The Crunch Wrap Supreme Presidency

Welcome to 62 new subscribers and Happy 4th! Quick programming note— I’m working on two new recurring columns covering inflections in AI, commerce and media with a couple of publications many of you read consistently. Excited to share more on both initiatives with you all in the next edition.

Thus, United States of Amazon will now publish on a once per month(ish) basis with a little more frenetic blog energy and a heavier emphasis on the “United States” piece since I can’t as easily sell my Americana ramblings to established media players. Will be treating this a canvas to workshop ideas with smart people and throw some more jagged, unfiltered thoughts into the ether for feedback.

Hope you’ll all stick around but just want to give a fair warning on what you’re getting into. Let’s get to it 🙂 

There was a debate last week and…….oh who the hell cares? Nothing that transpired last Thursday told us anything we didn’t already know.

Back in November, I opened the inaugural edition of this newsletter with the following declaration:

My incredibly pompous word choice notwithstanding, the calculus for the election will be far simpler than that. Biden will either win or lose based on the prevailing sentiment around inflation. 

Before digging into this, I must take a second to acknowledge the obvious– Democrats are fumbling the bag on a historically easy election to win by running a candidate in cognitive decline, gaslighting the American public about his condition and simultaneously ensuring the voting populace remains blissfully unaware of his accomplishments and the cornerstones of his agenda that have significant mass appeal. It’s an embarrassment of epic proportion.

Amazingly, they might still get a lifeline if inflation continues to fall, though it’s an uphill battle. Even though inflation will be <3% by November, several household essentials are truly 20%+ more expensive than they were three years ago.  Reasonable people can disagree as to whether or not the Biden administration has managed this well but it’s top of mind for voters.

Of course, voters by and large don’t rationally analyze macro Consumer Price Index data— they anchor on heuristic signals from tracking the price of items they know and love. In economics, “The Big Mac Index” is a tool for measuring the purchasing power of different currencies but it works just as well for inflation.

Here’s the problem— thanks to generations of galaxy brained MBAs and consultants being unleashed on humble proletariat institutions like McDonalds and Taco Bell, the Big Mac (or Crunch Wrap Supreme) Index is a funhouse mirror. At the most basic level, the price you pay for fast food varies wildly depending on if you have the app installed or are a member of a restaurant’s loyalty program. In a more sophisticated sense, the entire experience you have at a fast food kiosk is now an algorithmically optimized adventure designed to get you specifically to pay as much as your previous purchasing patterns suggest might be possible. If you opt into this experiment, the price you pay for a single Big Mac may well be cheaper than it was five years ago, subsidized by those of us who don’t.

So customers who are less digitally savvy or have reasonable qualms about telling Experian and Cigna when they get high as a giraffe and eat seven gorditas are heavily subsidizing customers who order in-app. Along the way, they are losing their sense of economic reality, believing things are rapidly getting a lot more expensive than they actually are.

And there you have it folks— the quarterback of the free world will be determined by whether or not a few swing voters in Pennsylvania, Nevada and Michigan have the McDonalds app installed when they decide to crush a quarter pounder after a few beers.

I’m sticking with my prediction from January— when the dust settles Biden wins against all odds with 279 electoral votes.

Amazonia 

My quick take on the current thing in the Amazon ecosystem

Direct to China: Much like Frank Lucas did in the heroin trade five decades ago, Amazon has cut out the middleman, launching a marketplace that will ship direct from china. Andy Jassy, American gangsta.

When the news first broke, I wrote on LinkedIn that this feels like some “Day 3 shit” and I stand by the position. While I generally assume that Amazon is playing three moves ahead of the competition, this does not feel like a move made from a position of strength.

Amazon is on defense here against Temu and Shein, a position it does not often find itself in. Temu simply gives Amazon existential fits like no company has before because they can run the Amazon playbook on easy mode. In the most reductionist form, Amazon’s dominance is due to the fact that it was able to sustain massive losses to chase top line growth. To pull this off, Amazon had to convince Wall Street to reimagine the entire framework it used to evaluate retail businesses. If Pinduoduo (Temu’s parent company) runs low on cash, they can simply remind the powers that be in Beijing of the geopolitical value of getting American shoppers hooked on a Chinese owned marketplace.

If Amazon operated at a sane scale, it might choose to just abandon the boondoggle of chasing cheap, unprofitable commodity products altogether. Let the Chinese have a brutal, low margin business that fills our landfills (and balls?) with microplastics—we’ve got drones, AI and the cloud infrastrucutre that powers the world to build. Amazon Basics has always been a controversial business inside Amazon with several executives feeling that it’s a needless, low margin regulatory magnet whose main benefit is providing kindling for Lina Khan’s fire. Exploiting a loophole in the US regulatory ecosystem to further enrich Chinese manufacturers at the expense of American small businesses is unlikely to win brownie points in Washington.

Of course, Amazon can’t think this way— it’s a $2 trillion business that needs to capture Chinese factory business to continue feeding the beast. Or more accurately, Amazon doesn’t want to think this way. The Bezosian ethos lives on; any end short of the total domination of global commerce is insufficient.

As I type this, Amazon’s stock is at all-time highs.

Dispatches from America

The current vibe across the land

“Our Asshole”: When I first started my career in tech in 2015, the era of hyper indulgence was at its apex. Dropbox had happy hours with steak and whiskey every Friday that seemingly anyone could get into. But in the orgy of VC cash and unbridled tech optimism that defined the first half of the 2010s, no company was more widely revered than Uber.

Within months, the vibe would shift as a wealth of negative press would envelop Uber, portraying Travis Kalanick as the consummate tech bro and in retrospect, largely making him a fall guy for a shift of institutional power to tech companies that society was not yet ready for. Through it all, most Uber employees were steadfast in rallying behind their leader. I remember chatting with one reasonably new and junior Uber employee amidst the worst of the backlash against Travis. His response said it all:

“Objectively speaking, he’s probably an asshole but he’s OUR asshole.”

So too is the current Silicon Valley sentiment on Donald Trump. Much ink has been spilled about a so-called Trumpian wave sweeping the tech ecosystem but I don’t really think that’s what is happening here. As noted by Mike Solana in Pirate Wires, actual donations from tech power brokers to right wing politicians have barely increased. But more importantly, it’s not so much Silicon Valley as the former president who has changed.

The media is notoriously awful at covering Trump’s actual policy positions partially because covering the soap opera is more profitable and partially because the man himself often seems unclear on what he believes. Thus, Matt Stoller does the lord’s work in this piece, meticulously tracking Trump’s retreat from attacking big business.

The Trump of 2016 was a swashbuckling renegade who posed a real threat to all forms of institutional power, corporate or otherwise. The Trump of 2024 is, at least policy wise, a fairly conventional big business Stooge. Maybe Peter Thiel predicted this all those years ago when he made himself a pariah to back the former President.

The main thing that has changed about the technology business from 2016 to 2024 is simply how much more institutional power the industry has. The five largest companies in the world are all technology firms—there’s no such thing as bigger business.

Donald Trump is simply not a threat to that. So they kiss the ring.

Once again, Happy 4th of July! If you’re so inclined, shoot me back a quick note to tell me what you’re grilling this weekend. My backyard is mostly out of commission during my home renovation so I live vicariously through you all.