  I tend to think it’s the latter. Prognostications of China-esque livestream shopping taking hold in the West have been around in the decade and we still love our search bars, boxes and Facebook ads. And what Americans really love is cheap shit. If you keep selling us a dollar for ninety cents, we’ll take that deal. 

Love is A Long Road 

Leave it to the folks at Rockstar to dig deep onto the B-side of Free Fallin’ to unearth a reasonably obscure Tom Petty tune that absolutely perfectly matches the aesthetic of GTA VI’s trailer. As of this writing, we’re at 130M views and counting.  

Since GTA V was released, there have been TWENTY-FIVE fuckin’ Marvel Cinematic Universe movies added to humanity’s artistic archive. In a world where pretty much every financial incentive rewards consistent, predictable mediocrity, Rockstar left billions of dollars on the table in pursuit of perfection.  

I was 21 when GTA V came out. I ended an internship I was working a week early to shack up and power through the game, then got in a buddy’s heinous 1996 Corolla and rode down from Chicago to Gulf Shores, Alabama where I spent ten days on a rainy spring break perennially blasted and neck deep in crawfish. When GTA VI comes out, I’ll be 32 with a child, mortgage and zero regrets.  

Somehow, one woman stuck with me through it all. God bless America. Love is a long road.

If you enjoyed this newsletter, forward it to one person who looks like a flower but stings like a bee. Idk man, this is what the newsletter growth people told me to do.